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Enterprise Migration Agreements strike the right balance in a tricky policy area

Sitting between the two hot potatoes of immigration control and labour market regulation, work visas are an inherently controversial public policy issue. It is therefore of little surprise that Immigration…

Sitting between two hot potatoes: Gina Rinehart’s Hancock Prospecting is the first company allowed to use an EMA. AAP

Sitting between the two hot potatoes of immigration control and labour market regulation, work visas are an inherently controversial public policy issue. It is therefore of little surprise that Immigration Minister Chris Bowen’s announcement on Friday that Hancock Prospecting will be the first company permitted to use an Enterprise Migration Agreement (EMA) on its Roy Hill mining project has provoked the ire of union leaders and Labor and crossbench parliamentarians.

The agreement will allow Hancock Prospecting and subcontracting employers on the project to engage up to 1,715 foreign workers on temporary visas. The main concern of unions and their parliamentary supporters is that the EMA will deny employment and training opportunities to resident workers. These concerns are not without foundation, but essentially they are misguided.

Let’s leave a few issues to one side. The internal Labor Party politics, the timing of the announcement given recent job losses and plant closures in manufacturing and the inconsistency of awarding the first EMA to a company owned by one of the government’s main political targets have all been discussed at length in recent media coverage and do not warrant further attention here. But there has been little detailed analysis of the merits of EMAs as a policy mechanism for meeting a range of competing objectives.

Work visa policy is a very difficult policy area to get right. If visa regulations are too lax, then employers will have less incentive to recruit locally, to invest in developing the skills of their employees and to maintain wages at market rates. But if regulations are too tight and workers with the appropriate skills are not available locally, or cannot be trained quickly enough, then there is a risk that opportunities for new business investment will not be realised. Few countries have managed to strike a policy balance between work visa and skills policy to assist both the needs of industry as well as those of the workforce.

Australian governments have generally relied more on immigration policy to expand labour supply during periods of economic growth, on one hand, and on training policy to develop the skills of underutilised workers during downturns, on the other. But it is always a question of balance, as immigration is often needed to meet shortages in parts of the economy that are booming even when other parts are sluggish, as is currently the case. A key reason for this relates to the practical barriers associated with relocating unemployed workers to fill vacancies that exist elsewhere, particularly in remote communities (such as the Pilbara).

The right balance between work visa policy and skills policy in Australia has not always been found. In the late 1990s, the Howard government incrementally relaxed the rules for employers engaging temporary work visa holders on the grounds that existing regulations were too tight in a climate of growing labour shortages. But it went too far the other way. By 2007, stories of employers abusing the scheme were widespread. And as I’ve suggested elsewhere, the Howard government placed too much emphasis on work visa policy as a mechanism for meeting skills shortages and not enough on skills development.

The Rudd and Gillard governments have tightened work visa regulations to protect labour standards and given more attention to skills policy, without going over the top. Visa regulations have remained sufficiently liberal to permit entry to very high numbers of foreign workers by historical standards, which has been important for meeting labour shortages in the sectors directly benefiting from the mining boom. The new EMA scheme is an innovative measure that epitomises Labor’s concern to maintain a sufficiently liberal work visa policy framework without allowing employers to shirk their responsibilities to the Australian workforce.

The scheme is only applicable to major new projects in the resource sector worth more than $2 billion with a peak workforce above 1,500 workers. It allows subcontracting employers to engage foreign workers on temporary visas via the project owners or principal contractors, but only if they can demonstrate a shortage of resident workers with the appropriate skills. Work visas can only be used if attempts to recruit workers locally have proved unsuccessful.

Project owners and subcontracting employers must also make a defined investment in workforce training. This investment must be directed towards shortage occupations with the aim of reducing reliance on migrant workers. As with the temporary work visa program, employers must comply with certain regulations to prevent the EMA scheme from being used to undermine labour standards or to exploit visa holders.

Given that many more EMAs are likely to follow the Roy Hill project agreement, unions are correct to emphasise the importance of getting the policy settings right from the beginning. There are many examples in Australia and elsewhere of where lax labour market protections have produced unintended consequences and popular backlashes against liberal immigration policies.

But on the face of it, the EMA scheme is regulated in such a way to give employers in the mining sector ready access to migrant workers, which will allow the further continuation of the resources boom, without eroding employment and training opportunities for Australian residents. It therefore seems to be a rare example of a work visa policy containing the appropriate checks and balances to safeguard the interests of both employers and workers.

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27 Comments sorted by

  1. William Bruce

    Artist

    Yesterday I read there is currently 32% youth unemployment in the Central Coast of NSW .
    I would like to know exactly what these EMA jobs to be offered are?
    And also, what are the jobs to be offered that Australians can not do now or very soon?

    Shorton's "Australians First" spiel is all chat.
    The devil is in the detail.

    What are our Govt & Non Govt (paid for by Govt) "Employment agencies" actually doing?...
    To some extent they are simply giving kids money "not to work"?
    We need a system…

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  2. Greg Boyles

    Lanscaper and former medical scientist

    Why are we even listening the bull$hit about threatening Australian jobs coming from this sector and its big business allies?

    The fact is that modern mines employ VERY FEW Australians once the construction phase is finished and it is a major threat to the jobs of Australians working in other sectors, particularly manufacturing, due to the mining boom's effect on the Australian dollar!

    I think it would be in the interests of the majority of Australians if some of these mining projects DID NOT get off the ground due to lack of workers and if this whole mining boom was slowed down just a little bit!

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  3. Jack Arnold

    Director

    Why do we rush to exploit our mineral resources for the benefit of foreign populations? oh, silly me ... Australia has suffered from cultural cringe for over 200 years & allowed our mineral wealth to become owned by foreign multinational corporations.

    Now that these corporations want to make huge profits, this means they will pass as many costs as possible on to somebody-else.

    Successive Australian & state governments have pursued short-sighted polices by not requiring extensive job skills training as part of the licensing process.

    One of few things that Joh got correct was to give state owned Qld Railways the monopoly providing freight to distant ports. Then this was stuffed up by his successors.

    We need "Australian Jobs for Australian Workers" in this 2% sector that is distorting the economy for the 98% majority.

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  4. Dennis Alexander

    logged in via LinkedIn

    Thanks Chris. You have confirmed a couple of points: that the EMA legislation is a tightening of the Howard era scheme; and that there are labour market, workforce, and training tests that must be met before a scheme is approved. As you say, the EMA is a necessary scheme in the current circumstances

    Just because it is Gina Rinehart who will be the employer does not make the scheme or this instantiation necessarily wrong headed. On the other hand, because it is Gina Rinehart this instantiation…

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    1. Jack Arnold

      Director

      In reply to Dennis Alexander

      HI Dennis ... I think you have identified a major point that possibly has slipped under the radar of many commentators & likely all journalists.

      The company town providing all the requirements of life at enormous expense taking back all the wonderful wages ... so much US folk music describes these scenarios.

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  5. Jack Arnold

    Director

    Chris ... I cannot agree with your conclusion.

    Why do we need to export all our raw mineral resources rather than require miners to process these minerals in Australia?

    Surely onshore processing gives Australian workers jobs ... minerals are a single extraction, once they are dug up, they are gone ... as are the mining & processing jobs.

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    1. William Bruce

      Artist

      In reply to Jack Arnold

      Too Right....we need to develop Oz owned industry & work.
      Steel & value adding in all the primary industries is a must.

      We must stop the Unions, Govts. & so called experts wrecking our industries and future jobs...AND welfare dependancy.

      If we are doing so well why has Gillard et al borrowed $200 Billion and how can we ever pay this back?

      Why is home ownership so appallingly low?

      The foreign banks are always aiming to suck all the wealth out of our nation (& others) with their dodgie currency/capital and we ought wake up.

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  6. david poole

    logged in via LinkedIn

    Chris,
    Insightful. Where is the balance between developing the skills of Australians, and engaging those from overseas who have the skills?
    Can the public be allowed to see this balance?
    As regards ".....only if they can demonstrate a shortage of resident workers with the appropriate skills. " are we allowed to see these justifications?
    If you are able to point me in the right direction it would be great. I suspect though, that a fog, and clouds of deception will obscure any real measure of what is going on.
    Thanks for bringing up the key issues here

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  7. Peter Ormonde

    Farmer

    Excellent article. Hope you're getting danger money ... I'd be anticipating a fair bit of xenophobic flak on this.

    This "new frontier" creates absurd and obscene distortions in the national and particularly the local economies that host these projects. Housing in particular becomes unaffordable and effectively drives out the locals - admittedly some of them with a fortune from selling their house... but it can actually hollow the place out rather than build anything substantial.

    I also have…

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  8. Anthony Nolan

    logged in via email @hotmail.com

    Globalisation erodes the conditions for national economic and political sovereignty. The only sensible response is to give up even the idea of national sovereignty and embrace globalisation in all of its manifestations this includes international workforce and population mobility. The relevant unions would be sensible to grab the opportunity to educate guest workers about the nature of democracy while they are on Australian soil. This ought to be a key demand.That way Australia could be exporting democracy along with repatriated income.

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    1. Greg Boyles

      Lanscaper and former medical scientist

      In reply to Anthony Nolan

      Not a good idea at all Anthony.

      This whole globalisation thing is nothing more than a transient phase of human civilisation and will collapse in the next few decades as the age of cheap oil energy draws to a close.

      Mean while, if we follow your suggestion, we will have destroyed what remains of our economic self sufficiency with respect to manufacturing.

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  9. Hedda Ransan-Cooper

    PhD Candidate in Sociology at Australian National University

    Great article. Another little discussed dimension to this debate is around the potential regional development impact of having temporary oversease workers. In the recent budget, the government decided to defer its earlier (and bi-partisan supported) promise of providing 0.5% of Gross National Income (GNI) as aid until 2016-17. If some of these workers are coming from less developed countries in our region there could be a development dividend from these enteprise agreements as well. (In many countries remittances have been shown to be of much more benefit to households than traditional development aid). Surely something most Australians would see the value in doing. We send a lot of our development professionals to the region, and they are extraordinarily well paid for this. Let's not be miserly when it comes to temporary overseas workers if there is a genuine need.

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    1. Marshall Clark

      Australian National University

      In reply to Hedda Ransan-Cooper

      Good point, but the potential aid aspect seems to have been completely overtaken by the notion that these are Aussie minerals, for Aussie workers, despite the fact that with the billions of dollars worth of taxes gained from the mining profits, not to mention the taxes gained from the wages of the foreign workers, Australia also benefits.

      For more on the 'foreign labour as aid' angle, see: http://www.canberratimes.com.au/opinion/foreign-labour-is-a-vital-part-of-our-aid-program-20120520-1yyww.html

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    2. Dale Bloom

      Analyst

      In reply to Marshall Clark

      “not to mention the taxes gained from the wages of the foreign workers, Australia also benefits.”

      Many foreign workers send most of their wages back home. If 1,700 foreign workers send $1000 back home each week, that is $1700000 lost from the Australian economy each week.

      If that money were spent in Australia, the money circulates through society, and it employs people as the money circulates.

      The amount of money gained by a state or federal government in the form of taxes is minimal, and the benefites are minimal.

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    3. William Bruce

      Artist

      In reply to Hedda Ransan-Cooper

      Hedda....nice argument but I think we need to get full employment AND get over our current account losses problem and debt problems AND also do more in aid/development with out immediate neighbours &, yes, also others to....concurrently. We need to do it all.

      I think we ought mitigate having 32% youth unemployment and NOT import workers to drive trucks & machines, &, to do other basic skills stuff...otherwise, we will end up with massive numbers of lifelong "welfare dependancy" here.

      We need to be productive ourselves and lead by example....

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  10. Rob Crowther

    Architectural Draftsman

    I do not understand why she not train her workforce starting a decade ago.
    It’s not as if she can’t afford it.

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  11. Dale Bloom

    Analyst

    Some important factor not mentioned.
    What will the foreign workers be paid?

    What requirement have governments placed on mining magnates to invest more widely in Australia?

    What have universities done to increase skills, or have they simply left it to TAFE colleges to do that?

    Also, what is the long term future for this country? This is a very important question, because commodity prices in coal and iron ore seem to have peaked, and despite the mining boom, Australia actually has a trade deficit, and also has one of the highest per capita debts of any country in the world, and actually higher than Greece, Spain, Portugal etc.

    http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

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  12. Chris Wright

    Post-Doctoral Research Fellow, Centre for Workforce Futures at Macquarie University

    Thanks to everyone for their comments.

    For anyone wanting to know more about the operation and regulation of EMAs, the guidelines [http://www.immi.gov.au/skilled/_pdf/ema-submission-guidelines.pdf] published by Department of Immigration contains some useful information. This document sets out the obligations of employers covered by the agreements on issues such as skills investment and the requirements regarding the local sourcing before migrant workers can be engaged.

    I should also note…

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  13. david poole

    logged in via LinkedIn

    Marshall Clark makes points in his article for the Canberra Times that are valid. BUT, to balance the valid points made, a person needs to also point out the opportunity that is being lost for Australians, who are resident in this country, whose families have paid taxes, who have struggled with the idiosyncrasies of politicians, their parties, vested interest groups, and powerful people who have twisted the usual Australian's good nature.
    Why cant an 18 year old Australian get a job in the mines…

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  14. Sean Lamb

    Science Denier

    Perhaps I can bring a perspective to this discussion that the academic types lack.

    Last year I did the Certificate II Pre-Apprenticeship Electrical Trades course. While doing this course I would hear on various media, eg Cassandra Wilkinson, how these Certificate II courses were designed in a period of high employment to try and change the attitudes of the least employable - eg getting out of bed in the morning, presentation skills etc. That was not my experience of the course. Instead I saw…

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    1. Peter Ormonde

      Farmer

      In reply to Sean Lamb

      No question Sean - some people will do anything for a quid. Only trouble is they'll need somewhere to sleep.

      People with families find it a bit harder. People who own houses too.

      On another site (Crikey) I've raised the suggestion that in an effort to "mobilise" the lumpen workforce the young unemployed should be given swags like the good old days of the wallaby track ... those with families cop a trailer allowance with the kiddies being enrolled at their schools one week at a time to…

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    2. William Bruce

      Artist

      In reply to Peter Ormonde

      Peter, did you see my previous post noting currently we have 32% youth unemployment in the NSW Central coast?

      Can you tell us roughly how many & exactly what jobs Australians can not do or will not do re this scheme?

      If you do not, it seems what you are saying is perhaps shilling for this scheme which will consign even more of our youths to welfare dependency.

      Surly willing Australian youths would quickly be very capable hands re these schemes AND concurrently get trades qualifications?

      The Libs ought oppose this scheme.

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    3. Peter Ormonde

      Farmer

      In reply to William Bruce

      G'day William,

      A couple of problems - firstly the jobs on offer are for construction crews and the like - at least semi-skilled and some quite specialised skills. There should be some scope for apprenticeships but the workers are required now. Not sure what sort of skills are on offer from the kids on the Central Coast but as I understand the process if they have skills they can apply. But it's a shocking life.

      Secondly we still have this issue of where they will actually live. Jamming a…

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    4. William Bruce

      Artist

      In reply to Peter Ormonde

      Absolute rubbish...a 17 year old can easily drive a truck or an excavator... are they even being offered the jobs firs?

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  15. John Clark

    Manager

    As a number of contributors have observed, there is no need for balance, and no need for visas.

    There is no rush. The ore will still be there (and possibly more valuable).
    The companies concerned should accept the obligation to train the required workforce. Not much of an ask, when the jobs are reported as unskilled and semi-skilled.

    How any Labor Government would agree to such terms is quite incredible.

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