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Issue #1444      24 February 2010

457 visas:
Free trade in human capital

When the Howard government introduced its Section 457 visa scheme in 2003, employers were supposed to fill gaps in the labour market when they could not find local labour. Workers from overseas were sponsored by employers to fill nominated positions in Australia. The scheme was rife with abuses by employers and when Labor came to office it initiated a review and made some modifications to address some of its worst features. Labor has now extended the scope of the 457 visa scheme, dropping the requirement that employers must first test the local labour market before offering jobs to overseas workers.

Labour market and migration specialist Bob Kinnaird, in a report commissioned by the Construction, Forestry, Mining and Energy Union (CFMEU), said that the Rudd government “goes further than even the Howard government’s position’’.

The Howard government saw the scheme as a means of undermining wages and conditions and de-unionising workplaces. From its inception, trade unions warned of the scheme’s potential for abuse by employers and their worst fears were confirmed.

Workers were held hostage by employers, working for pittance wages in unsafe working conditions and in some cases holed up in substandard accommodation. Many were promised high wages but when they got to Australia were faced with a very different reality with some employers forcing them to sign new, inferior contracts on arrival or be sacked.

They were in a very precarious situation. If they resisted they were sacked. This left them with 28 days to arrange a new sponsor employer which was not easy considering all the bureaucratic processes involved. They were not eligible for unemployment benefits under Centrelink.

The workers were not eligible for Medicare, where employers were supposed to insure them but in practice the coverage was not up to scratch and workers were left with large bills.

Conditions in some workplaces were appalling; there were deaths and injuries as well as gross underpayment. When Labor came to office the program was reviewed and some of its worst features addressed. But now, the Rudd Labor government is allowing employers to bring in overseas labour without first testing the local market.

The trade unions fought hard to uncover the extreme exploitation of 457 visa employees and to assist them. They thought they had made some progress under Labor until the government opened up the scheme, leaving employers free to hire without first checking for locals.

CFMEU general secretary John Sutton, warned “employers seeking cheap, contingent labour from overseas will jump all over the changes…. Without that genuine labour market testing, they can just assert that they want foreign workers without having to prove the need.’’


John Sutton

In 2008-09 more than 101,000 skilled workers and their dependents were granted 457 visas.

The union raised its concerns with the government and Immigration Minister, Chris Evans. Evans tried to defend the government’s actions claiming its hands were tied by its international obligations under the World Trade Organisation. Senator Evans said: “We cannot create legal obstacles for overseas workers or introduce preferential treatment for Australian workers without compromising our international trading position and legal obligations.’’

The government’s position amounts to saying the labour of an overseas worker is a commodity, which can be freely traded on international markets: that under the WTO it cannot refuse the entry of foreign human capital. According to Bob Kinnaird the government is under no such obligation.

The government gives employers the right to import foreign labour for employers to exploit to the hilt but denies refugees the right of entry to Australia.

Mr Sutton said the situation for Australian workers was becoming “perilous’’. In a survey of 50 companies by KPMG last August two-thirds of respondents said they were continuing to recruit 457 visa holders while they were reducing staff numbers overall. Mr Sutton said that the minimum 457 visa wage rate was as low as $45,000 in jobs where a local worker might expect to earn more like $100,000.

The union is preparing for a national campaign against the government’s position.

Workers coming to Australia should be employed on the same basis as other workers and encouraged to join the appropriate trade union. This would remove the motive for employers to import overseas labour unless it there were genuine skills shortages. The Australian government should be addressing skills shortages through training and education, not draining developing countries of their skilled workforce.

Next article –  Respect at Work campaign needs to make up lost ground

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