Saturday, May 24, 2008

A throwback policy?

It seems likely that the Rudd Labor Government will introduce a guest worker scheme, bringing South Pacific Islanders to Australia to harvest crops.

(This is, oddly enough, a step back to the 1860s when kanaka labour was brought to Queensland to work on the sugar and cotton plantations.)

There is some resistance by the unions to the proposal. The national secretary of the CFMEU has warned that the guest woker scheme could lead to the "Mexicanisation" of the country's job market:

The large movement of guest workers from the Asia-Pacific to our small labour market would have profound effects on the ability of governments or unions to uphold standards.

Former union boss Doug Cameron has also come out in opposition to the proposal:

Overseas - in the UK, the US, Europe and in Asia - problems with migration schemes are there and we can't just sweep it under the carpet.

However, the Australian Council of Trade Unions (ACTU) has approved a guest worker scheme on the basis that it would increase "labour market mobility". The Australian Workers Union has also given "in-principle support".

It's interesting to find the ACTU basing its policy on extending "labour market mobility". It wasn't that long ago that leaders of the ACTU could be found singing the Internationale; now they are echoing the free market ethos of the employer organisations.

We shouldn't be too surprised by this. A lot of union leaders today have little connection to the working-class. Bill Shorten, head of the Australian Workers Union before his recent election to Parliament, and one of the key supporters of the guest worker policy, is an alumni of Xavier College, the most prestigious Catholic school in Melbourne.

The Rudd Government seems to have committed itself to the guest worker policy, despite considerable opposition to the scheme from a number of well-informed sources. The guest worker option has been questioned not only by the unionists cited above but also by:

- The Australian Farm Institute
- The Department of Immigration and Multicultural Affairs
- Authors of the Australian Government's White Paper on the Overseas Aid Programme (2006)
- Emeritus Professor Helen Hughes
- Sandy Cuthbertson, Centre for International Economics, and Rodney Cole, ANU, in their research into population growth in the South Pacific Islands

I would suggest that those wanting to familiarise themselves with the arguments read the parliamentary research report prepared in 2006. Before I begin quoting sections of the report I'll briefly list the arguments it cites against guest worker schemes:

- they encourage inefficiency and backwardness in the rural sector
- they are a spur to illegal immigration
- they are expensive to administer
- they have failed overseas
- they distort the development of third world nations
- they make rural work unattractive to local workers
- they exploit immigrant labour
- they are likely to create welfare dependent ghettoes in Australian cities
- other developing nations will expect to join in

I can't quote every relevant section of the report. One interesting item of information, though, is that a survey of farmers showed that only one in ten thought that labour shortages were preventing the expansion of their business. In other words, 90% of farmers are confident that they already have enough labour not only for current needs but also to expand further.

The Australian Farm Institute undertook research into a guest worker scheme, but didn't endorse the option for these reasons:

A recent Australian Farm Institute study of farm demography examined but stopped short of recommending a guest-worker scheme to alleviate seasonal farm-worker shortages in the short term.

It suggested that such a program would need to be heavily regulated and monitored to prevent exploitation of the workers involved, and could lead to dependency on such labour on the part of otherwise unproductive growers. The agricultural labour force more broadly has increasingly required skilled workers to operate the high-tech (and expensive) farm machinery used in the production of crops such as grains, cotton or sugar, or, for example, to generate and interpret crop production data and manage genetic improvement in livestock herds. Referring to the farm sector labour force generally, the AFI study found that the Australian farm sector is not competitive in attracting labour. Low remuneration, poor conditions and lack of professional development or career structures were leading to labour shortages, especially in the horticultural industry.

The AFI study argued that in the medium to long-term the problems of the farm sector can only be met by a concerted effort to ‘professionalise’ the farm labour force. Farming is now a knowledge-based industry. The report concluded that:

"... over the medium to longer-term, a substantial shift will need to occur in how farmers manage the rural workforce. The focus on keeping rural wages low will need to change, and a greater focus will need to be placed on ‘professionalising’ the rural workforce by developing training and career structures.

"Farmers will need to recognise that in order to successfully produce the quality of outputs that are demanded by consumers in higher-value markets, a skilled and motivated workforce is essential."

The section of the parliamentarly report summarising the views of the Department of Immigration runs as follows:

The Department of Immigration and Multicultural Affairs, in submissions to parliamentary inquiries, has consistently warned that there are serious risks associated with a Pacific guest-worker program. They argue that similar guest-worker programs would be sought by other countries and possibly other groups of employers. There would be significant problems of compliance. Pacific Islanders have high visa overstay rates. (The country with the highest visa overstay rate in 2004–05 was Kiribati.) A guest-worker scheme would increase these overstay (and illegal work and social security fraud) rates. It could lead to stigmatisation of Pacific Island communities in Australia, and a backlash against the migration program.

The department argues further that the level of management and extent of controls necessary to ensure employer and employee compliance with program conditions, and to safeguard seasonal workers from exploitation, would render such a scheme prohibitively expensive: the costs could outweigh the benefits. It points out that expectations regarding financial benefits for individual guest workers and the level of remittances sent home could be unrealistic, once costs of living and taxes in Australia are taken into account. (Temporary residents are taxed at a flat rate of 29 per cent.)

I'll finish by quoting the problems identified by the report with guest worker programmes overseas:

Debate about guest-worker schemes in Europe is coloured by the failure of earlier experiences; Germany’s ‘Gastarbeiter’ program is often cited as the archetypal guest-worker failure ... The program ‘failed’ because the guest workers who were supposed to leave stayed. After the program was abruptly ended with changed economic conditions in 1973, immigration continued as the ‘guest workers’ were joined by their families, and later by asylum seekers.

... A study published in July 2003 by the UK Trades Union Congress claimed there were up to 2.6 million migrant workers in Britain who were under the control of ‘gang-masters’ and unregulated recruiters. It claimed that farmers were unable to make the distinction between ‘legals’ and ‘illegals’; that many couldn’t afford to pay wages above welfare levels, and that people were evading taxes and being exploited. It made the point that while there was a system in place to recruit seasonal guest workers from Eastern Europe, there was no infrastructure to recruit people from East Anglia or Essex.

The USA ... As in Europe, debate about guest workers is coloured by the failure of an earlier program, the ‘Bracero’ program. This ran from 1942 to 1964, and admitted mainly agricultural workers from Mexico. It was accompanied by massive illegal immigration, and followed by even more massive illegal immigration ... According to Mark Krikorian of the Centre for Immigration Research in Washington:

"... As immigration has increased, native-born low-skilled workers (those most directly affected by foreign-labor programs) are increasingly dropping out of the labor force, and the tendency seems most pronounced among teenagers.

"... guest-worker programs just can’t work even on their own terms. Every guest-worker program - everywhere - has failed. In every instance, they lead to large-scale permanent settlement, they spur parallel flows of illegal immigration, and they distort the development of the industries in which the foreign workers are concentrated."

Canada ... As in the US agricultural sector, the ready access to low-skilled cheap foreign labour provided through CSAWP has been criticised as downgrading productivity and competitiveness in the sector over the longer term, as employers are able to avoid innovation and investment in new technology. Another criticism is that the Canadian guest-worker program, with its many layers of administration, would be so expensive that the costs to government would outweigh any economic benefits to the nation as a whole. Canadian taxpayers are thus subsidising employers’ use of cheap labour.


  1. A report by economist Greg Clydesdale of Massey Univerisity in New Zealand has found the Pacific Island labour is less likely to contribute to economic growth.

  2. "90% of farmers are confident that they already have enough labour not only for current needs but also to expand further."

    This revelation alone demonstrates the insanity and inanity of political thinking on this issue. If we add the further insight that farming in the future will require above all else a greater technological proficiency and a more knowledgeable workforce, it can be seen that a guest worker program is really about social ideology. All this in spite of the miserable track record of directed immigration schemes.

    While Australia and NZ both exhibit what are probably the most extreme regulations in the world regarding the coming or going of horticultural commodities-- a subcategory singled out in the report excerpt-- in terms of innovation they look up to no one and are as competitive as any other nation. If this industry is suffering from anything it is over-regulation and not a shortage of menial workers.

  3. can be seen that a guest worker program is really about social ideology

    I think that's the crux of it.