Subway joins the wage thieves

Via Domain:

Subway has said it could terminate franchisees that do not pay staff properly after it emerged the US sandwich giant is under investigation by the Fair Work Ombudsman over underpayment of local employees.

The troubled franchise is under pressure after an investigation by The Age and Sydney Morning Herald revealed it is closing stores, suffering from falling revenue and facing a backlash from some franchisees forced to pay the price of costly renovations.

The Sydney Morning Herald and The Age has confirmed Subway is now the subject of an inquiry by the ombudsman following claims by employees of underpayment across the franchise network.

What can we say? It’s the same pattern over and again: franchise business model; migrant preponderance; youth targeted and bullshit services sector jobs.

It is the new Australian economic model centered cheap labour migrants, low rent service provision and theft.

Mass immigration is the macro-economic enabler. The evidence of this is overwhelming. There was one unprecedented change to Australian macro conditions in this cycle that made wage growth impossible. Australia has never run mass immigration into material economic slack before but that’s what we did this time:

What does macro-economics 101 tell us happens when a perpetual supply shock lands on weak demand? Prices fall.

Piles of micr0-economic evidence also supports the contention that the mass immigration model does not do wage rises:

  • For years we have seen Dominos, Caltex, 7-Eleven, Woolworths and many other fast food franchises busted for rorting migrant labour.
  • The issue culminated in 2016 when the Senate Education and Employment References Committee released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documented systemic abuses of Australia’s temporary visa system for foreign workers.
  • Mid 2017, ABC’s 7.30 Report ran a disturbing expose on the modern day slavery occurring across Australia.
  • Meanwhile, Fair Work Ombudsman (FWO), Natalie James, told Fairfax that people on visas continue to be exploited at an alarming rate, particularly those with limited English-language skills. It was also revealed that foreign workers are involved in more than three-quarters of legal cases initiated by the FWO against unscrupulous employers.
  • Then The ABC reported that Australia’s horticulture industry is at the centre of yet another migrant slave scandal, according to an Australian Parliamentary Inquiry into the issue.
  • The same Parliamentary Inquiry was told by an undercover Malaysian journalist that foreign workers in Victoria were “brainwashed” and trapped in debt to keep them on farms.
  • UNSW Sydney and UTS survey painted the most damning picture of all, reporting that wages theft is endemic among international students, backpackers and other temporary migrants.
  • A few months ago, Fair Work warned that most of Western Sydney had become a virtual special economic zone in which two-thirds of businesses were underpaying workers, with the worst offenders being high-migrant areas.
  • Dr Bob Birrell from the Australian Population Research Institute latest released a report, based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs, with only 24% of skilled migrants from Non-English-Speaking-Countries (who comprise 84% of the total skilled migrant intake) employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates. These results accord with a survey from the Bankwest Curtin Economics Centre, which found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they arrived, with underemployment also rife.
  • The Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants reportrevealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%).
  • ABC Radio recently highlighted the absurdity of Australia’s ‘skilled’ migration program in which skilled migrants have grown increasingly frustrated at not being able to gain work in Australia despite leaving their homelands to fill so-called ‘skills shortages’. As a result, they are now demanding that taxpayers provide government-sponsored internships to help skilled migrants gain local experience, and a chance to work in their chosen field.
  • In early 2018 the senate launched the”The operation and effectiveness of the Franchising Code of Conduct” owing in part to systematic abuse of migrant labour.
  • Then there is new was research from the University of Sydney documenting the complete corruption of the temporary visas system, and arguing that Australia running a “de-facto low-skilled immigration policy” (also discussed here at the ABC).
  • In late June 2018 the government released new laws to combat modern slavery which, bizarrely, imposed zero punishment for enslaving coolies.
  • Over the following few months we witnessed widespread visa rorting across cafes and restaurants, including among high end establishments like the Rockpool Group.
  • Then Alan Fels, head of the Migrant Workers Taskforce, revealed that international students are systematically exploited particularly by bosses of the same ethnicity.
  • Geoge Calombaris is crucified for and $8m wage theft.
  • Subway joins the wage thieves.

Academic research also supports it. Below are key excepts from Chapter 13 entitled Temporary migrant workers (TMWs), underpayment and predatory business models, written by Iain Campbell:

This chapter argues that the expansion of temporary labour migration is a significant development in Australia and that it has implications for wage stagnation…

Three main facts about their presence in Australia are relevant to the discussion of wage stagnation. First, there are large numbers of TMWs in Australia, currently around 1.2 million persons. Second, those numbers have increased strongly over the past 15 years. Third, when employed, many TMWs are subject to exploitation, including wage payments that fall below — sometimes well below — the minimum levels specified in employment regulation…

One link to slow wages growth, as highlighted by orthodox economics, stems from the simple fact of increased numbers, which add to labour supply and thereby help to moderate wages growth. This chapter argues, however, that the more salient point concerns the way many TMWs are mistreated within the workplace in industry sectors such as food services, horticulture, construction, personal services and cleaning. TMW underpayments, which appear both widespread in these sectors and systemic, offer insights into labour market dynamics that are also relevant to the general problem of slow wages growth…

Official stock data indicate that the visa programmes for international students, temporary skilled workers and working holiday makers have tripled in numbers since the late 1990s… In all, the total number of TMWs in Australia is around 1.2 million persons. If we include New Zealand citizens and permanent residents, who can enter Australia under a special subclass 444 visa, without time limits on their stay and with unrestricted work rights (though without access to most social security payments), then the total is close to 2 million persons… TMWs now make up around 6% of the total Australian workforce…

Decisions by the federal Coalition government under John Howard to introduce easier pathways to permanent residency for temporary visa holders, especially international students and temporary skilled workers, gave a major impetus to TMW visa programmes.

Most international students and temporary skilled workers, together with many working holiday makers, see themselves as involved in a project of ‘staggered’ or ‘multi-step’ migration, whereby they hope to leap from their present status into a more long-term visa status, ideally permanent residency. One result, as temporary migration expands while the permanent stream remains effectively capped, is a lengthening queue of onshore applicants for permanent residency…

Though standard accounts describe Australian immigration as oriented to skilled labour, this characterisation stands at odds with the abundant evidence on expanding temporary migration and the character of TMW jobs. It is true that many TMWs, like their counterparts in the permanent stream, are highly qualified and in this sense skilled. However, the fact that their work is primarily in lower-skilled jobs suggests that it is more accurate, as several scholars point out, to speak of a shift in Australia towards a de facto low-skilled migration programme

A focus on raw numbers of TMWs may miss the main link to slow wages growth. It is the third point concerning underpayments and predatory business models that seems richest in implications. This point suggests, first and most obviously, added drag on wages growth in sectors where such underpayments and predatory business models have become embedded. If they become more widely practised, underpayments pull down average hourly wages. If a substantial number of firms in a specific labour market intensify strategies of labour cost minimisation by pushing wage rates below the legal floor, it can unleash a dynamic of competition around wage rates that foreshadows wage decline rather than wage growth for employees…

Increases in labour supply allow employers in sectors already oriented to flexible and low-wage employment, such as horticulture and food services, to sustain and extend strategies of labour cost minimisation… The arguments and evidence cited above suggest a spread of predatory business models within low-wage industries.37 They suggest an unfolding process of degradation in these labour markets…

And below are extracts from Chapter 14, entitled Is there a wages crisis facing skilled temporary migrants?, by Joanna Howe:

Scarcely a day goes by without another headline of wage theft involving temporary migrant workers…

In this chapter we explore a largely untold story in relation to temporary migrant workers… it exposes a very real wages crisis facing workers on the Temporary Skill Shortage (TSS) visa (formerly the 457 visa) 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…

In Australia, these workers are employed via the TSS visa and they must be paid no less than a salary floor. 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. This protection was considered important because an independent review found that many 457 visa workers were not receiving wages equivalent to those received by Australian workers…

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. In its original iteration back in 2009, it was set at A$45 220. This level was determined by reference to average weekly earnings for Australians, with the intention that TSMIT would be pegged to this because the Australian government considered it ‘important that TSMIT keep pace with wage growth across the Australian labour market’. This indexation occurred like clockwork for five years. But since 1 July 2013, TSMIT has been frozen at a level of A$53 900. ..

There is now a gap of more than A$26 000 between the salary floor for temporary skilled migrant workers and annual average salaries for Australian workers. 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?..

But why would employers go to all the effort of hiring a temporary migrant worker on a TSS visa over an Australian worker?

Renowned Australian demographer Graeme Hugo observed that employers ‘will always have a “demand” for foreign workers if it results in a lowering of their costs’.  The simplistic notion that employers will only go to the trouble and expense of making a TSS visa application when they want to meet a skill shortage skims over a range of motives an employer may have for using the TSS visa. These could be a reluctance to invest in training for existing or prospective staff, or a desire to move towards a deunionised workforce. Additionally, for some employers, there could be a belief that, despite the requirement that TSS visa workers be employed on equivalent terms to locals, it is easier to avoid paying market salary rates and conditions for temporary migrant workers who have been recognised as being in a vulnerable labour market position. A recent example of this is the massive underpayments of chefs and cooks employed by Australia’s largest high-end restaurant business, Rockpool Dining Group, which found that visa holders were being paid at levels just above TSMIT but well below the award when taking into account the amount of overtime being done…

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…

A national survey of temporary migrant workers found that 24% of 457 visa holders who responded to the survey were paid less than A$18 an hour.  Not only are these workers not being paid in according with TSMIT, but they are also receiving less than the minimum wage. A number of cases also expose creative attempts by employers to subvert TSMIT. Given the challenges many temporary migrants face in accessing legal remedies, these cases are likely only scratching the surface in terms of employer non-compliance with TSMIT…

Combined, then, with the problems with enforcement and compliance, it is not hard to conclude that the failure to index TSMIT is contributing to a wages crisis for skilled temporary migrant workers… 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.

It’s not just temporary visas. It is the entire mass immigration model:

  • students, visa holders, tourists all work for nothing to gain longer terms visas;
  • their numbers are endless and so is the labour supply shock;
  • and that endless flow has now generated a supply side adjustment to businesses that thrive on cheap foreign labour – basically service economy dross – that holds up empty calorie growth, boosts asset prices and the currency, holds own productivity via capital shallowing, and hollows out tradables in an era of global lowflation.

Thus everybody can get some work, nobody can get enough of it, participation skyrockets but productivity craters. Wages can’t rise and the economy spirals, literally, into a dumbening singularity.

The only fix is to radically cut immigration.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


  1. To play the Devil’s advocate here:
    Why should your average Aussie care if immigrants are willing to take badly paying jobs? It lowers the cost of goods like fast-food for everybody. Surely this is just capitalism at work.

    • Because they are the starter jobs for our youth , the jobs for those who’ve re entered the workforce through necessity, the low skilled jobs accessible to the lower tiers of our society. A society that requires all levels to be viable for our nation to retain its enviable standards of living .

      • Mining BoganMEMBER

        This a million times over.

        Kids will work cheap for a start. I can never understand why we’re paying 40-year-old immigrants to push trolleys when our kids will do it.

      • blacktwin997MEMBER

        Absolutely this. All these subcontinental unnecessaries clogging up the gears of our once-envied social machine. And that’s the law-abiding ones, don’t get me started on visa fraud or the Crown-ice-RE nexus from our middle kingdom friends.

      • Seeing a middle-aged Indian work at the self-serve checkouts at Coles Paddington is depressing. And when he speaks (rarely), you can tell he wasn’t born here. They can’t even feign pleasantness (because there’s nothing he can gain from us, so why be nice to us?).

    • ErmingtonPlumbingMEMBER

      Fine then admit you all for a race to the Bottom, don’t give a fk about working class citizens or National solidarity and openly support a dog eat dog society.
      Wear you position openly and with pride but stop Fking lying by saying things that suggest otherwise.

      Let the people hear the truth of our “leaders” positions and let the peopke decide.

      Just stop all the Fking lying and obfuscation

      • Jumping jack flash

        The hidden agendas will be revealed precisely at the time when it is too late to do anything about it, and nobody (important) has anything to lose.

    • You don’t have to care. This is the path the US took, and look how well thats turning out. Ever increasing inequality resulting in a massive population of people with no hope for the future and nothing left to lose.
      A few of these people think F#$K it and go commit suicide or increasingly go on a shooting spree to take some people with them. Is that the future you want?

      • The modern Australian way now seems to be not to give a flying %$#@ until it affects you directly.

    • The Horrible Scott Morrison MP

      This. The barmy lefty incel bureaucrats artificially set the price of labour and unfailingly get it wrong, and then turn around and blame the economy for operating at the right level. You honestly couldn’t make it up.

    • dunno.. why should the average australian be engaged as a citizen looking at contemporary situations that require an informed opinion about the decisions directly affecting their community? [other than @rseholes who behave like this, self evidently, arent australians]
      another question that arises, is why should anyone exhibit any decency whatsoever?

    • What jobs do you want Aussies to do?

      Foreigners are allowed to take 90% of the IT jobs. 90% of the tradie jobs. 90% of the accounting jobs. 90% of the retail jobs.

      Ban foreigners from driving trucks here – so that at least Aussies can work as truck drivers.

    • And the money saved helps pay off the business loan to overseas, and goes out of the country in remittances. Plus it brings down ALL wages – less wages, less spending, less revenue, less chance of wages going up.

  2. If everyones doom and gloom scenario of this next economic crash is true hopefully the services industry wont exist since it only lives off discretionary spending.

    • What? Should I reconsider my $37 K pa Masters in Dog Walking and Wedding Planning from one of our World Clarss Universities??!

  3. Ronin8317MEMBER

    This is the franchise model in Australia : sell a franchise that can’t make money unless you pay below award, terminate the franchise for paying below award, then resell the same franchise again. There is an endless supply of suckers in Australia.

    • ErmingtonPlumbingMEMBER

      They’ll be even more now the money for nothing real-estate boom is over.
      Where to put all those realised capital gains next?

      • Stewie GriffinMEMBER

        At the back of my Biology text book in year 12 was this note:

        “Man does not weave this web of life. He is merely a strand of it. Whatever he does to the web, he does to himself.

        So it is with Australia’s political and economic system, pretty much since Bob Hawke and Paul Keating, each piece of policy that has been crafted pretty to help support other laws and regulations, all forming part of a coherent whole, designed to maximise one thing and one thing only – Australian land prices.

        This has been the traditional means by which “elites” have always farmed the people beneath them…. indeed, it was for a very long time one of the prime reasons individuals from certain… ah em…. cultures, were prevented from owning land. Part of the reasoning was, that if they couldn’t own the land, then they couldn’t craft polices that would help to inflate land at the detriment of the underlying society.

        Neoliberal employment markets, help reduce wage pressures, that enables lower interest rates that keeps asset prices inflated.

        Mass migration, helps reduce wage pressures, that enables lower interest rates that helps keep asset prices inflated.

        Smaller Govt, means lower taxes that means more of a nations income can be diverted into asset prices.

        Remember the point of these policies ISN’T for the long term benefit of the nation or society, it is only for the short or intermediate benefit of the elites within that nation.

        Their vision isn’t about progressing society, development or the nation – societal dreams of colonising the moon, mars, etc are abandoned in favour of more practical goals (for our new elites) like diversity, which is far more important for them in achieving their only true vision – them remaining in charge. Whether they be at the top of a pile of gold or a pile of shyt doesn’t really matter, so long as they are the master and we are the cattle, and God’s pre-ordained covenant is made a reality.

        And if it does all fall over…. well, then they just pack up and move to another society and start again.

      • ErmingtonPlumbingMEMBER

        “which is far more important for them in achieving their only true vision – them remaining in charge.”

        Lol,…followed by a long Sigh.

      • Stewie GriffinMEMBER

        Culture maters Ermo – and the cultural values at the top that from the ideas pool that our society turns to in order to solve the problems it faces is important.

        The battle for ideas doesn’t require 100% adherence, only cultural domination at the top – who dominates our Rich list? A barbarian heiress with no culture of her own, followed by:

        Harry Triguboff
        Anthony Pratt
        Frank Lowy

        I wonder how much they spend on their Institutes and Policy groups as percentage of total charitable giving to such organisations compared to the remaining top 10?

    • Who cares if you get a business visa for you and your family to stay here, plus you get to them sponsor your extended family with skilled-visas. Winning!

  4. I knew it 2 years ago.

    Every subway outlet that I walked past had Indian women working in them. In 2004, the staff were Aussie. In 2008, you could still see Aussies working in Subway outlets.

    • Stewie GriffinMEMBER

      This is the problem you have when you take a society away from the underlying culture that built it – it stops working to help the native born people into it.

  5. Jumping jack flash

    Put yourself in the place of the poor franchisee:
    I bought this bloody subway, and let’s face it, its not all that special.
    I had to get everything just right; spend a ton of money. The contractors were a useless bunch of… well whatever nationality they were they couldn’t set up an Ikea bookcase.

    I can’t raise prices too much because they’re pretty much dictated.
    I can’t raise prices anyway otherwise prospective Subway customers will just go to the next stall in the food court for lunch, where its cheaper – probably that Chinese food! The b&*%%&@*#&#$ds

    And now I need debt! What good is owning a franchise if I can’t buy another IP with it?
    Its just too hard. Nobody has any money to spend on Subway. Everyone is bringing in leftovers from last night’s dinner for lunch.

    My wages are stagnant so I can’t take on more debt to buy that second IP and finally be successful!

    What to do? What to do?
    Ooh I know, I’ll beat them at their own game. I’ll employ a ton of immigrant students to make the Subway instead of these $18 an hour slackers, pay them $5 an hour and pocket the difference.

    More debt is within reach now, and I can finally buy that extra IP and be successful!! Yes!!

    • All the new Australians, new consumers, particularly from India, with their little cool-ey bags they bring in to work each day, to stink up the office microwave and kitchen with their lovely home-made ‘cuisine’. There’s an army of them stepping off the train each day. I suppose it saves them money so they can buy more fleece and gold jewellery.

  6. Scrap business visas for food outlets. We have far too many food outlets as it is (meaning there is more ripping staff off to remain solvent), plus money coming in from overseas to buy business is less then the money going out to pay back foreign debt to buy business (principal, plus interest; as well as other remittances).

    All these new Australians, are all cheap consumers – just go and see who the bulk of people are that line up for the shytey 7-Eleven $1 coffee.