Labor to lift skilled migrant pay floor from ludicrous to ridiculous

While undoubtedly much better than the Coalition, the Labor Party also continues to fail Australian workers, promising a ridiculously low wage floor for temporary skilled workers of only $65,000 a year. From The AFR:

Bill Shorten will announce today that the minimum wage for workers on a 457-style visa – known as a Temporary Skilled Migration Income Threshold – will be increased from the current level of $53,900 to $65,000… indexed annually…

“When businesses use overseas workers as a cheap replacement for local workers it it contributes to wage stagnation,” Mr Shorten said…

Labor says the scheme is still being exploited and has already proposed tighter labour market testing, higher fees for using temporary foreign labour, and further limits to the eligible range of occupations…

Here’s more via The Guardian:

In a statement, Shorten and the shadow employment minister, Brendan O’Connor, said the fact the rate had been frozen since 2013 had eroded Australians’ job protection because “it has become cheaper to bring in an overseas worker than pay a local worker”.

“Around four out of five temporary skilled worker visas are granted for occupations where there is no shortage of skilled workers in Australia – this needs to change,” they said.

Labor would legislate to establish an independent Australian skills authority to restrict temporary work visas to jobs where there was a genuine skills shortage.

Labor would also crack down on under-qualified temporary workers by using registered training organisations to test workers before a visa was granted rather than relying on an immigration department assessment.

“These reforms improve fairness, equity, level the playing field for Australian workers, and protect jobs and wages,” Shorten and O’Connor’s statement said. “Only Labor has a plan to crackdown on 457-style visa rorts, ensure local workers are given the first shot at local jobs and invest in skills and training.”

The salary floor for Temporary Skills Shortage (TSS) visas has been frozen at a pitifully low $53,900 since 2013-14, which is $32,700 below the current average full-time Australian salary of $86,600 (comprising both skilled and unskilled workers). It’s also well below the median full-time wage of $68,620.

Joanna Howe, Senior Lecturer in Law at University of Adelaide, explained the ramifications of this TSS wage floor in the recent book, The Wages Crisis in Australia:

This crisis has been precipitated by the federal government’s decision to freeze the salary floor for temporary skilled migrant workers since 2013… the government has chosen to put downward pressure on real wages for temporary skilled migrants, thereby surreptitiously allowing the TSS visa to be used in lower-paid jobs…

This salary floor is called the Temporary Skilled Migration Income Threshold (TSMIT). TSMIT was introduced in 2009 in response to widespread concerns during the Howard Government years of migrant worker exploitation…

In effect, TSMIT is intended to act as a proxy for the skill level of a particular occupation. It prevents unscrupulous employers misclassifying an occupation at a higher skill level in order to employ a TSS visa holder at a lower level…

TSMIT’s protective ability is only as strong as the level at which it is set… But since 1 July 2013, TSMIT has been frozen at a level of A$53 900…

This means that the TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker. This begs the question — is the erosion of TSMIT allowing the TSS visa to morph into a general labour supply visa rather than a visa restricted to filling labour market gaps in skilled, high-wage occupations?..

Put simply, temporary demand for migrant workers often creates a permanent need for them in the labour market. Research shows that in industries where employers have turned to temporary migrants en masse, it erodes wages and conditions in these industries over time, making them less attractive to locals…

So the failure to index the salary floor for skilled migrant workers is likely to affect wages growth for these workers, as well as to have broader implications for all workers in the Australian labour market.

Given the above, it is not surprising that actual pay levels of ‘skilled’ migrants in Australia is abysmally low.

According to the ABS’ most recent Personal Income of Migrants survey, the median employee income of migrants under the skilled stream was just $55,443 in 2013-14.

In a similar vein, separate ABS data revealed that Temporary Work (Skilled) visa holders earned a median income of only $59,436 in 2016.

While Labor is 100% correct in tackling the skilled migrant rort and raising the wage floor, why has it chosen a level ($65,000) that is still $21,600 below the average full-time Australian salary of $86,600, and $3,620 below the median full-time wage, both of which comprise both skilled and unskilled workers?

Why hasn’t Labor promised a wage floor that, at a minimum, matches average full-time earnings and preferably exceeds them? These are supposed to be ‘skilled’ workers after all.

Because under Labor’s policy, employers will continue to reach out for cheap foreign workers en masse instead of employing and training locals, and will continue to undermine wages.

unconventionaleconomist@hotmail.com

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