Alan Kohler: Immigration reboot a deliberate wage killer

Alan Kohler has penned a terrific piece in the New Daily lambasting the federal government for deliberately undermining Australian workers by importing huge numbers of temporary migrant “slaves”. He also calls immigration policy “the most material economic decision to be made by whoever wins the next election”:

Scott Morrison’s can-do capitalists can’t really do wage rises, not for the past decade anyway.

And now they’re demanding to get their imported ‘slaves’ (aka temporary visa holders) back again, to put a lid on wages.

There have been times when wages went up a lot in this country, notably in the 70s and late 80s, brought to a halt by the Accord of 1983 and the recession of 1991.

Then came John Howard in 1996 and the permanent fix of temporary migrant workers.

Now we are about to enter the 10th year of real wage stagnation in Australia – wages minus inflation per worker have been unchanged since 2012. That has meant that real household disposable income has also stagnated…

Unsurprisingly, the cancellation of immigration as a result of the pandemic is starting to put some upward pressure on wages, evident in yesterday’s figures from the ABS.

But now farmers and businesses are demanding to let the foreign workers back in on temporary visas so they don’t have to pay Australians more to pick fruit and wash dishes.

So the question of what happens to wages, inflation, interest rates and therefore the economy as a whole will now largely come down to how quickly the levels of permanent and temporary immigration are restored to where they were, especially temporary visas…

Howard’s ‘optics’

John Howard introduced 457 temporary work visas soon after becoming Prime Minister in 1996 and then doubled the overall net migration in 2005.

Both of these acts were industrial strategies specifically designed to suppress wages…

It worked. By 2016, close to half a million temporary workers were in Australia at any one time, creating a pool of labour that drove wages down…

It was a brilliant strategy that led to a huge transfer from wages to profits, but it came to an abrupt halt last year when the Morrison government simply closed the borders…

Now restaurant owners are complaining that dish washers are demanding $50 an hour. Naturally, they want the ‘slaves’ back.

The RBA governor, on the other hand, would rather wages went up some more.

This is the most material economic decision to be made by whoever wins the next election.

Tellingly, Prime Minister Scott Morrison himself has delayed rebooting immigration until after the upcoming election because he is concerned that it would suppress wage growth:

The Morrison government is resisting calls by business and others to expedite the migration intake between now and the federal election amid fears that such a move could hamper wage growth…

[He] believes opening the floodgates on migration to make up for the pandemic years would suppress wage growth…

Although the government is not ruling out a longer-term approach to tackle the migration challenge, there is no appetite to move before the election. Right-wing parties such as One Nation are opposed and flat wage growth has been a political problem.

Even The Guardian’s immigration defender, Greg Jericho, admits that opening the border to immigration will suppress wages:

The particularly strong growth in sectors facing labour shortages shows that wages are doing what they should – reacting to demand and supply. But once the borders open and those shortages become less acute you would expect wages in those particular industries to moderate.

Anyone still trying to claim immigration does not hold down wages is either delusional or a shill. Everyone else knows the truth.

Unconventional Economist
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Comments

  1. Craig Thompson appears to have made $2M out of ~130 fake work visa applications. That’s about $15k per application.
    I wonder how much the employers make from their work visa slaves.

      • Economics of fraudelent visasMEMBER

        Pay them 10 an hour instead of minimum wage of 25 an hour per year (and live 8 in a container fruit picking they pay 200 a week for board). Save 25 K a year , so 15K for a visa payoff not so bad.
        Why would the poor guys still want to come ? – One answer is the average wage in Nepal is 1K per year or Vietnam, 4k a year in India, and then there’s the promise of a PR in 2 years.

        The employer soon saves enough to get a Bentley.

        • Spoke to a cab driver who is a qualified accountant from Australian University and according to him he is better off riding uber, pay and get fake accounting experience for immigration purposes.

    • What’s surprising is that he’s been charged for this. Surely this activity goes on all the time and it’s well understood that it is not to be policed?

      What has Craig done to upset those in power?

      • Strange EconomicsMEMBER

        This sends a message just to ex Labor politicians, no one else.

        Why would he need to do this when it was open slather for exploited fruit pickers only.

        Then back to Lower wages for workers, more profit for the winging owners
        (who somehow still are affording waterfront mansions despite their suffering)

        Anyway,
        ScoMos “read my lips” promise of mass immigration again after the election, will save the apartment real estate market, even if the apartment is empty now. Just got to hang in there one more year, negative gearing to help you keep the price up.

  2. The trouble is given the mediocre products that we sell our cost structure was way too high except for driving haul trucks. So after a decade of stagnant real wages is the Oz wage structure now competitive on a global basis even at 70c XR? I’m assuming not cause of other high input costs eg wharf costs, stupid housing/land costs, energy prices have only got worse!

      • Display NameMEMBER

        It is the politicians and senior public servant salaries that are truely world leading in Australia. They are the new leaners.

        Head of Australia Post paid 10 x’s the US equivalent for an organisation < a tenth the size. Lots of examples if you look for them

    • Far out, best comment today since the top Reddit comment on Xi’s claim that ‘China has never taken one inch of land from other countries’. That pearl of a comment being “That’s what Xi said”

      Thankyou and goodnight.

  3. Wages are already inflating in countries like US and UK.

    So, why would overseas wage slaves come to work in Australia when they can get more in the US and UK?

    • Er – Because you get citizenship almost automatically from an unskilled job in a country with good schools, public hospitals, and social welfare (none of which is the case in the US)

  4. This issue is too public now.
    Population Ponzi works when the frog is boiled quietly with lots of bait and switch.
    I don’t think it will be as easy to restart without a real backlash this time given the last 18 months.

    My point is illustrated by Scummo being careful on this issue. He knows he can’t be too public on it. Scummo has an election to win, he at least needs to be seen to be interested in wages until that point… Then the fvkr will let it rip if he wins.

    • The ‘Population Ponzi’ is a myth, it’s a FIRE Ponzi created on the back of ageing baby boomer ‘bubble’ investing in property as it always goes up in price (but not value)…. so inflating asset values (in nominal terms). Meanwhile, a bunch of charts and graphs are simply a bunch of charts and graphs making anti-immigrant sentiments seem scientific…. like climate science denial (often blames ‘immigrants’ or ‘population growth’ via eugenics based tropes from 18thC).

      Australia is not unique in having increasing dependency ratios, our permanent working age population, like elsewhere, is declining vs. increasing retirees; temporary churn over and employee mobility have been the solution, but presented as an ‘environmental hygiene’ issue.

      There are plenty of examples of what happens in regions (inc. Oz), nations or states with ageing populations, no permanent nor temporary migration, youth and working age emigrate, then community infrastructure declines….. end up with unliveable ghost towns, and impaired environment (as no longer managed).

      • yeah, nah.
        The whole FIRE thing relies on more warm bods (from overseas) for 3 things.
        1) supress wages thereby minimising interest rates
        2) provide people to rent places from investors
        3) support the narrative that prices will always go up because of demand.
        4) provide customers for Westpac to give liar loans to buy Tarniet house and land packages/inner city apartments.
        Without high immigration the whole thing falls over.

      • “Dependency ratio” is a crock.

        What matters is whether we can produce enough stuff to support ourselves, not how many taxpayers there are.

  5. Old c00ts protecting us from old c00ts. First they cause this mess then they come to save us from themselves. How nice of them. Not good enough. Sack him.

  6. Sounds like the media are demanding foreign workers back asap, as the PM said on the news, (in an annoyed manner) that they’ll be back as soon as next month.

  7. Well so it took covid to move immigration to an economic issue from a racial issue. Gone are all the lefty voices when their own house is on the line. Funny how inflations puts a lot of things right.. this low interest rate policy has caused a lot of distortions in the last 10 years.

  8. Kohler might re-think all this honest journalism when SComo pulls his ABC news contract? Surely ScoMo must be giving it some serious thought… if he peddles this narrative out during the 7pm news I’d say its a done deal!