Exploitation of migrant workers in Australia is rife, a new Grattan Institute report has found.

The report, Short-changed: How to stop the exploitation of migrant workers in Australia, shows that recent migrants are twice as likely as long-term residents to be underpaid, and up to 16 per cent of recent migrants are paid less than the national minimum wage.

Exploitation hurts migrants, but it also weakens the bargaining power of Australian workers, harms businesses that do the right thing, damages Australia’s global reputation, and undermines confidence in the migration program.

Three sets of reforms are needed to eliminate exploitation.

First, visa rules that increase migrants’ risk of exploitation should be reformed.

Many temporary visa-holders put up with mistreatment because they fear that if they speak up their visa will be cancelled or they will lose their pathway to permanent residency in Australia.

Temporary skill-shortage visas should be made portable, so migrants can flee from an exploitative employer. And a new Workplace Justice visa should be created, to empower workers to report exploitation and stay in Australia while they pursue unpaid wages.

Second, workplace and migration laws should be strengthened and better enforced to deter exploitation.

Few employers who underpay their migrant workers get caught, and when they do get caught the penalties are far too small. The Fair Work Ombudsman hit employers with just $4 million in penalties in 2021-22, whereas the ATO hit taxpayers with $3 billion in penalties and the ACCC imposed $232 million in penalties for breaches of competition and consumer law.

The Fair Work Ombudsman should be renamed the Workplace Rights Authority and given greater powers and more funding. Maximum court-ordered penalties against employers should be increased, and criminal penalties including jail should apply where employers knowingly underpay workers.

Third, migrants should be given more help to reclaim lost wages.

Migrant Workers Centres should be established in each state, funding for community legal centres should be boosted, and the Fair Entitlement Guarantee should be extended to migrant workers.

These reforms would cost $115 million a year. That should be covered by a levy on select temporary visas set at $30 for each year of work rights the visa offers (raising $45 million a year) and by the larger penalties paid by employers who underpay their workers (at least $70 million a year).

Exploitation of migrant workers – who are often young and vulnerable – is a blight on Australia’s claim to be the land of the fair go.

This report shows how the government can stamp it out.

Trent Wiltshire

Economic Prosperity Deputy Program Director
Trent Wiltshire is the Deputy Program Director of Grattan Institute’s Economic Prosperity program. He previously worked at the Victorian Department of Treasury and Finance, as Domain Group’s economist, and at the Reserve Bank of Australia

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