On Monday, employer lobby the Committee for Economic Development of Australia (CEDA) released spurious ‘research’ claiming that the surge in temporary migration into Australia has had no adverse impacts on wages, is unambiguously good for the Australian economy, and calls for the expansion of temporary migration:
CEDA’s analysis shows that contrary to some concerns, recent waves of migrants have not had an adverse impact on the wages or jobs of local workers…
CEDA’s research confirms that temporary skilled migration has been an overwhelming net positive for the Australian economy, enabling skills shortages to be filled and contributing to the transfer of new knowledge and experience to Australian workers. Australians need not feel anxiousabout the impact of temporary skilled migration on their jobs.
The Temporary Skill Shortage (TSS) program and its predecessors, including the 457 program, have helped to fill important skills gaps, with safeguards to prevent the displacement of Australian workers and, undermining of pay and conditions…
CEDA’s research indicates that temporary skilled visa holders experience better labour market outcomes than other migrants. For example, they typically earn more – in 2016, 42 per cent of temporary skilled visa holders earned over $78,000 a year compared to 35 per cent of permanent skilled migrants…
Temporary migrants tend to be employed in higher paying jobs – the average base salary for nominated positions was around $95,000 in 2017-18.
Temporary skilled migration is so good, according to CEDA, that it has demanded an expansion of the program via:
- making the process for identifying eligible occupations for skilled visas more business-friendly;
- dropping the requirement for labour market testing of occupations before temporary migrants can be employed;
- making intra-company transfers easier; and
- reducing the costs of the Skilling Australia Fund Levy applying to temporary workers.
So basically, CEDA wants businesses to face fewer barriers to bringing in temporary workers, irrespective of whether the industry is facing actual skills shortages and whether local workers are available for the job.
CEDA’s claims do not pass scrutiny
An examination of the empirical analysis contradicts CEDA’s rosy claims and shows unambiguously that excessive temporary migration is undercutting Australian workers.
Consider first CEDA’s outlandish claim that “Temporary migrants tend to be employed in higher paying jobs – the average base salary for nominated positions was around $95,000 in 2017-18”. Nothing could be further from the truth.
According the ABS’ Insights from the Australian Census and Temporary Entrants Integrated Dataset, 2016, released in February 2019, the median personal weekly income of Temporary Work (Skilled) visa holders was a mere $1,143 per week, or $59,436, in 2016.
The low earnings of temporary skilled migrants is hardly surprising given the salary floor for Temporary Skilled Shortage (TSS) visas has been frozen at the absurdly low level of $53,900 since 2013-14, which is $19,000 below the median full-time Australian salary of $72,900 (comprising both skilled and unskilled workers).
Joanna Howe, Senior Lecturer in Law at University of Adelaide, explained the ramifications of the $53,900 TSS wage floor in the recent book, The Wages Crisis in Australia:
This crisis has been precipitated by the federal government’s decision to freeze the salary floor for temporary skilled migrant workers since 2013… the government has chosen to put downward pressure on real wages for temporary skilled migrants, thereby surreptitiously allowing the TSS visa to be used in lower-paid jobs…
This salary floor is called the Temporary Skilled Migration Income Threshold (TSMIT). TSMIT was introduced in 2009 in response to widespread concerns during the Howard Government years of migrant worker exploitation…
In effect, TSMIT is intended to act as a proxy for the skill level of a particular occupation. It prevents unscrupulous employers misclassifying an occupation at a higher skill level in order to employ a TSS visa holder at a lower level…
TSMIT’s protective ability is only as strong as the level at which it is set… But since 1 July 2013, TSMIT has been frozen at a level of A$53 900…
This means that the TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker. This begs the question — is the erosion of TSMIT allowing the TSS visa to morph into a general labour supply visa rather than a visa restricted to filling labour market gaps in skilled, high-wage occupations?..
Put simply, temporary demand for migrant workers often creates a permanent need for them in the labour market. Research shows that in industries where employers have turned to temporary migrants en masse, it erodes wages and conditions in these industries over time, making them less attractive to locals…
So the failure to index the salary floor for skilled migrant workers is likely to affect wages growth for these workers, as well as to have broader implications for all workers in the Australian labour market.
Moreover, businesses have chosen to employ migrant workers in lieu of lifting wages, as noted by the ACTU:
Wright and Constantin (2015) surveyed employers using the 457 visa scheme and found that 86% state that they have experienced challenges recruiting workers locally. Despite identified recruiting difficulties, the survey found that fewer than 1 in one hundred employers surveyed had addressed ‘skill shortages’ by raising the salary being offered. Labour ‘shortages’ should first be addressed through a readjustment in the price of labour – increased wages. An inability to find local workers to work at a specified wage rate, coupled with an unwillingness to offer higher wages, does not necessarily imply a skill shortage – particularly where local workers would be willing and able to work if the wage rate was lifted. This differs from a skill shortage in which there are simply not enough people with a particular skill to meet demand.
Contrary to CEDA’s claims, the 2016 Senate Committee report, entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, also found that temporary skilled visas were “not sufficiently responsive either to higher levels of unemployment, or to labour market changes in specific skilled occupations”.
In addition to the absurdly low $53,900 pay floor for TSS visas, the problem lies in the fact that almost any occupation is eligible for skilled migrant workers. Specifically:
- 216 occupations are eligible for the Employer Nomination Scheme visa (subclass 186)
- 673 occupations are eligible for the Regional Sponsored Migration Scheme (subclass 187)
- 212 occupations are eligible for the Skilled Independent Visa (subclass 189), the Temporary Graduate Visa (subclass 485), and the Skilled Regional (Provisional) Visa (subclass 489)
- 427 occupations are eligible for the Skilled Nominated Visa (subclass 190)
- 504 occupations are eligible for the Skilled Regional (Provisional) Visa (subclass 489)
- 508 occupations are eligible for the Temporary Skill Shortage (TSS) visa (subclass 482).
The above lists have no requirement that the occupations are actually experiencing skills shortages. This means that TSS visas can be used by employers who wish to access foreign labour for an ulterior motive, including lowering wages.
Rather than loosening access to TSS visas, and making it easier for Australian businesses to undercut Australian workers, the federal government should lift the pay floor applying to TSS visas from $53,900 to average fill-time earnings. This would encourage businesses to employ and train locals, rather than reaching for a cheap migrant worker at the earliest opportunity.
Moreover, if CEDA truly believes that “temporary migrants tend to be employed in higher paying jobs” and that “the average base salary for nominated positions was around $95,000 in 2017-18”, then it should have no problem with lifting the pay floor from $53,900 to $86,600 – the average full-time Australian salary.
Temporary migrant exploitation ignored
Finally, CEDA has conveniently ignored the systemic exploitation of unskilled temporary migrants, which has been widely reported across the entire Australian economy.
The 2016 report by the Senate Education and Employment References Committee, entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, found international students and backpackers were “consistently reported to suffer widespread exploitation in the Australian workforce”.
In a similar vein, the 2019 Report of the Migrant Workers’ Taskforce concluded “the problem of wage underpayment is widespread and has become more entrenched over time” and showed that at least half of temporary migrant workers are being underpaid, with exploitation of international students and backpackers deemed “endemic”.
The massive increase in temporary visas has entrenched entire industries to becoming heavily reliant on these migrant workers to perform low-skilled work in the labour market. Accordingly, Australia has witnessed widespread abuses showing the entire system is broken, spanning the franchising sector (e.g. 7-Eleven, Domino’s and Caltex), to hospitality, farming, construction, food processing and supermarkets.
In summary, CEDA’s report is not worth the paper it is written on. It is industry propaganda for the purposes of giving businesses easier access to cheap foreign labour.
