Three months ago, the Grattan Institute released alarming research showing the rapid expansion of migrant workers across the Australian economy, which Grattan labelled “predominantly low-skill migration”. Grattan also noted that many of these workers appear to work for below-market rates, and that this is having a detrimental impact on the wages of younger and lower-skilled Australians:
FWO investigations suggest that underpaying of low-skill migrant workers is widespread… many migrants work for much less than minimum wages…
Once underpayment takes hold in a material minority of cases in a particular labour market, it can change how other employers behave… they pressure all the other employers in the industry to do the same – and to underpay non-migrants as well…
About three quarters of net migrants to Australia today are not high-skill, at least when they arrive… The stock of temporary students remains relatively low-skill…
Low-skill migrants might also put downward pressure on wages (if accurately measured). The measured wages of those aged 20 to 34 have not risen as fast as the wages of older workers for some time (Figure 7)…
Australia is now running a predominantly low-skill migration system. People from this system form a material proportion of the younger workforce. Because of visa conditions, many of these migrants have incentives to work for less than minimum wages, and there is anecdotal evidence that many do…
Today, Unions NSW secretary, Mark Morey, claims that 80% of migrant workers are being paid below the minimimum wage:
Unions NSW secretary Mark Morey said a significant percentage of migrant workers were being exploited by employers, with research showing 80 per cent were being paid below the legal minimum…
Mr Morey said workers were not exercising their industrial rights because “they are afraid of what will happen under immigration law”.
“The dark reality of the Australian economy is there are two labour markets. If you are a foreign student, refugee or migrant on a contingent visa, you can’t complain about exploitation without being gripped by the threat of deportation,” he said…
Mr Morey said the interaction of workplace and immigration laws “deeply compromises a worker’s capacity to stand up for decent wages, safety, superannuation or penalty rates”.
“Foreign students visas, for example, allow only 20 hours worker per week, pushing the visa holder into black market employment to survive,’’ he said.
“We know migrant wage theft is flourishing in this country. All too often the people delivering our meals, washing our dishes or cleaning our offices are illegally paid below the award minimum.”
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Nothing we don’t already know. It also helps to explain why income growth across Australia has virtually disappeared as cheap labour supply continues to run way ahead of demand:
The bigger question is: when will Australia’s union movement stand up for Australian workers and demand deep cuts to Australia’s immigration program, which is currently running at around triple the historical average?
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Because wage growth will never recover with cheap foreign labour continuing to flood Australia’s labour market.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
