Wage theft is a design feature of Australia’s temporary visa system, a report from the Migrant Workers Centre shows, in which uncertainty about residency is a key driver in exploitation.
The survey-based report shows that 65% of workers on temporary migration visas have suffered wage theft, and 25% some other form of workplace exploitation.
It also shows a high level of incomprehension about Australian workplace laws among temporary visa holders: 50% had never heard of penalty rates and more than a third had never heard of most of the basic ideas behind industrial relations legislation like workers’ compensation.
What the report also explores is how visa uncertainty is crucial in enabling worker exploitation.
There is a dramatic difference in wage theft levels between temporary workers on a pathway to permanent residency, and those without any pathway: “The survey results show a positive correlation between migrant workers’ original entry visa types and their experience of exploitation … 90.9% of migrant workers who experienced wage theft in Australia had originally arrived with a visa with no pathway to permanent residency such as Student or Working Holiday visa.”
In contrast, just 9% of wage theft victims had arrived on some kind of pathway visa.
The result — if not the sheer size of the disparity — is unsurprising: workers without a ready path to permanent residence are less likely to remain in Australia to report their exploitation, and those on pathway visas and not reliant on employers to keep them on so they can remain in Australia are more likely to stand up for their rights, move jobs to avoid exploitation or gravitate to better-paid professions. This disparity in exploitation isn’t affected by education levels: employers will exploit both well-educated and poorly educated employees without visa certainty.
The report is another step in our understanding of wage theft: it is not a flaw in the existing system that has been widely exploited by employers, but a design feature that has enabled Australian employers to increase profits and suppress wages. Consider the extent of wage theft:
- The remarkable diversity of organisations involved: large retail employers Bunnings, Target, Super Retail Group, 7-Eleven, Subway and Ampol; the Commonwealth Bank, NAB, Westpac, the ABC, Monash, Melbourne, UNSW and Sydney universities; prominent law firms, prominent restaurateurs; Crown, a host of smaller retailers, NGO Red Cross, Optus, IBM, Telstra, Regis Healthcare, the Australian Sports Commission;
- The Fair Work Ombudsman (FWO) announced last week it had started legal action against Coles, claiming it had underpaid 7500 employees a total of $115 million between January 2017 and March 2020; that follows the FWO taking Woolworths to court in June over its $390 million (including interest) underpayment of staff; the Finance Sector Union today revealed it will launch a major court action against NAB in relation to wage underpayment and unpaid overtime
- The amount repaid by major companies and organisations to workers in recent years is over $1.1 billion. This doesn’t include wage repayments forced on smaller firms by the FWO, which last year reached $150 million, nor systemic wage underpayment in the construction and notorious horticulture sectors
- According to the ACTU in a 2020 submission, “estimates from accounting firm PwC suggest underpayment affects as much as 21% of employees in high-risk industries such as construction, healthcare, retail, accommodation and food service, and as much as 13% of the total workforce. Construction is the biggest risk area, with as much as $320 million in annual underpayment of wages, according to the modelling of Fair Work Ombudsman data”
- Nearly 90% of job ads in foreign languages specified below-award rates of pay, according to a Unions NSW survey
- A South Australian parliamentary committee report released last week concluded “wage theft was found to be pervasive across South Australia among vulnerable cohorts of workers … wage theft has become the basis of a business model.”
In industries where high levels of underpayment occur, that flows through to employers committed to doing the right thing by workers, who may continue to pay legal rates of pay but be reluctant to offer wage increases for fear of becoming less competitive with other employers who steal wages.
The steadily mounting evidence shows that Australia’s economic history of the last decade must be re-evaluated: wage theft has not been an incidental, occasional feature of the industrial relations system, but a key, intentional characteristic of Australian industrial relations that has had a significant positive impact on corporate profitability and significant negative impact on household income, directly through lower wages and indirectly through pressure on wage growth.
For some sectors of the workforce — younger people, specific industries and temporary migrant workers — wage theft is a standard fact of working life. And the migration system is specifically designed to increase precarity and uncertainty, making workers more vulnerable to exploitation.
Given the role played by poor household income growth in Australia’s tepid economic growth prior to the pandemic, any economic policy or analysis that fails to recognise wage theft is a design feature of the Australian economy is wilfully blind.
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