Tue Jun 6

Labor plans to stamp out the exploitation of migrant workers, but it won’t succeed until we treat it like tax avoidance

Written by Brendan Coates, Program Director, Economic Policy, Grattan Institute

The exploitation of migrants is widespread in Australia. Our recent report for the Grattan Institute, Short-changed ^[1], found that as many as one in six migrant workers are paid less than the national minimum wage, which is meant to be the least a worker in Australia can be paid.

Underpayment is also a significant problem for preexisting workers – we estimate that between 3% and 9% of all employees are paid less than the minimum wage – but it is far more common among migrants.

Migrants are also more likely to miss out on their superannuation, overtime and paid leave. Some face unsafe workplaces and sexual harassment.

Now the Albanese government is acting. Today, Immigration Minister Andrew Giles announced a package of reforms ^[2] to help stamp out the exploitation of migrant workers. We think it will help, but alone it’s not enough.

Protections for temporary visa holders

Many temporary visa holders put up with mistreatment out of fear their visas will be cancelled if they are working in breach of visa rules, or that they will lose their pathway to permanent residency.

That’s why the government will strengthen the assurance protocol ^[3], which is supposed to protect exploited workers against the risk of their visas being cancelled.

The existing protocol has rarely been used, only 77 times in the past four years, because it can be invoked only at the discretion of the Fair Work Ombudsman, and many migrants and their lawyers don’t trust the process.

Fair Work Ombudsman Sandra Parker: few uses of the assurance protocol. Mick Tsikas/AAP

The strengthened protocol will make access to those protections a legal right.

The government also plans to pilot a new whistleblower visa ^[4], which will enable migrant workers to stay in Australia while they pursue an exploitation claim.

And temporary skill-shortage visa holders will get up to 180 days to find a new employer before their visa lapses, instead of the current 60 days, making it easier for migrants to flee from an exploitative employer.

The government will also increase protections for exploited migrants reliant on their employer for a future visa.

Action against employers

When it comes to employers, the government will empower the Australian Border Force with more funding, higher penalties and new compliance tools to target those that exploit migrant workers.

New laws will make it a criminal offence to coerce someone into breaching their visa condition, and employers found to be exploitative will be banned from the future use of temporary visas.

These reforms are a good step, but the government is yet to act on visa rules that encourage the exploitation of working holidaymakers.

We believe the rules that force working holidaymakers to work in regional areas in order to extend their stays ought to be abolished. Instead, working holidaymakers should be limited to a single one-year visa, which is what Australians are usually entitled to overseas.

And we would like the government to commission a review of international higher education in Australia, with a view to identifying ways of weeding out dodgy course providers and relax the fortnightly cap on students’ work hours.

But we need to treat it like tax avoidance

Underpaying workers seems to have become an accepted way of doing business in Australia. Until we treat underpayment as seriously as we treat, say, tax avoidance, it is likely to continue.

Last year, the workplace cop on the beat – the Fair Work Ombudsman – hit employers who underpaid their workers with a total of just $4 million in penalties.

By contrast, the Tax Office collected $3 billion in penalties from people who didn’t pay their taxes.

Imagine how many fewer workers would be exploited if we were as tough on employers who underpay their workers as we are on people who cheat on tax.

It’s little wonder that so many businesses regard underpaying their workers as an easily affordable cost of doing business.

The government ought to give the Fair Work Ombudsman the powers and budget necessary to properly hunt down and weed out bad-faith employers.

Courts should be able to issue much bigger fines to bosses who underpay their workers. Employers who knowingly exploit their workers should face jail time.

Funding for the ombudsman has fallen in real terms since 2010, while the Australian workforce has grown 25%. We reckon the ombudsman’s annual budget ought to be increased by $60 million a year, so its resources per worker return to where they were in 2011-12.

And the ombudsman needs a new name – we would call it the Workplace Rights Authority – to make it clear that Australia is going to be tough in protecting vulnerable workers.

The reforms to tackle migrant worker exploitation are a big step in the right direction. But until we take exploitation more seriously, it isn’t going to stop.