Half of Australian temporary visa holders underpaid

The latest Department of Home Affairs quarterly visa data reported another increase in the number temporary visas on issue, hitting a record high 2,260,000 in trend terms in the year to June 2019:

As noted last month by the Grattan Institute, an increasing proportion of immigration into Australia is relatively low-skilled, with many of these migrants working below minimum wage, thus dragging down overall wage growth across the economy:

About three quarters of net migrants to Australia today are not high-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…

On Friday, The SMH reported on a speech by Professor Alan Fels, who claimed that around half of temporary migrant workers were being underpaid, and that this was contributing to the Australian economy’s stubbornly low wage growth:

“Once it was maybe just a small number of people who were being underpaid but there’s enough data to say that there are several hundred thousand currently being seriously underpaid,” [Professor Fels] told the Melbourne Press Club this week.

Professor Fels chaired the Migrant Workers Taskforce, which was established after the 7/11 fast-food chain underpayment scandal in 2015. Professor Fels’ inquiry found that up to 50 per cent of temporary migrant workers may be being underpaid.

He said the scale of underpayment was having the effect of slowing the pace at which wages grew across the country.

None of this is new. The 2019 Report of the Migrant Workers’ Taskforce that Professor Fels chaired 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”.

In a similar vein, 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”.

Whereas yesterday’s open letter from academics claimed modern slavery is rife amongst temporary migrant workers:

In 2015, Four Corners revealed that food was being picked, packed and processed by exploited workers and sold nationwide, including by supermarkets and fast food chains.

It exposed crime syndicates acting as labour hire companies, selling migrant labourers to work at cut prices. They were paid as little as $3.95 an hour, worked 22-hour shifts, slept on dog beds, and some were forced to perform sexual acts to extend their visa.

In 2018, the Fair Work Ombudsman released a five-year study detailing conditions experienced by seasonal harvest workers in Australia. It completed 836 investigations, involving 444 growers and 194 labour-hire contractors. It recovered $1,022,698 for 2503 employees, but it believes the full extent of underpayments is significantly worse…

Hundreds of thousands of people enter Australia on temporary visas each year, and many others are working here having overstayed their visas.

Migrant workers are vulnerable of falling victim to modern slavery because they often have limited English skills, lack knowledge of labour rights – which are often limited because of restrictive visa conditions, and they frequently find themselves in financially precarious conditions…

The fact of the matter is that the massive increase in temporary visas has entrenched entire industries into becoming dependent on cheap migrant workers to perform low-skilled jobs.

The widespread abuses uncovered across the franchising sector (e.g. 7-Eleven, Domino’s and Caltex), hospitality, farming, construction, food processing and supermarkets, among other areas, is bonafide evidence that Australia’s visa system is broken and in desperate need of an overhaul.