Australia has wholeheartedly embraced the concept of a global workforce, with 10% of Australia’s labour force holding a temporary visa (Macro Business).

Their employment conditions have been thrust into the national spotlight with a recent Government report titled A National Disgrace: The Exploitation of Temporary Work Visa Holders.

The report highlights the challenges foreign workers face and the emergence of a labour black market economy.

The question of how this situation was allowed to develop is complex. The report states that most employers wanted to comply with the law and there was, therefore, an important distinction between inadvertent and deliberate noncompliance.

Those that broke the law deliberately are another matter. Multinational organisations find it difficult to reconcile with Australia’s high-base wages, and look to assimilate labour costs and conditions to match overseas markets they operate in.

A survey by United Voice (trade union) found that of more than 200 international students who had a job while studying, 25 per cent were receiving $10 or less an hour. 60 per cent were earning less than the national minimum wage and 79 per cent knew little or nothing about their rights at work in Australia.

Regardless of the number of employees that understand Australian labour laws, there remains a problem with staff treatment, as well as the treatment of foreign workers. The report made key recommendations regarding foreign workers which are summarised below:

  • The committee recommends the Ministerial Advisory Council on Skilled Migration (MACSM) be re-constituted as a genuinely tripartite, independent, and transparent body committee, and further recommends that the reports produced by MACSM be made publicly available.
  • The committee recommends that the replacement of local workers by 457 visa workers be specifically prohibited.
  • The committee recommends that employer sponsors of a 457 visa worker (professional) be required to also employ an Australian tertiary graduate in the same enterprise on a one-for-one basis.

The recommendations aim to promote the better treatment of foreign workers but still include Australian staff, leading to a more balanced workforce. The committee also recommends the protection of identities of foreign staff who complain from Border Force and the change of Government attitudes toward a more victim-centred approach.

The recommendations could be viewed as too little, too late (and too hard to implement) while the true extent of foreign staff conditions in Australia may never be fully known.

Digging deeper, the report points toward a broader issue affecting all labour markets – how much to pay staff?

Businesses see wages as an expense and a cost that affects profit while not contributing to the bottom line (an attitude that has led to the poor treatment and payment of foreign staff).

Henry Blodget, CEO and co-founder of Business Insider, takes offence to this attitude and gives his thoughts on staff payment.

“It’s not a ‘law of capitalism’ that you pay people as little as possible — it’s an excuse.” – Henry Blodget, 2015

If it is an excuse and employers should pay more, what are the benefits of paying staff above award wage?

Paying staff more helps break the Walmart effect, whereby low-wages paid by major corporations forces the government to aid low-paid workers. The U.S Government pays $153 billion in public assistance to families that have a job but struggle to live. While the Australian Government doesn’t spend as much, it still costs the Australian taxpayer millions of dollars to regulate law breaking companies, a cost that could be avoided.

One of the primary drivers of an economy is the spending power of its members. If employees aren’t paid a living wage, they cannot spend on goods and services. Profit obsessed companies look to lift the bottom line, cut staff wages and then panic when sales don’t lift, not realising they are creating the cycle in the first place.

There are countless examples of companies that pay well above award-wage and are profitable. A study from 2006 found that Costco paid 40% higher wages than its main competitor yet, was still more profitable.

In conclusion, paying your staff more can result in multiple benefits, as staff are not liabilities; they are engines of revenue growth.