Creating labour exploitation in Australia: A third year for the Working Holiday visa

The Morrison Government’s extension of the Working Holiday program, introducing a third 12 month visa, will give licence to unscrupulous employers seeking profit at the expense of young migrant workers, Australian workers, and employers who pay their workers according to the law. The extension of the visa is simply a copycat provision, mimicked from the worst aspects of the Howard Government’s fourth term.

The Migration Amendment (Working Holiday Maker) Regulations 2019 was tabled in the Australian Parliament on Budget day, 2 April 2019. This followed a compromise brokered in November 2018 by the Prime Minister after denying his Coalition partners, the Nationals, the introduction of a standalone agricultural visa. The Amendment will introduce a third 12 month visa for people who already hold either type of working holiday visa, if they complete six months specified work in regional Australia during their second 12 month visa.

Working holiday visas were introduced in the mid-1970s as Australia sought to promote cultural affinity with similar countries: the United Kingdom, Canada and Ireland. Since then, agreements between Australia and other countries have proliferated and there are 42 agreements in place or being negotiated. The visa allows people under an age limit (traditionally 30, now being increased to 35) to work and travel in Australia for 12 months.

Like many facets of temporary migration visa policy, the Howard Government upended the working holiday program by signing agreements with 17 countries and introducing a work-based incentive for people to acquire a second 12 month visa. By working for 88 days in regional Australia, predominantly in the horticultural and broader agricultural industry, people were eligible for a second visa. As Stephen Howes documents, the number of second 12 month working holiday visas granted went from 2,500 in 2005-06 and peaked at 45,950 in 2013-14. There were just over 36,000 second visas granted in 2017-18.

Since 2006, the working holiday program has became a de-facto work visa, without any associated regulatory oversight. The result has been increasing migrant exploitation coupled with the erosion of labour norms in the horticultural sector. Instead of rectifying this situation by promoting regulated alternatives such as the Seasonal Worker Program, the Morrison Government’s third 12 month visa will expand the opportunity for those employers willing to exploit young migrants.

While the Prime Minister, his Home Affairs Minister, Peter Dutton, and the then Foreign Minister, Julie Bishop, are to be applauded for preventing the introduction of an agricultural visa, the addition of the third year visa for people in the working holiday program will exacerbate exploitation and the erosion of labour norms. People will now need to spend six months in regional Australia working on farms and associated packing centres. More people will give up income just to tack on extra days. More people will pay for forged payslips to escape before six months is up. More people will agree to work for below award wage rates.

The incentive to work for time to spend in Australia undermines the very core of any employer-employee relationship. Instead of wages driving the supply of labour, visa rules are inducing work from migrants. Yet because the horticultural industry has plentiful vacancies combined with low barriers to entry in terms of skills, farmers and processing centres essentially have a monopoly over these migrants seeking another year in Australia. It is difficult to think of a more vulnerable position for a worker than one where there is little competition for employees and where the wage rate is relatively divorced from the choice of who to work for. This is a clear example of government policy creating monopsony power in Australian labour markets, with the result being income moving from labour to capital.

If people who hold a working holiday visa care more about a third year in Australia than the wage they are receiving, certain employers will reduce wages to maximise profit. This exploitation in turn hurts existing workers and those seeking to enter the labour market, as they cannot compete given they seek the minimum award wage (or higher). And perhaps most importantly, this behaviour spreads and is then institutionalised as employers who seek to do the right thing are now faced with a higher relative wage share. These employers will face difficulties competing in supply chains, as well as lower overall profits.

Based on current trends, if one in four people eligible for this visa seek to apply by working for six months in regional Australia, an additional 9,000 people will be induced into these labour markets. These people will be among the most vulnerable workers in Australia: relatively isolated in regional and rural areas, working in an industry where employers trade on visa eligibility instead of income. In addition to these 9,000 people, the third visa will induce additional people to Australia in the future on working holiday visas, who would’ve otherwise not arrived.

Ever since August 2015 when the joint ABC-Fairfax investigation into 7/11 was published, exploitation of migrants holding temporary visas in the labour market has become a mainstream political issue. Yet despite this, the Morrison Government’s copycat working holiday provisions will further cement exploitation in the Australian labour market.

There are 14 Parliamentary sitting days left for 39 Senators to vote for a motion to disallow the Amendment and prevent additional exploitation. Labor, the Greens and Centre Alliance makes 37, effectively placing One Nation as the decisive voting bloc to remove the third year visa from the working holiday program. I view this as highly unlikely given the support working holiday visas have from the farming sector and the vocal opposition that would arise if the Senate tried to undo these changes. That said, the Amendment will undoubtedly increase the number of temporary migrants in Australia, something Senator Hanson has spoken against unceasingly since re-entering the Senate in 2016.

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