Bob Kinnaird. 750,000 temporary residents with work rights.

Oct 9, 2015

The recent Fairfax/ABC Four Corners reports exposing widespread exploitation and wage abuse of overseas students and other visa workers in 7-11 stores, horticulture and other sectors have been justly applauded as outstanding examples of investigative journalism.

Their impact has been immediate, forcing 7-11 to set up an independent investigation panel chaired by Alan Fels and 7-11 chairman Mr Russ Withers to resign.

The latest Fairfax report was titled ‘The Precariat’ (SMH, 3 October 2015). The term combines ‘precarious’ and ‘proletariat’ and was coined by British economist Guy Standing. It means broadly workers reliant on transitory and insecure work, though not necessarily low-skill.

The government’s response to the scandal so far has been underwhelming. This is strange, since Trade Minister Robb says that two ‘super-growth’ industries for Australia’s economic and jobs future are international education and tourism. Both are indirectly implicated in the exploitation scandals in 7-11 and elsewhere. A prudent government would do more to secure their long-term future.

Senator Cash In her new capacity as Employment Minister in the Turnbull government declared there was no need for government regulation of the labour hire industry, one of the central players in this sordid scene: industry self-regulation was her preferred way.

As Assistant Immigration Minister she had earlier announced that three months ‘volunteer’ (i.e. unpaid) work by working holiday 417 visa-holders would no longer qualify them for a second-year 417 visa. That long-overdue correction was a reaction to an earlier ABC Four Corners program on mainly Asian working holiday makers being exploited in the fruit and vegetable sector.

The Fairfax ‘Precariat’ report points out that the end of last year, Australia was host to 750,000 foreigners on temporary visas with some work rights, mostly on student, working holiday and 457 skilled visas. Another 470,000 people were here on visitor visas, largely for tourism. Technically they have no work rights but many do work unlawfully.

This 750,000 figure actually understates the size of the temporary visa workforce because it is a snapshot at 31 December when many temporary visa-holders go home for the work shutdown or summer break and are outside Australia at this time. In June 2014, the figure was 840,000.

Alongside the foreign worker exploitation issue, two related issues need attention. The first is the impact on Australian workers especially young people who bear the brunt of cut-throat job competition from the burgeoning temporary visa-holder work force. Between June 2007 and 2014, the number of overseas students and working holiday visa holders in Australia grew by 50 per cent, from 324,800 to 490,960.

Expressed as a proportion of the 15-24 year old labour force (June 2007 vs 2014, latest available), the stock of WHMs and overseas students has grown from 16 per cent to 24 per cent of the total youth labour force in Australia.

Most of these temporary visa-holders are young people and compete in the entry-level job market. Not all work, but most do.

The impact on young Australians is clear in many indicators: declining labour force participation rates among young people, rising youth unemployment and underemployment, increasing unemployment rates among new graduates and many others.

Competition from the growing temporary visa work force is not the only factor responsible. Increased participation rates in higher education and some welfare disincentives to work also contribute, among other things. Successive governments have failed to commission any serious study of the labour market impacts of this recent explosive growth in this temporary visa workforce. But this level of growth in labour supply is bound to have major impacts especially in times of sluggish employment growth, even before considering the characteristics of the additional labour.

The second issue is the role of government international education and visa policies that are feeding the growth in Australia of a vast underclass of temporary visa holders desperate for work and ripe for exploitation.

These policies need to change or the already large underclass of temporary visa workers will grow even larger, if international education and tourism do become Australia’s super-growth’ industries.

International education and visa policies

The two most serious examples are international education and visa policies for overseas students and graduates. Working holiday visas are also another serious area, not dealt with here.

When Australia’s international education industry started in the mid-1980s under Labor, overseas students had no work rights in Australia. The target market was foreign students whose families were wealthy enough that their fee-paying sons and daughters didn’t need to work in Australia to survive. They were also in university study only, not low-rent private vocational colleges.

Over time the government’s international education policies have changed dramatically. They now increasingly target overseas students from families with far less wealth and resources especially in the vocational education (VET) sector. Many go into debt to fund their Australian study and hope for a long-term employer-sponsored 457 visa or permanent residence (PR) visa. Many of these students need to work for much of their time here just to survive or send money back home, and are prepared to work for $6/hour or less. Some even pay their employer for the job, to secure 457 employer sponsorship or employer certification of ‘work experience’ needed for some visas, as reported in a Monash study I co-authored with Bob Birrell and others (‘Cooks galore and hairdressers aplenty’, People and Place, 2007).

Over time the government has also expanded work rights for overseas students and graduates to give Australian international education providers a marketing advantage over other competitor destinations. What is being sold here is not the quality of the education offering but the right to work in Australia.

The work rights on student visas now are 40 hours a fortnight during term and unrestricted hours the rest of the year.

The most important recent development is the post-study work visa (485 visa) introduced by the former Labor government. This visa now gives overseas student graduates from higher education degree courses, in any field of study, unrestricted work rights in Australia for 2 to 4 years, depending on the qualification level. The vocational education (VET) sector is lobbying hard for the same post-study work visa. It is probably just a matter of time before they succeed. At present overseas student VET graduates can only get a more restricted 485 visa, limited to courses in occupations on the government’s skill shortages list and only for 18 months.

The Immigration department says it expects 70 per cent of eligible overseas student graduates to take up the post-study work visa – a massive 200,000 by 2017-18, regardless of unemployment among Australian graduates whose numbers are set to grow rapidly at exactly this time, a result of policy-driven increased enrolments in the last five years or so.

All overseas students and the graduates on 485 post-study work visas compete in the labour market with no legal obligation on employers to give preference to young Australians or to undertake labour market testing. Many overseas student graduates on 485 post-study work visas will end up competing in the lower-end of the job market, if UK experience with a similar program is any guide. That means even more pressure on young Australians with low skills looking for entry-level jobs.

Incredibly, none of these extensions of work rights to overseas students or graduates including the post-study work visa has ever been based on any serious assessment of the impact on Australian residents in the job market. The Knight review, which recommended introducing the post-study work visa, completely ignored its potential labour market impact on local graduates and non-graduates.

The main policy driver, as always, is to grow the international education sector and increase overseas student numbers and revenue. Governments like this, because it takes pressure off their education budgets. Business likes this, because it means a larger domestic market for their products and services, increased labour supply and downward pressure on wages.

The policy changes needed are clear but unlikely, given the institutional resistance and vested interests.

First, Australia’s international education policies should not be targeting relatively poor overseas students for onshore course delivery in Australia. Onshore provision should be targeted more to high-yield/high fee courses and well-funded students, not at overseas students so poor they have to work 40 hours/fortnight just to stay alive. If this segment is to be targeted, more emphasis should be given to providing courses offshore.

Second, the overseas student graduate post-study 485 work visa needs a complete rethink. The timing is bad enough, coming into operation just as the Australian economy faces several years of below-trend growth, with no visa mechanism for protecting Australian graduates and job seekers. The number of 485 visas is not limited in any way and will be determined simply by graduate demand for them.

At the very least, the visa should be restricted to graduates in occupations on the skill shortage list.

Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.



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