Dr Wadan Narsey (Islands Business October 2006) insulted Australia by implying that its unwillingness to accept the Pacific Island Forum’s guest worker scheme was similar to the ‘White Australia’ policy firmly discarded in 1966.
Australia welcomes thousands of permanent immigrants from Tonga, Samoa, Fiji and other Pacific islands every year in accordance with its ‘points’ non-discriminatory selection system that, following the wishes of the resident population, reaches world wide. Total numbers have increased as Australia’s absorptive capacity for immigrants has been deemed to rise. Dr Narsey should note that the largest increase has come from India and China. Migrant numbers will increase further in the future if sound economic policies continue to be pursued. This means that more Pacific islanders can look forward to migrating to Australia where they will be welcomed together with other permanent immigrants. Australia has an enviable record of integrating permanent migrants. Typically, migrants have the same level of unemployment and workforce p articipation as the rest of the population.
The benefits of seasonal guest worker schemes, however, are far lower than the benefits of long term migration, and there are considerable costs. It is estimated that the additional costs of air fares, health and security procedures, the insurance necessary to protect the workers and administrative costs could double the wage rates currently paid to seasonal workers. It is doubtful these additional costs could be absorbed by employers, so workers and taxpayers are likely to subsidise the scheme. Moreover, although Australia appears to have shortages of unskilled labour, it also has substantial long term unemployment and one in six Australians still receive welfare. The Australian government is trying to wean the long term unemployed off welfare through ‘mutual obligation’ measures. There are at least 100,000 long term unemployed when those with mild ‘stress’ and similar conditions on disabled pensions are included. Perhaps 50,000 or 60,000 of the long term unemployed are Aborigines and Torres Strait Islanders who have been mar ginalised by a combination of poor education and welfare policies so that they have few ways of entering the labour force. Fruit and vegetable picking and canning is one industry that can provide a transition from welfare to work for these Australians.
The Pacific has at least 1.5 million unemployed and underemployed men and women. Another 200,000 youngsters – many of them unschooled – are added to this number every year. Vast unemployment and stagnating living standards for the majority of Pacific islanders are the result of Pacific governments’ unwillingness to take the measures that would lead to growth and create badly needed jobs. This would enable Pacific islanders to live decently without having to emigrate into economic exile. The World Bank has estimated that a maximum 38,000 seasonal jobs could be available in Australia annually for Pacific islanders. This number would be a drop in the bucket of Pacific unemployment and underemployment. Samoa has faced up to economic reform. It has grown faster than any other Pacific state. Its excellent education system means that Samoans who want to emigrate can do so. It also has the largest domestic formal employment share in its labour force in the Pacific. Because of the costs of seasonal emigration it is not interested in the Pacific guest worker scheme.
Because the World Bank’s welfare oriented aid policies have failed in the Pacific (as they have failed in Latin America and Africa), it is supporting a seasonal guest worker scheme as a form of increased Australian aid to the Pacific. That is, Australian taxpayers should presumably subsidise a Pacific guest worker scheme to make it economic. But the Pacific is already the largest per capita aid recipient in the world and Australia is already its principal donor. All this aid has not done the Pacific any good because domestic policies have stultified development. Australian taxpayers are getting fed up with aid that benefits small elites that are not interested in the welfare of the majority. Samoa is afraid that because of wage differentials skilled workers would be attracted by the scheme, denuding Samoa’s limited skill base. It does not want to create a rentier class that could, with repeated stints in Australia, sit back for a large part of the year, without contributing to the domestic economy.
The Pacific islands are beautiful. Many are rich in mineral, agricultural and marine resources. They are very well located in relation to burgeoning Asian markets. Tiny, well run and hard working Norfolk Island has a higher per capita income than Australia. Iceland, roughly the size of the Solomons, is located in the far Arctic North and initially only had fish to rely on. But with liberal economic and social policies it has become one of the highest per capita income countries in the world. The Pacific could be a new Garden of Eden if modern technology, including modern economics and governance, were married to its bounteous natural resources and able peoples.
Having a safety valve in seasonal jobs in Australia would not shift Pacific governments toward growth policies. On the contrary, economic reforms would likely to be put off even further into the future. Remittances from emigrants can only be used for investment if their home countries’ policies – like Taiwan’s or South Korea’s are determinedly pro growth. Frustrated contract guest workers unable to become permanent migrants would be entitled to feel that they had been ‘blackbirded’ like the sugar cane workers who filled apparent labour shortages in Northern Queensland in the 19 th century. Australia does not want to repeat past mistakes.
Professor Hughes is a Senior Fellow and Gaurav Sodhi is a researcher at The Centre of Independent Studies, Sydney. Their paper, Should Australia and New Zealand Open Their Doors to Guest Workers in the Pacific? Costs and Benefits, is available at www.cis.org.au
Home > Commentary > Opinion > Why Guestworker Scheme is ‘Uneconomic’
Why Guestworker Scheme is ‘Uneconomic’
Dr Wadan Narsey (Islands Business October 2006) insulted Australia by implying that its unwillingness to accept the Pacific Island Forum’s guest worker scheme was similar to the ‘White Australia’ policy firmly discarded in 1966.
Australia welcomes thousands of permanent immigrants from Tonga, Samoa, Fiji and other Pacific islands every year in accordance with its ‘points’ non-discriminatory selection system that, following the wishes of the resident population, reaches world wide. Total numbers have increased as Australia’s absorptive capacity for immigrants has been deemed to rise. Dr Narsey should note that the largest increase has come from India and China. Migrant numbers will increase further in the future if sound economic policies continue to be pursued. This means that more Pacific islanders can look forward to migrating to Australia where they will be welcomed together with other permanent immigrants. Australia has an enviable record of integrating permanent migrants. Typically, migrants have the same level of unemployment and workforce p articipation as the rest of the population.
The benefits of seasonal guest worker schemes, however, are far lower than the benefits of long term migration, and there are considerable costs. It is estimated that the additional costs of air fares, health and security procedures, the insurance necessary to protect the workers and administrative costs could double the wage rates currently paid to seasonal workers. It is doubtful these additional costs could be absorbed by employers, so workers and taxpayers are likely to subsidise the scheme. Moreover, although Australia appears to have shortages of unskilled labour, it also has substantial long term unemployment and one in six Australians still receive welfare. The Australian government is trying to wean the long term unemployed off welfare through ‘mutual obligation’ measures. There are at least 100,000 long term unemployed when those with mild ‘stress’ and similar conditions on disabled pensions are included. Perhaps 50,000 or 60,000 of the long term unemployed are Aborigines and Torres Strait Islanders who have been mar ginalised by a combination of poor education and welfare policies so that they have few ways of entering the labour force. Fruit and vegetable picking and canning is one industry that can provide a transition from welfare to work for these Australians.
The Pacific has at least 1.5 million unemployed and underemployed men and women. Another 200,000 youngsters – many of them unschooled – are added to this number every year. Vast unemployment and stagnating living standards for the majority of Pacific islanders are the result of Pacific governments’ unwillingness to take the measures that would lead to growth and create badly needed jobs. This would enable Pacific islanders to live decently without having to emigrate into economic exile. The World Bank has estimated that a maximum 38,000 seasonal jobs could be available in Australia annually for Pacific islanders. This number would be a drop in the bucket of Pacific unemployment and underemployment. Samoa has faced up to economic reform. It has grown faster than any other Pacific state. Its excellent education system means that Samoans who want to emigrate can do so. It also has the largest domestic formal employment share in its labour force in the Pacific. Because of the costs of seasonal emigration it is not interested in the Pacific guest worker scheme.
Because the World Bank’s welfare oriented aid policies have failed in the Pacific (as they have failed in Latin America and Africa), it is supporting a seasonal guest worker scheme as a form of increased Australian aid to the Pacific. That is, Australian taxpayers should presumably subsidise a Pacific guest worker scheme to make it economic. But the Pacific is already the largest per capita aid recipient in the world and Australia is already its principal donor. All this aid has not done the Pacific any good because domestic policies have stultified development. Australian taxpayers are getting fed up with aid that benefits small elites that are not interested in the welfare of the majority. Samoa is afraid that because of wage differentials skilled workers would be attracted by the scheme, denuding Samoa’s limited skill base. It does not want to create a rentier class that could, with repeated stints in Australia, sit back for a large part of the year, without contributing to the domestic economy.
The Pacific islands are beautiful. Many are rich in mineral, agricultural and marine resources. They are very well located in relation to burgeoning Asian markets. Tiny, well run and hard working Norfolk Island has a higher per capita income than Australia. Iceland, roughly the size of the Solomons, is located in the far Arctic North and initially only had fish to rely on. But with liberal economic and social policies it has become one of the highest per capita income countries in the world. The Pacific could be a new Garden of Eden if modern technology, including modern economics and governance, were married to its bounteous natural resources and able peoples.
Having a safety valve in seasonal jobs in Australia would not shift Pacific governments toward growth policies. On the contrary, economic reforms would likely to be put off even further into the future. Remittances from emigrants can only be used for investment if their home countries’ policies – like Taiwan’s or South Korea’s are determinedly pro growth. Frustrated contract guest workers unable to become permanent migrants would be entitled to feel that they had been ‘blackbirded’ like the sugar cane workers who filled apparent labour shortages in Northern Queensland in the 19 th century. Australia does not want to repeat past mistakes.
Professor Hughes is a Senior Fellow and Gaurav Sodhi is a researcher at The Centre of Independent Studies, Sydney. Their paper, Should Australia and New Zealand Open Their Doors to Guest Workers in the Pacific? Costs and Benefits, is available at www.cis.org.au
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