The Impact of the China-Australia Free Trade Agreement
on Australian job opportunities,
wages and conditions, a report by Joanna Howe at the University of Adelaide, comments
Significant controversy surrounds the impact of the China-Australia
Free Trade Agreement (ChAFTA) in a number of areas. This report
focuses on two of these areas by examining the ChAFTA’s provisions
on labour mobility.
The first area of controversy is whether the ChAFTA will enable
Chinese workers to replace local workers in the Australian
labour market. This question hinges upon whether the Australian
Government can impose labour market testing to determine whether
a genuine skills shortage exists in the local labour market. Without
labour market testing there is no regulatory mechanism to ensure
that local job opportunities are protected.
The second area of controversy is whether the ChAFTA allows for, or
will result in, Chinese workers receiving poorer wages and conditions
than local workers in the Australian labour market.
This report is structured in two parts. Part One considers the three
provisions in the ChAFTA that provide the opportunity for Chinese
workers to access the Australian labour market. The labour mobility
clauses in Chapter 10 and the two memorandums concerning largescale
infrastructure development projects and the annual entry of
working holiday makers each facilitate this opportunity. This report
identifies each of these entry pathways into the Australian labour
market and examines how they will operate in practice.
Part One of the report makes a number of findings. Firstly, the report
finds the ChAFTA greatly increases the access of Chinese workers to
the Australian labour market. The report recommends the Australian
Government use its enabling legislation to clarify that labour market
testing will apply to certain categories of Chinese workers. In
particular, there needs to be labour market testing in a manner that is
consistent with Australia’s 457 visa program, before employers can
access Chinese workers who are ‘contractual service suppliers’ or
‘installers and servicers’. Without labour market testing, there is no
regulatory mechanism to prevent an employer from preferencing a
Chinese worker over a local worker for these two categories.
Secondly, the report also finds that there needs to be greater
protection to ensure Chinese workers are not used as a way
of undercutting local wages and conditions. This can be done
by making it a requirement that Chinese workers be paid the
applicable market salary rate and not merely the award rate for their
occupational category. The market salary rate can be determined
through taking into account the current major employing collective
agreement registered by the Fair Work Commission in the sector
and/or region, ABS average salary rate data and the Department of
Employment’s Job Outlook data.
Thirdly, the report finds that the current regulatory framework for
Investment Facilitation Arrangements (IFAs) requires reform in order
to ensure it is a legislated framework that mandates labour market
testing, market salary rates and the achievement of greater public
accountability and transparency around IFAs.
Part Two of the report examines two key issues concerning the
ChAFTA’s impact on Australian labour standards.
The first issue pertains to the role and importance of labour market
testing in determining the composition of Australia’s migrant worker
intake. This section finds that both the OECD and two independent
Australian government reports published in the last two years
suggest that it is necessary for countries to have a clear and concrete
process for determining which occupations are eligible for temporary
migration. It is essential, therefore, that the Australian Government
relies on labour market testing to assess whether Chinese workers
are filling genuine vacancies in the Australian labour market. The
report recommends that Australia adopt a consistent approach to
labour market testing so that workers entering Australia via a free
trade agreement are subject to the same labour market testing
requirements as under Australia’s 457 visa program.
The second issue concerns whether temporary migrant workers
from China can and/or will be paid less or treated differently to
local workers performing equivalent jobs in the Australian labour
market. Although it is true that Chinese workers will be required to
be employed in accordance with Australia’s employment laws and
are entitled to Australian wages and conditions, it is equally true that
where these workers are being exploited or being used to undercut
local wages and conditions, it is highly unlikely this will be uncovered
by authorities, due to the inadequacies of existing regulatory
enforcement arrangements. This section explores the myriad reasons
why this is so, including the significant wage differentials between
China and Australia, the employer-driven nature of Australia’s
temporary migrant worker program and the limited resources of
our enforcement inspectorate, the Fair Work Ombudsman. It is also
highly unlikely that Chinese workers themselves will raise the alarm
about underpayment of wages or exploitative treatment because of
structural reasons inherent in temporary migrant worker programs,
relating to the precarious position of migrant workers, especially
those on temporary and employer-sponsored visa arrangements.
Although advocates of the ChAFTA will point to the text of the
agreement that requires Chinese workers be employed according
to Australian law, and government policy which currently stipulates
labour market testing for labour agreements, neither of these are
sufficient to ensure that the ChAFTA’s operation in practice does
not place downward pressure on Australian wages, conditions and
labour standards.
Increasingly, there is an unquestioned economic philosophy that
systems need to be less regulated by government and driven by
the needs of employers, with market responsiveness, timeliness
and flexibility as the drivers and indicators of success. Be that as
it may, there is a strong case for government regulation to ensure
that temporary labour migration is used to address genuine skill
needs in the local labour market, without being used as a vehicle
to unnecessarily increase labour supply and reduce local wages
and conditions. Without clarification in the enabling legislation,
the ChAFTA does not achieve the right balance between these
two needs. Not only does the ChAFTA attempt to prevent the
Australian government from regulating its temporary labour migration
program with respect to Chinese workers to include some form of
labour market testing, but it greatly increases the entry pathways
for Chinese workers to enter the Australian labour market. Taken
together, these two provisions make it extremely hard for the
Australian Government to determine the scope and composition of
its temporary migrant workforce, which is an important sovereign
right and responsibility for any national government.
Thus, it is vital that the ChAFTA’s implementation be accompanied
by enabling legislation that stipulates the application of labour
market testing and market salary rates to Chinese workers, greater
public accountability and transparency around investment facilitation
arrangements and a substantial increase in the enforcement capacity
and powers of the Fair Work Ombudsman.
The report features the following recommendations -
R1:
the Government clearly establish in its
enabling legislation that labour market testing will apply to all
Chinese workers coming into Australia as contractual service
suppliers or as installers and servicers via Annex 10-A in the
China-Australia Free Trade Agreement.
R2: the requirement of labour market
testing in free trade agreements be consistent with the 457 visa
program. This requirement of labour market testing for certain
categories of temporary migrant workers should be enshrined in
the Migration Act 1958 (Cth).
R3:
This report recommends that contractual service suppliers
and installers and services be subject to a market salary rates
requirement as stipulated under the 457 visa program.
R4: the Australian Government strengthen
the application of labour market testing for the 457 visa, and
consistent with the UK approach, adopt a model that is primarily
predicated on independent labour market testing but which can
be supplemented, where necessary, with employer-conducted
labour market testing.
R5: that Chinese workers receive the same
wages and conditions as equivalent local workers for each
occupational category specified in the investment facilitation
arrangement. The process for determining the applicable local
wage and employment conditions for each occupation should
take into account, but is not limited to the following:
- the current major employing collective agreement registered by
the Fair Work Commission in the sector and/or region;
- ABS average salary rate data; and
- the Department of Employment’s Job Outlook data.
R6:
the requirement for labour market
testing for labour agreements signed under an investment
facilitation arrangement become a legislated requirement through
an amendment to the Migration Act 1958 (Cth).
R7:
once an investment facilitation
arrangement is in place it must be made publicly available by
the Department of Immigration on its website. This should be
accompanied by a public statement stipulating:
- the concessions which are granted under the IFA with regards
to wage levels, skills and English language ability
- justification of why each concession has been granted and the
circumstances surrounding the grant
- how compliance with each concession will be monitored
- the occupations which are covered by the IFA
- the salary rates to be paid out to workers for each occupational
category under the IFA
- the proportion of overseas workers to be employed under the
arrangement compared with local workers
8:
This report recommends that any labour agreements negotiated
under the investment facilitation arrangement should be made
publicly available by the Department of Immigration on its website.
This should be accompanied by a public statement stipulating:
- the concessions which are granted under the labour agreement
with regards to wage levels, skills and English language ability
- justification of why each concession has been granted and the
circumstances surrounding the grant
- how compliance with each concession will be monitored
- the occupations which are covered by the labour agreement
- the salary rates to be paid out to workers for each occupational
category under the labour agreement
- the proportion of overseas workers to be employed under the
arrangement compared with local workers
R9: the Government review the Work and
Holiday Visa and the Working Holiday Visa to ensure this visa
scheme meets its central purpose of being for cultural exchange
rather than as a general labour supply visa. In particular, this
review should address the following:
- the need to protect local job opportunities; and
- the need to protect working holiday visa holders in the
Australian labour market from exploitative arrangements.
R10: the Government substantially
increase the enforcement capacity of the Fair Work Ombudsman,
its powers under the Fair Work Act 2009 (Cth) and its ability
to impose penalties on employers who breach Australian
employment law.
R11: the increasing of civil and criminal
penalties for employers found breaching Australian law with
respect to the hiring and employment of temporary migrant
workers.
12:
all temporary migrant workers,
including Chinese workers entering the Australia labour market via
the ChAFTA, be given an induction in their own language which
details their workplace rights under Australian law and advises on
support services available in the event of a breach of these rights
or any other workplace issue.
R13 the identities of migrant workers who report instances of
exploitation to the Fair Work Ombudsman or to any other body
should not be provided to the Department of Immigration and
Border Protection.
