May 8, 2019 by Dymphna

Scandal: Are the pollies pulling a swifty on us?

Something is very fishy about our “skilled” visa program

The election is shaping up as a tame (and lame) affair. But both sides look set to fail working people in Australia.

And whoever wins this election, it looks like nobody will be getting a pay rise (except maybe the politicians, of course).

In what seems to be characteristic of this campaign – with policies that sound different, but aren’t actually aren’t all that different when you look at it – Labor has announced plans to change the skilled migration program – specifically to raise the wage floor attached to skilled visas:

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 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…

Maybe because I’m trained as an economist this all screams ‘bollocks’ to me, but I’m genuinely surprised more people aren’t angry about this.

Because what is the “skilled visa” about?

If you believe the propaganda, it’s about helping plug ‘skills shortages’ in Australia – it’s about bringing in people with particular skill sets because there just aren’t enough workers with those skill sets here already.

But what does a wage floor of $53K pa tell you about how rare and ‘in-demand’ those skills actually are?

Let me put it in perspective for you. 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.

If the floor is $53K, that means the skilled visas are very tightly bunched around that $55K mark – there can’t be all that many earning all that much more than that.

But $55K is not at the high end of the spectrum. The current median full-time Australian salary is $68,620 pa.

That means 50% of Australian full-time workers earn less than $68K pa. Our “skilled” visa holders earn $13K less than that.

So I don’t know the exact distribution, but I would guess the average skilled visa salary is lower than maybe 70% of all full-time salaries in Australia.

So tell me how a professino is in such chronic undersupply that it’s crippling the Australian economy, and yet it still pays less than two thirds of all full-time positions in the country?

Do the rules of the market just not apply? If something is in shortage, its price goes up. That’s economics 101. But somehow that just doesn’t apply to ‘skilled’ jobs in Australia.

And so we end up with this absurd situation where our skilled visa program is bringing in labour that is cheaper than the great majority of jobs in the country.

What happens to local wages if you do that?

Well, if the basic rules of economics apply (and that seems to be in question), increasing the supply of cheap labour pushes the price of labour down even further. It depresses wages.

And remember this is in the middle of a wages crisis. Everyone is fretting about the chronic underperformance of wages in recent years.

Real average compensation per employee (i.e adjusted for inflation) has been falling for six years!

This has real consequences. Households have less in their pocket. They’re spending less at local businesses. They’re struggling to meet their rent or mortgage payments.

Labor’s proposal is a start, but a pretty weak one.

The pure economic reality is that if you have a job in Australia, the continued abuse of the skilled visa program is putting downward pressure on your wages and earning potential.

But why would our politicians do that? Why? It’s almost like they’re trying squash wages.

Oh wait, is our skilled visa program just about squashing local wages to help out their donor mates?

Noooo. Surely not. That would be treason. And Scomo and Shorten are honourable men.