EMPLOYMENT: by Joseph PoprzecznyNews Weekly
Guest workers accepted at economy's expense
, September 30, 2006
The World Bank and other international organisations are pressing Australia and New Zealand to accept Pacific Island guest workers, reports Joseph Poprzeczny. Two Australian economists, however, argue that the costs of such a policy would far outweigh any benefits.Although attempts are being made to cajole Australia into adopting the post-war German policy of accepting guest workers (gastarbeiter), especially for rural employment, the proposal has been given the thumbs down by two leading economists.
Professor Helen Hughes and Gaurav Sodhi, of Sydney's Centre for Independent Studies (CIS), argue in a just-released research paper entitled, Should Australia and New Zealand Open Their Doors to Guest Workers From the Pacific? Costs and Benefits
, that such a policy would be costly, with few benefits.
Hughes worked at the World Bank between 1968 and 1983 and was a member of the UN Committee for Development Planning from 1987 to 1993.
"International organisations are now at the forefront of reviving gastarbeiter
schemes in spite of their troubled history in Western Europe and the U.S.," Hughes and Gaurav said.
"The schemes are part of the pressure placed on developed countries to solve developing countries' problems by increasing immigration intakes.
"The World Bank is consequently pressing Australia and New Zealand to create seasonal work places for Pacific Islanders."
Island states being targeted include: Fiji, Samoa, Tonga, Tuvalu, Niue, Tokelau, as well as Papua-New Guinea and the Marshall and Cook Islands.
The Hughes-Sodhi paper says that a 2003 Australian Senate committee proposal for a guest worker scheme, as a form of aid, reflected growing lobbying by the media, academics and multinational aid agencies.
Last year's Pacific Forum held in Port Moresby made the guest worker scheme a central feature of that conference, and even the National Farmers' Federation (NFF) sees it as a way of tackling rural labour shortages.
And Labor's Pacific Island Affairs spokesman, Bob Sercombe, has lent qualified support to the proposal.
Despite Prime Minister John Howard not agreeing to open Australia's doors to seasonal workers - especially for fruit-picking and processing - support for such schemes has intensified in certain quarters.
Those promoting the idea envisage benefits for the lesser-developed Pacific Island populations primarily through remittance of funds.
However, according to Hughes and Sodhi, the evidence suggests that most Pacific remittances are spent on consumption rather than investment.
"Although remittances contributed to investment in several large countries, for example, Mexico and Bangladesh, many years of considerable remittance flows in these countries have not been able to contribute to rapid economic development in the absence of pro-growth domestic polices," they said.
Notwithstanding this, such schemes have relatively long histories.
For instance, Austria, Germany, Italy and the United Kingdom still have seasonal agricultural labour schemes.
Although Switzerland, along with several Northern European countries, abolished its rural workers' scheme in 2002, Finland has persisted with a limited program that employs Polish workers.
Hughes and Sodhi said those promoting the idea claimed it would become a win-win arrangement for Australia and Pacific island-states, even though the likely intake of short-term guest workers, initially at least, would not exceed 40,000 annually, a tiny fraction of the 1.5 million unemployed and underemployed across Pacific economies.
They claim the schemes may well even be counterproductive since they could relieve Pacific Island governments of the need to pursue fundamental economic reforms, the only real guarantee of long-term economic development and higher living standards across the Pacific basin.
It's worth noting that neither Japan, Taiwan nor South Korea dispatched members of their once rapidly growing workforces overseas to help modernise their domestic economies.
Instead, modernisation was initiated primarily via land reform, acceptance of foreign investment and the promotion of aptitudes and attitudes amongst their populations that valued material improvement.
Also implemented concurrently were liberalising and democratic reforms.
This suggests that the dispatching of a segment of a nation's workforce to foreign lands isn't necessarily a catalyst for self-sustained economic growth.
"A guest worker scheme could not contribute significantly to Pacific living standards and, by appearing to provide a safety valve for the Pacific's employment problems, could further delay policy reforms," Hughes and Sodhi said.
"A Pacific guest-worker scheme would also seriously undermine efforts to provide employment opportunities to unskilled Aboriginal and Torres Strait Islanders in Australia, and to unskilled Pacific Islanders already resident in New Zealand.
"Seasonal work could also provide transitional employment opportunities for unskilled Pacific Islanders resident in New Zealand.
"Considerable numbers of Pacific Islanders have successfully settled in Australia and New Zealand and they should continue to be welcomed as long-term immigrants.
"A guest-worker scheme would move away from proven immigration models.
"The World Bank's pressure on developed countries to accept more immigrants will bring little of benefit to Australia, New Zealand, or Pacific island nations. Instead, the failure to pursue genuine reforms in the Pacific will lead to ever-increasing social problems and political instability."
The economists' report contends that the best reason for Australia not acceding to a guest-worker scheme is that it would ensure Australia's long-term unemployed and other welfare dependants would see unskilled job prospects removed from their grasp.
Australia, the report said, had a significant pool of under-utilised labour, most especially within the ranks of indigenous peoples.
"Not employing Aborigines and Torres Strait Islanders from fringe and remote communities in labour-short rural Australia is an egregious anomaly," the report says.
"Given low literacy, numeracy and English among Aborigines and Torres Straight Islander working-age adults, seasonal fruit-picking and processing are among the few jobs available for the transition from welfare to jobs.
"International migration experience suggests that neglecting domestic sources of employment ratchets up welfare rolls.
"The policy challenge is to unlock this supply with welfare reforms."
The report said some 200,000 Aborigines lived on the fringes of townships and outback "homeland" settlements and it criticised the September 2005 NFF Labour Shortage Action Plan,
because it carried only "a few meagre paragraphs at the very end" about Aboriginal workforce participation.
"In contrast to those integrated into urban society, most rural Aborigines are on welfare pensions, including those on the euphemistically-named Community Development Employment Program, known more accurately as 'sit-down money'," they said.
"Only some 15 per cent of rural Aborigines are employed.
"The NFF failed to note the successful 2005 Cape York Institute (CYI) initiative to recruit Aborigines from remote communities for fruit-picking which recognised that breaking the habits of welfare dependence required policy and administrative intervention.
"Noel Pearson from the CYI, argues that rural indigenous labour is ideal for use in horticultural industries.
"Fruit-picking and packaging are frequently the best points of entry into the workforce for poorly-educated Aboriginal men and women without work experience."
The NFF's plan proposed limiting Pacific guest-workers to groups of between 30 to 50 employees with the groups being directed to particular regions or industries that would also sponsor them. The Greater Shepparton fruit-growing and processing area is identified as a regional example of a failure to utilise rural Aborigines.
Although this region's official unemployment rate stands at 2.5 per cent, the Yorta Yorta people, who number about 6,000, are almost entirely welfare-dependent.
"To reassure potential trade union critics, the NFF stressed that Pacific workers would be paid standard wages and work to standard conditions," Hughes and Sodhi said.
"The NFF has not, however, considered how guest workers would be selected, sponsored and how many would be required.
"Importantly, given standard wages, what would be the additional costs of employing guest workers and who would bear them?"- Joseph Poprzeczny