Exploitative visa system undercuts Australian workers

Federal Minister for Employment Michaelia Cash has called on businesses to invest more in workforce training. Noting that it costs companies on average $28,000 to replace an employee, Cash claims that one of the main reasons why people leave their job is that they are unsatisfied with their skills development. Cash says that spending more on workforce training would help to boost productivity. From The AFR:

“The reality is that business investment in workplace training has been going in the wrong direction for some time,” Senator Cash said.

“But business needs to play its part. Workforce planning is not simply a problem for government, and the solution will lie with industry as well.”

Work-related training has fallen across all age groups, dropping from 26.9 per cent in 2013 to 21.5 per cent in 2016–17…

“That’s stark evidence and a call for employers to invest more in the skills development of their employees to make their businesses more sustainable. A trained workforce brings greater productivity returns and better wages,” Senator Cash said.

Why would Australian businesses bother to employ and train locals when they can instead grab a cheap migrant worker?

The pool of migrant workers has swelled across Australia, many of whom work for below-market rates:

The federal government has also set the pay floor for temporary ‘skilled’ migrant workers at just $53,900, which is $34,349 below the current average full-time Australian salary of $88,249, as well as $14,720 below the median full-time wage of $68,620, each of which comprise both skilled and unskilled workers.

This appallingly low pay floor has strongly incentivised businesses to ‘grab’ a cheap migrant worker over employing and training a local. As noted by Joanna Howe in the recent book, Wage Crisis in Australia:

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

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…

Not surprisingly then, migrants took 83% of Australian jobs created between 2011 and 2016, according to research from Professor Peter McDonald from Melbourne University:

From July 2011 to July 2016, employment in Australia increased by 738,800. Immigrants accounted for 613,400 of the total increase…

The ACTU has also blamed unfettered employer access to migrant workers for limiting the job opportunities and training of local workers [my emphasis]:

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.

The relatively recent availability of a large and vulnerable pool of temporary migrant workers has undoubtedly contributed to current record low levels of wages growth and a growing reluctance by employers to train local workers…

While there are approximately 1.5 million temporary entrants with work rights, the overseas worker team at the Fair Work Ombudsman consists of only 17 full time inspectors to investigate cases of exploitation – over 80,000 visa workers per inspector. Inadequate enforcement and penalties act as an incentive for employers to exploit temporary workers when the benefit from doing so outweighs the cost of the penalty. or where the probability of being caught is sufficiently low….

Allowing the mass importation of migrant workers bypasses the ordinary functioning of the labour market by enabling employers to source cheap foreign labour in lieu of raising wages, as well as abrogating the need for training.

So rather than waxing lyrical about investing in workforce training, the federal government should place a minimum salary floor of $100,000 on each skilled visa, both temporary and permanent, as well as stem the flow of international students into Australia’s universities, which has hit plague proportions.

Implementing these measures would ensure the visa system is used only for specialised high skilled workers that Australia cannot foster domestically, rather than being used by employers as a general labour market tool to undercut local workers and reduce wage costs.

Australia’s weak wage growth, and the lack of job opportunities and training, won’t improve otherwise.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.


  1. My goodness! There is nothing the foreign workers will not rort:

    Uber drivers are prompted to pose for a verification “selfie” every time they get into the car to work.

    But police sources have told The Age that scammers are getting around the system’s log-on technology by simply holding up a photograph of the registered account holder.

    drivers are using the flaw in the technology to run illegal rackets, connecting one account to as many as 10 vehicles and paying a string of employees, many foreign nationals, in cash.

    Getting an imposter to do your exams. Getting an imposter to drive for Uber. What next? Getting imposter children in childcare?

    false rostering and timesheets for a day-care operation that never actually cared for any children.

    One property purported to be caring for 50 children at a time, despite being a small garage that was without electricity

    Enough is enough. Ban foreigners from working in certain jobs. Do not let them drive trucks. Do not let them drive for Uber. Do not let them work in childcare.

    • Jumping jack flash

      “Ban foreigners from working in certain jobs. Do not let them drive trucks. Do not let them drive for Uber. Do not let them work in childcare.”

      Seriously? I applaud their ingenuity but if they don’t work these jobs then who would do it?

      These jobs simply don’t pay enough to obtain the required amounts of debt to be successful, unless rorted like this.

      Aspiring young debt slaves have no time to bother working these jobs. They’d rather do nothing than waste time on performing a dead end job with no prospects for obtaining the required amounts of debt to buy the things they need.

      • Rubbish, supply and demand would force companies to pay more, they would find the workers at the right price and in the background more people would skill up with truck licenses because it would be worth their while. The statement that so many use about locals not wanting to do something is used to justify importing cheap labor so they can pay cheap rates.

        • Jumping jack flash

          Companies are just people. All the money is being siphoned off for the select few to obtain debt to buy the things they need, and then service that debt. Where’s it going to come from to increase wages?

          I haven’t even touched on the rise in living costs, also due to this requirement for debt.

    • Uber et al are pretty much illegal entities in Australia.

      The government should ban Uber et al – but of course they turn a blind eye because such jobs prop up the ponzi population scheme.

      Boycott Uber et al.

  2. reusachtigeMEMBER

    It’s time for Australian workers to get their revenge and start undercutting the wages of new migrants!

  3. Jumping jack flash

    “Why would Australian businesses bother to employ and train locals when they can instead grab a cheap migrant worker?”



    “employers ‘will always have a “demand” for foreign workers if it results in a lowering of their costs’”

    The aim of course is debt maximization. Debt depends on income. Income depends on profit. Profit is affected by costs and sales.

    Costs and sales can be manipulated by importing a ton of overseas workers who can then be enslaved by businesses to reduce costs. Increased people increase demand (supposedly)

    The reduced costs are pocketed by the business owners and upper tiers to convert into more debt.

    This is the result of the skilled immigration which was originally intended to bring wages down to counteract the severe debt inflation of the 00s. After that worked stupendously, the immigration was doubled to hopefully encourage falling debt growth by all these migrants taking on trillions of new debt dollars to keep the debt inflation going.

    Unfortunately it didn’t work as intended. These immigrants were enslaved so business owners and top tiers could increase their own wages to increase their debt. So it still kind of worked. Up until now.

    Now we have the classic parameters for depression: a working underclass who cannot afford the goods and services they produce – underpaid or completely indebted, and, an elite who either don’t want to, or can’t spend their money due to debt taking it all.

    • You saw it in the flat lining of the immigration vs emigration ratio in Leigh’s chart yesterday. It’s obviously very hard now to get ahead, every job taken, every angle to make money exploite. One has to wonder whether vested interests are running a deliberate fleecing campaign of migrants knowing full well they’re selling a false dream. It’s pretty cynical.

  4. Stewie GriffinMEMBER

    “This appallingly low pay floor has strongly incentivised businesses to ‘grab’ a cheap migrant worker over employing and training a local.”

    The issue is that we are no longer a nation, but an economic zone (EZFKA).

    Various interest groups have spent hundreds of millions of dollars on propaganda designed to destroy any sense of national identity. When there is no cohesive national identity and everyone is out for themselves, who is going to bother to invest in the future of a nation and people who don’t exist?

    This attitude is best summed up by one of the words of Harry Triguboff:

    “What’s more important for me – a guy who can fix my tap or a guy who can speak English?”.

    There is no society for people with views like Harry, just resources to be used – which is what the Economic Zone Formally Known as Australia is all about.

    • Jumping jack flash

      People have been collectively referred to as “consumers” and dehumanised for quite a while.
      That’s the problem.

      Now “consumers” are a means to an end. A parameter in an equation.
      An economy is now comprised of “consumers” and these weird (faceless) entities of “corporations” and “businesses” and perhaps “government”.

      Bankers and economists forget that an economy is fundamentally a bunch of people, and without people there is no economy – unless they want to completely automate the whole thing in some kind of macabre simulation so their models actually work.

      If they create a requirement for people to maximise their debt to afford the things they need, then that means the people get crippling amounts of debt and so too the economy gets crippling amounts of debt.

      Then after that point all the people start having individual agendas to try and maximise their debt and then service that debt, but because the economy is just people, the economy develops that same agenda towards debt maximisation and debt service. That taints the purpose and the function of the economy.

      The psychological effects of extreme debt and the sociological effects of extreme debt are still being studied and worked out, but they’re surely not going to be good for an economy overall.

      • Stewie GriffinMEMBER

        Now “consumers” are a means to an end. A parameter in an equation.

        A very true observation and one that only becomes possible when the ‘consumers’ see themselves as individuals as opposed to members of a society, with mutual obligations (social contract) running back and forth between the individuals and the society within which they reside.

        Attitudes to debt are in reality a function of cultural values and it is interesting to observe the change in cultural values that has occurred throughout the ‘west’ over the past century from one where debt was viewed as a necessary evil to be tolerated, but never supported, best summed up by Andrew Mellon at the commencement of the previous great financial crisis:

        “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate…. It will purge the rottenness out of the system.”

        — Andrew Mellon.

        To one where debt is viewed as a such important function of the economy, and something that should be preserved at all costs and the bail outs that have followed ever since.

        Until people start questioning where these cultural values originate from, and start opposing them, we are doomed to have them continuously propagated and seeded within our society.

        • Jumping jack flash

          “To one where debt is viewed as a such important function of the economy, and something that should be preserved at all costs and the bail outs that have followed ever since.

          Until people start questioning where these cultural values originate from, and start opposing them, we are doomed to have them continuously propagated and seeded within our society.”

          Fantastic! I’m so glad that someone else notices this.

          It goes in cycles. There was the roaring 20’s, after all, and then after that, the depressing 30’s and then after that.. well…

      • We now build societies to fuel an economy, rather then allowing the economy to help build the society we want.

    • Is it time for a brave soul to have a go at an Australian Settlement 2.0?

      Not necessarily the same policies – but at least discussing and enshrining what Australia is to be (beyond an economy). Discuss what size we would like to be; should we have a safety net: what do we want to produce and create; what institutions do we want?

      It seems like a radical notion these days for a government to actually discuss why Australia should exist and what it should actually exist to achieve. But it could be done.

    • Jumping jack flash


      So long as the debt still flows up the pyramid then everyone who matters is happy and instantly rich.

  5. ” Workforce planning is not simply a problem for government ….”

    WTF are government doing getting involved in ‘workforce planning’ (outside of a Communist regime).

    Sure, organise your own bloated army of paper-shufflers, but seriously, get involved in private sector business? When will these chumps realise that they are the problem, not the solution.

  6. I have been pushing hard in my business to get them to set up a Splunk practice. Domestic skills are tight but its not the end of the world and it wouldnt take much to train up a few grads. I put it forward to the business but we have another unit overseas and will just grab some 457’s and solve the problem.