Neoliberals can’t CEDA wood for the trees on exploitation

The Committee for the Economic Development of Australia (CEDA), once a well-regarded institution for independent economic thought, appears in danger of disappearing down a neoliberal rabbit hole.

It recently spruiked one of those risible “international competitiveness indices” and today has produced a report calling for the expansion of temporary migration. For those interested in the debate on wage stagnation, it makes for interesting, though not enlightening, reading.

The report starts off as a useful explainer from Henry Sherrell about the size and nature of temporary migration, and how it interacts with permanent migration, with some basic numbers around temporary workers, working holidaymakers and the dominant temporary migration category, foreign students, the numbers of whom have nearly quadrupled since the mid-1990s. And in the view of CEDA, the huge increase in temporary migration is a good thing.

“[T]emporary skilled migration has been an overwhelming net positive for the Australian economy, enabling skills shortages to be filled and contributing to the transfer of new knowledge and experience to Australian workers,” CEDA concludes. “Australians need not feel anxious about the impact of temporary skilled migration on their jobs.”

In a rebuke to those who have linked migration to lower wages growth, CEDA says: “contrary to some concerns, recent waves of migrants have not had an adverse impact on the wages or jobs of Australian born workers”.

Indeed, so good is temporary migration that CEDA wants a number of restrictions on it removed: the process for identifying eligible occupations for skilled visas should be made more business-friendly, the requirement for labour market testing that applies to employers wanting to bring in temporary workers should be dropped, intra-company transfers should be made easier, and adjusting the Skilling Australia Fund Levy that applies to temporary worker visas to reduce the impact on business.

Taken together, the package would likely lead to a significant increase in temporary workers, with business facing fewer hurdles to bringing in workers regardless of whether local workers were available or not.

CEDA relies on an academic study from 2015 to assess the impact of migrants on wage and employment outcomes. It concluded:

Overall, we find no evidence that the labour market outcomes of Australian-born workers are negatively related to immigration. If anything, there is some evidence for small positive associations. However, these associations are economically small and only just statistically significant, so the evidence is scant.

Missing from CEDA’s discussion — from the entire paper, actually — is any study of the problem of rampant wage theft and the systematic targeting by employers of temporary workers — whether on temporary worker visas, working holidaymakers or foreign students.

All three groups have featured prominently in recent major scandals involving underpayment of wages or other forms of worker exploitation.

The Fair Work Ombudsman’s Harvest Trail inquiry revealed over half of the 638 employers in the horticulture industry investigated by the office were breaching workplace laws, including over 40% underpaying or not paying workers, and/or failing to keep proper records.

Around two-thirds of employers investigated used temporary workers, mostly working holiday visa holders. The FWO’s ongoing investigations of wage theft over the last two years — which show around a quarter of small and medium businesses investigated are ripping off their workers — routinely involve either foreign students or working holiday visa holders being underpaid, with employers relying on the youth and visa status of their victims to get away with breaking the law. Some of the biggest wage theft scandals — 7/11 and Caltex — primarily involved visa holders, particularly foreign students.

It’s noteworthy that CEDA’s report focuses primarily on skilled worker visa holders, not the far more widespread foreign student and working holiday visa classes, to declare that “in some cases, an increase in migrant concentrations in certain levels of qualification and experience is associated with a positive impact on wages and employment.”

The issue of wage theft is not mentioned once anywhere in the report, despite the strong links between temporary workers and underpayment and other forms of exploitation, and the extraordinary extent of wage theft, especially among small and medium business.