Free trade agreements driving labour market reform by stealth

Australia’s agricultural sector stands to gain from recent Asian free trade deals, but where will it leave workers? Dan Peled/AAP

The Coalition government has assured the Australian electorate it will not proceed with any major industrial relations reforms until it has secured a mandate to do so. But this has not stopped the government from initiating several labour market reforms.

The labour market reorientation advocated by last year’s Agricultural Competitiveness Green Paper, points to a broader agenda being pursued. The paper’s authors call for:

“an appropriately skilled, available and affordable workforce…labour market flexibility and the ability [of industry] to access labour when needed.”

The Green Paper was commissioned to investigate measures for strengthening Australia’s agricultural competitiveness, positioning it for gains from free trade agreements negotiated with our northern neighbours. Labour market reforms are viewed as one critical solution.

Making it easier to recruit migrant workers, via “broadening the scope of existing visa schemes…[and reducing] compliance burdens”, is one desired measure. Changes to temporary labour migration programs, especially those negotiated as part of the free trade agreements with Korea and China, the newly legislated Temporary Protection Visas, which include an employment opportunity provision, are other positive policy initiatives. The “work-for-the-dole” program for Indigenous Australians in remote communities is also praised for its likely positive employment effects.

Interestingly, the free trade agreements with South Korea (KAFTA) and China (ChAFTA) have proved a springboard for liberalising labour markets and enhancing employment flexibility. Each has included labour mobility clauses.

KAFTA expands scope for the “movement in natural persons” – temporary migrant workers – engaged in contractual service, but the issue of visas is not subject to the safeguards that ensure compliance with established industry employment standards, unlike the 457 visa stipulations. A second KAFTA visa category enables increases in 457 visa labour recruitment while removing the labour market testing requirement.

This weakening of labour market protections comes on the back of the Abbott government’s introduction of “designated area migration agreements” (DAMA). These permit employers to hire low- and semi-skilled 457 visa workers in the Northern Territory to work in non-resource sector industries. These agreements no longer mandate the strict foreign worker employment requirements of the 457 visa program, relax the language test and set a lower income threshold permitting employers to pay a wage 10% below the industry market rate.

This erosion of labour market protections could be underscored by the proposal to extend the duration of the “short term mobility” visa for skilled workers, announced in October. This visa does not set minimum language proficiency requirements nor require compliance with 457 visa employment standards.

The ChAFTA has yet to be finalised, but some of the details of clauses agreed suggest still further erosion of employment standards. Chinese-owned and controlled investment projects would be allowed to recruit and deploy Chinese workers.

Agriculture Minister Barnaby Joyce launched the Australian Government’s Agricultural Competitiveness Green Paper in October 2014. Lukas Coch/AAP

What are we giving away?

While Trade Minister Andrew Robb has provided assurances that Australian industrial laws would apply to Chinese workers recruited into work on such projects, ChAFTA includes provision permitting “greater flexibilities for companies to respond to unique economic and labour market challenges”. This could mean Chinese ventures engaging migrant workers consistent with DAMA.

Alternatively, given there is no apparent and explicit clause mandating compliance with Australian standards, Chinese employers could have virtually-free rein to determine pay and conditions. In fact, recruiting in migrant workers on lesser terms than those presently prevailing could well explain the logic behind statements by Chinese corporate investors who have bought dairy farms in Victoria claiming the intention to employ Chinese workers, supposedly to increase productivity and milk yields.

Another ChAFTA labour mobility provision that will impact on employment standards is the agreement to issue up to 5,000 visas annually for Chinese working holiday makers. The Green Paper regards this as a further means of addressing labour challenges in rural Australia, allowing workers to be recruited into agricultural, dairying and pastoral enterprises, but the agreement does not reference employment safeguards.

There are very real concerns with the consequences of issuing residence-work visas that bond migrant workers to a particular employer, which is the basis of these labour migration schemes. Bonded labour is the basis of re-instituted Temporary Protection Visas. Under the scheme refugees can apply for a bridging visa, the “Safe Haven Enterprise Visa”, which entitles them to seek employment and access a range of social security supports. But employment rights will be quite circumscribed and contingent on refugees living in areas deemed to have labour shortages and this entirely at the minister’s discretion.

This circumscribing of labour rights is the defining feature of the “work-for-the-dole” scheme in remote Australia. Established for unemployed Indigenous Australians, the scheme provides unemployment benefits conditional on recipients working for the dole for five days a week, twelve months of the year, applying significantly more onerous conditions than those for regional and urban benefit recipients, and employers will be contractually obliged to report those unemployed who do not meet the work conditions.

Labour supply challenges in regional, rural and remote Australia are ostensibly the driving force of these labour market reforms, but clearly there is also another agenda at play designed to shift the balance in industrial relations.