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Backpackersvseasonalworkers:learningfromthecontrasting
temporarymigrationoutcomesinAustralianandNewZealand
horticultureRichardCurtain,MatthewDornan,StephenHowesand
HenrySherrell
Abstract
“Crowdingout”isawidelyacceptedclaiminmigrationanalysis,evolvingfromtheliteratureassessingpost-SecondWorldWarguest-workerlabourwhichhelpedfueltheeconomicboominEuropeandotherWesterncountries.Giventhecostsofregulation,thepreferenceofprofit-maximisingemployersforirregularandminimally-regulatedmigrantsoverregulatedalternativeswill,itisargued,undermineifnotcondemntofailurewell-regulatedtemporarymigrationschemes.Totestthecrowding-outhypothesis,thehorticulturallabourmarketsinAustraliaandNewZealandareexamined.TheexperienceofregulatedseasonalmigrantprogramsinAustraliaandNewZealandhasbeendivergent.Eventhoughthetwoprogramsareverysimilarindesign,theNewZealandvarianthasbeenmuchmorepopularthanitsAustraliancounterpart.Theevidencesuggeststhattherelativeattractivenessofregulatedandunregulatedmigrantlaboursourcesdependsonarangeoffactors,includingtheexportorientationofthesector,thecostsofcollectiveactionandregulation,differencesinpolicydesignandimplementation,andexternalfactors.Dependingonindustryandeconomy-widecharacteristics,qualityandreputationalbenefitsforemployerscanoffsetthecostofregulation.
DevelopmentPolicyCentreDiscussionPaper65November2017
SERIESISSN2206-303X
Backpackersvseasonalworkers:learningfromthe
contrastingtemporarymigrationoutcomesinAustralian
andNewZealandhorticulture
RichardCurtain,MatthewDornan,StephenHowesandHenry
Sherrell
RichardCurtain is an independent consultant andAssociate of
the Development Policy Centre. Matthew Dornan is Deputy
Director and Stephen Howes is Director of the Development
Policy Centre. Henry Sherrell was a Research Officer at the
DevelopmentPolicyCentreatthetimethispaperwasdrafted.
This paper was first presented at the Migration and Work
symposiumon6February2017attheUniversityofSydney.An
earlier version was presented at a 1-2 June 2016 Devpolicy
labour mobility workshop at ANU. Thanks to participants at
botheventsandtoreviewersfortheircomments.
Curtain,R,Dornan,M,Howes,S&Sherrell,H2017“Backpackersvseasonal
workers: learning from the contrasting temporary migration outcomes in
Australian and New Zealand horticulture,” Development Policy Centre
Discussion Paper #65,Crawford School of Public Policy, The Australian
NationalUniversity,Canberra.
TheDevelopment Policy Centre is a research unit at the
Crawford School of Public Policy, The Australian National
University.Thediscussionpaperseries is intended to facilitate
academic and policy discussion. Use and dissemination of this
discussion paper is encouraged; however, reproduced copies
maynotbeusedforcommercialpurposes.
The views expressed in discussion papers are those ofthe
authors and shouldnot be attributed to any organisationwith
whichtheauthorsmightbeaffiliated.
Formore information on the Development Policy Centre, visit
http://devpolicy.anu.edu.au/
1
Backpackersvseasonalworkers:learningfromthecontrastingtemporary
migrationoutcomesinAustralianandNewZealandhorticulture
1. Introduction
“Crowdingout”isawidelyacceptedclaiminmigrationanalysis.Itisoftenarguedthat
profit-maximisingemployerswillpreferirregularandminimallyregulatedmigrantsto
more regulated alternatives, given the costs of regulation. Thus, poorly-regulated
temporarymigrationschemeswillcrowdoutbetter-regulatedones.
This paper revisits the crowding-out hypothesis by comparing and contrasting the
horticultural labourmarkets in Australia andNewZealand (NZ). Both economies are
structuredonthesameliberalmarketprinciplesandhavelabourmarketsthatexhibit
highproportionsofmigrants.However,theexperienceofseasonalworkerprogramsin
Australia and New Zealand has been highly divergent. A regulated labour supply of
temporary migrants has thrived in NZ horticulture whereas an unregulated migrant
laboursupplyhasdominatedinAustralia.
Thispapersetsouttoexplainthesecontrastingoutcomes.Itfirstsurveystherelevant
literature,andprovidesthecontext,afterwhichadetailedanalysisoftheAustralianand
NewZealandhorticulturalsectorlabourmarketsispresented.Thefinalsectionsofthe
paperexplainthecontrastunearthedbythisanalysis.
2. Literaturereview
Since Castles’ 1986 obituary for European guest-worker systems, written on the
premisethattheseprograms“inevitablyleadtopermanentsettlement”(Castles1986),
much has changed in global migration. The apparent resurrection of temporary
migrationprogramswasacknowledgedbyCastleshimself(Castles2006).However,he
thencautionedthat“thefrequentpreferenceofemployersforundocumentedworkers
undermines temporaryworker programs” (Castles 2006: 755).We call a generalised
versionofthisclaimthe“crowdingout”hypothesis:theargumentthatthepreferenceof
2
employers for unregulated workers undermines regulated temporary worker
programs.1
The evidence for the crowding-out hypothesis typically rests on within-country
comparisons between small regulated schemes and large unregulated ones. For
example, Castles (1986) documents how Belgian and French employers came to rely
heavilyonmigrantswithatouristvisainthelate1960s:
“[These] clandestineworkersmet employers’ needswell. Theywere a flexible
sourceoflaborandtheirweaklegalstatuscompelledthemtoacceptpoorwages
andconditions”(Castles,1986:764).
Moregenerally,Wickramasekera(2002:5)findsthat“businessesandemployersinhost
countries reap enormous profits by exploiting migrant workers, especially irregular
workers”.
Exploring these labour dynamics in the context of “immigration policy and labour
shortages”,Anderson andRuhsnotehowprofit-maximising employerswill choose to
hiremigrantworkersillegallybasedonthree“businessandrecruitmentobjectives”:
(i) minimising labour costs, (ii) recruiting ‘good workers’ with the preferred
qualitiesandattitude, and (iii)minimising immigrationcosts, i.e. theeconomic
and other costs arising both from state sanctions and from complying with
bureaucraticrequirementsofthelegalemploymentofmigrants.Wherethelegal
employmentofmigrants isrestricted,recruitingmigrants illegallywill increase
laboursupplyandpotentiallyputdownwardpressureonwages,at least inthe
short term.Employersmayalsouse illegallyemployedmigrants to lowercosts
through non-compliance with employment and tax laws (Anderson and Ruhs,
2010:198).
Thereare twopossiblepolicy implicationsof the crowding-outhypothesis.One is for
moreenforcement.RuhsandMartin (2006:12-13)argue that “inboth theUSandUK,
thedebateoverhowtodealwithirregularmigrationincludestheargumentthatbetter1ThisisalabourmarketequivalentofGresham’slawthatbadmoneywilldriveoutgood.
3
enforcement of employment laws would reduce the demand for irregular migrant
labourbyraisingitscost…”.Ruhshimselfarguesinfavourofwelldesigned,regulated
andenforcedtemporarymigrationfromexistingsources(Ruhs2006,2013).
The other possible implication ismore defeatist: that temporarywork programs are
bound to fail. Castles (2006:755)writes that, because of crowding out, guestworker
programsarestill“unlikelytoachievetheiraimsofmeetinglow-skilledlabourdemand
andpreventingsettlement.”
As noted, the evidence for the crowding-out hypothesis is based on single-country
studies.Inthispaper,were-examinethecrowding-outhypothesisusingacomparison
ofAustralianandNewZealandhorticulturalsectorlaboursupply.
3. AustralianandNewZealandcontext
AustraliaandNewZealandareprimeexamplesof liberalmarketeconomies.The two
countries have similar migration regimes. The priority initially given post-war to
permanent “settler” migration gave way to a strong emphasis on attracting skilled
migrants, selected by points awarded for preferred characteristics. The growth in
temporary skilled migration and international students has also been important.
Employers have increasingly been given a direct role in skilled migrant selection,
including via a two-step migration process from temporary to permanent migration
throughemployersponsorship(Hawthorne2012).
One major difference between the two countries is New Zealand’s history of Pacific
migration. From 1951 to 1972, the Pacific Islander population in New Zealand grew
from3,600toover50,000(NewZealandGovernment,2016).Thelaissez-faireapproach
ofNewZealandpolicy-makerstoPacificvisitorsandvisaoverstayersinthe1960sand
1970swasgraduallyreplacedbyamoreformalapproach,withtheintroductionofthe
firstPacificmigrationprogramin1975-76(OngleyandPearson,1995).SpecificPacific
migration “windows” remain a feature of New Zealand immigration policy today
(Curtain et al. 2016). In Australia, theWhite Australia policy before the 1970s and a
rigidcommitmenttonon-discriminationthereafterensuredthatspecialconcessionsfor
4
migrationfromPacificcountrieswerenotforthcoming.Asaresult,thePacificdiaspora
ismuch larger inNew Zealand than in Australia. Pacificmigrantsmake up three per
centoftheNewZealandpopulation,whereasinAustraliaithasneverbeenmorethan
onepercent(Curtainetal.2016:Figure2).
While both Australia and New Zealand have traditionally emphasised permanent
migration,morerecentlybothcountrieshaveexperiencedmassivegrowthintemporary
skilledmigration.Themainfocushasbeenonskilledtemporaryvisas, the457visa in
Australia (now renamed the Temporary Skills Shortage Visa) and the Essential Skills
VisainNewZealand.Researchthemesinrelationtotheskilledtemporaryvisasinclude
precariousness (Tham and Campbell 2013; Velayutham 2013), fairness (Wright,
Groutsis and van den Broek 2016), marginalisation (Walsh 2014) and vulnerability
(Yuan, Cain and Spoonley 2014). Other major temporary visa categories are for
international students andworkingholidaymakers, and they toohave recently come
underbothpublicandacademicscrutiny.Boucher(2016)convincinglyarguesthatsuch
programs should be considered “de-facto low-skilled programs”. Mares (2016) and
Howe and Reilly (2015) discuss how lower skilledmigrants face amore constrained
environmentcomparedtothosewithhigherskilllevels.
Inthemid-2000s,bothcountriesintroducedtemporarymigrationprogramsspecifically
for horticulture. These schemes have been analysed separately (see Hay and Howes
2012,DoyleandHowes2015,andHoweetal.2017onAustralia;andBedford2013on
NewZealand),buttheircomparativeperformancehasonlybeenanalysedtodate ina
presentationandblogpostbyCurtain(2015,2016),onwhichthispaperbuilds.
4. HorticulturallabourinAustraliaandNewZealand
ThehorticulturalindustriesinAustraliaandNewZealandprovideausefulcomparison
toevaluatethecrowding-outthesis.Bothlabourmarketshaveaheavyshareofmigrant
workers and both have experienced similar policy changes with the introduction of
seasonalworkerprograms,albeitwithsomeimportantdifferencesintiming.
5
The Recognised Seasonal Employer (RSE) Scheme in New Zealand and the Seasonal
WorkerProgramme(SWP)inAustraliaareverysimilar.Theyarebothhighlyregulated
schemes for the employment of migrant labour. The contrasting use and different
employer preferences for the RSE and SWP show how the context within which
schemesoperateshapestheuseorotherwiseoftemporarymigrationprograms.
The following sub-sections explore the size and composition of the horticultural
workforceinthetwocountries,andthenlooksinmoredetailatthethreemaintypesof
labouremployed.
4.1Thehorticulturalworkforce:sizeandcomposition
Thesizeofthehorticulturallabourmarketinbothcountriesisdifficulttoestimatedue
tothecomplexityofthesectoranditshighrelianceontemporaryworkers,andinthe
case of Australia, illegal workers. The Department of Employment and Workplace
Relationsestimatedaworkforceof55,000to65,000in1999(AustralianSenate2006).2
InNewZealand,HorticultureNZestimatedaworkforceof50,000for2009,whichgrew
to60,000by2016(Herbert2017).
Assessingthecompositionofthehorticulturalworkforceisalsodifficultgiventhelack
ofempiricaldataandtheincentivesforemployersnottorevealanyrelianceonillegal
labour. We have excellent data on seasonal workers, some data on other migrant
workers,andpoordataondomesticorlocallysourcedworkers.Ourbestestimatesfor
the two countries arepresented inTable1.They suggest thatbackpackers andother
migrantsdominatethehorticulturalworkforceinAustralia,butthatdomesticworkers
dominate in New Zealand.While seasonal workers are the smallest category in each
country,theirshareismorethantwiceaslargeinNewZealandthaninAustralia.
2 The horticultural sub-groupANZISC cohorts in the 2011Australian Census only total 37,000 people.However,theCensusoccursinearlyAugustwhichisoutsidethetimemostharvestseasonsoccur.
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Table1:AnestimateofthecompositionofthehorticulturalworkforceinAustraliaandNewZealand
Domestically-sourcedworkers
Seasonalworkers
Backpackersandother migrantworkers
Australia 32% 8% 60%NewZealand 55% 16% 29%
Note:Basedonthediscussioninthetextabove,weassumealabourmarketof60,000ineachcountry.Seasonalworkernumbersarecloselymonitoredbygovernment,andavailablethroughofficialdatasources.ForAustralia,wederivebackpackernumbersfromsecond-yearvisaissuances,andderivedomesticworkersasaresidual.ForNewZealand,wetaketheshareofdomesticworkersfromBedford(2013),andderivethebackpackers/othermigrantcategoryasaresidual.Sources:Table2and3sources,Bedford(2013),Herbert(2017),AustralianSenate(2006).
4.2Domesticallysourcedworkforce
InAustralia, theshareof thedomestically sourcedworkforce isdeclining.Howeetal.
findthat“althoughlocalworkerstraditionallyformedthebulkoftheharvestworkforce,
theyarenolongertheprimarysourceoflabourforgrowers”(Howeetal.2017:20).
Domestically sourcedworkers are amore important contributor to theNew Zealand
horticultural labour market. Bedford examines multiple regions and employers and
suggestsalocalworkforceofapproximately55percentofthetotalfortheperiod2007-
2011 (Bedford 2013: Table 6.5). This is roughly equivalent to Horticulture New
Zealand’s own estimates of the domestically sourced labour supply (Herbert 2017).
AccordingtoBedford(2013),theshareof locallysourcedlabourisalsofallinginNew
Zealand.
Thereareanumberof reasonsbehinddomestically sourcedemploymentdeclining in
thehorticultural industry.Bedford finds retention is the “crucialproblem”becauseof
low wage rates combined with the prospect of only temporary work (Bedford,
2013:57). In both countries, an increasingly urbanised workforce is decreasingly
interestedinundertakingagriculturalwork.
4.3Backpackersandotherminimallyregulatedmigrants
Working holiday makers, known colloquially in both countries as backpackers, are
granted visas based on minimal eligibility criteria such as age, a return ticket or
7
equivalent, evidence of support funds, and in some cases a level of educational
attainment. The visa entitles them to live in Australia or New Zealand without
dependants and toworkwithout any supervision bymigration authorities. From the
perspectiveoftheemployer,backpackersareidenticaltodomesticallysourcedworkers
exceptthattheyarenotabletoworkforoneemployerforlongerthansixmonths.3
In 2005, the Howard Government introduced a second yearWorking HolidayMaker
(WHM)visaextensionavailabletofirst-yearvisaholderswhodidatleastthreemonths
of regional work. This was in response to pressure from horticultural employers to
addresslabourmarketshortages.Thisnewpolicywasimplementedasanalternativeto
a seasonalworkerprogram,whichNewZealandwas then introducing, butwhich the
Howard government was opposed to. This decision transformed the Australian
horticulturallabourmarket,asbackpackersactivelychosehorticulturalemploymentin
ordertoextendtheirresidencyinAustralia.TheDepartmentofImmigrationandBorder
Protectionreportedthat90percentofsecondWHMvisasaregrantedduetoworkin
horticulture (DIBP 2016a).4 The number of second-year backpacker visas grew
dramaticallyfromlessthan3,000in2005toover40,000by2013(Table2).Whilenot
allbackpackerswhoworkonafarmapplyforasecond-yearvisa,thisfigureofsecond-
yearvisaapplicantsisthebestproxyavailableforthenumberofbackpackersworking
onfarms.Althoughthegrowthhasmoderatedandeventurnednegativeinrecentyears
duetoafallinthenumberofbackpackerscomingtoAustralia,theabsolutenumberof
backpackersapplyingforasecond-yearvisahasremainedlarge.5
Hay and Howes (2012), in their nationwide survey of horticultural employers in
Australia, found that 73 per cent of growers report that backpackers are their main
source of labour. Doyle and Howes (2015), in a second survey of horticultural
employers,foundthat46percentofgrowersreportedthatbackpackersaretheirmain
source.
3Additional changes tobackpackeremployment ruleswereannounced in the2015NorthernAustraliaWhitePaperwhichrelaxedsingle-employeremploymentlimits.4The secondyearworkingholidayvisa is approved forbackpackerswhowork in agriculturewhich isfurtherdefinedas“theharvestingand/orpackingoffruitandvegetablecrops,fishingandpearling,treefarmingandfelling”.5Ontheotherhand,from18November2016,WorkandHolidayvisaholders(13,213visaholdersattheendof 2016)will be eligible for a second-year visa on the same requirements as the417 visa holders(DIBP2016b:4).
8
NewZealandalsopromotesadditionalbackpacker residency forwork inhorticulture,
but the incentive it offers ismore limited than inAustralia.Whereas abackpacker in
Australiacangainanadditional12monthsofresidencybyworkinginhorticulture, in
New Zealand the additional residency is limited to threemonths and the backpacker
mustcontinuetoworkinhorticulture.Thischangewasimplementedin2009,wellafter
theintroductionofitsseasonalworkerprogram.
Table2:NumberofsecondyearbackpackervisasgrantedinAustraliaandNewZealand,financialyear2005-06to2015-16
NewZealand Australia
Secondbackpacker
visas
Secondbackpackervisasas
proportionofall
backpackervisas(%)
Secondbackpackervisas
Secondbackpackervisasas
proportionofallbackpackervisas(%)
2005-06 -- -- 2,692 22006-07 -- -- 7,822 62007-08 -- -- 11,826 72008-09 -- -- 21,775 112009-10 1,163 3 25,315 142010-11 1,475 3 22,500 122011-12 1,963 4 30,501 142012-13 2,127 4 38,862 152013-14 2,911 5 45,950 192014-15 3,087 5 41,339 182015-16 3,731 5 36,264 17
Sources:DIBP2015and2016a;ImmigrationNewZealand2016.
Many backpackers working in the regional horticultural labour markets are not
motivated solely by income, but are also seeking to obtain a longer-termwork visa.
Approximately one in five backpackers from1991 to 2014 eventually ended upwith
someformofpermanentresidency(ProductivityCommission2015:373).Thefirstaim
for many is simply to get the second-year visa. This puts them in a vulnerable
employmentsituation,astheyaredependentontheiremployerforworkcertification.
The Fair Work Ombudsman recently found through an inquiry into the wages and
conditions of people working under the 417 Working Holiday Visa Program that
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“unreasonable and unlawful requirements are being imposed on visa holders by
unscrupulousbusinesses”(FWO2016:4).
Illegalmigrantsalsoworkinhorticulture.ThesemaybepeoplewhoenterAustraliaona
tourist visa, and/or are visa over stayers. Four out of five (79 per cent) employers
surveyedin2015recognisedthat“undocumentedworkerswereusedtoatleastsome
extent in the horticultural industry” (Howes and Doyle 2015:13). Data from the
Australian Department of Immigration and Border Protection show that more than
64,000peopleare living inAustralia illegallyafteroverstayingworkandtouristvisas.
Thedepartmentestimatedthat20,000overstayersarealsoworkingillegally(Mcllroy
2017). Media reporting, including investigative reporting in the Fairfax Press,
demonstratehowtouristvisasareusedaspartofanorganisedlaboursourcingregime
rife with middle men and “fixers” in clear contravention of government regulations,
suchasnoassociatedworkrights(BakerandMcKenzie2016).
Finally, it is important torecognisethat the illegalandbackpackercategoriesoverlap.
Backpackers are a legal source of labour, but, as discussed above, are often paid less
thantheyareentitledto.A2017onlinesurveyof4,322temporarymigrantsinAustralia
showed that the worst-paid jobs are in fruit and vegetable picking and farm work,
where15percentofrespondentssaidtheyhadearned$5anhourorlessand31per
centhadearned$10perhourorless(BergandFarbenblum2017).
4.4Seasonalworkers
Aninfluential2006WorldBankreport,AtHomeandAway:Expandingjobopportunities
forPacificIslandersthroughlabourmobility,proposedaframeworktopromoteseasonal
migration from Pacific countries to Australia and New Zealand to address labour
shortages in horticulture (WorldBank 2006). TheWorldBankworkedwith theNew
Zealand government to pilot the sourcing of workers from Vanuatu (McKenzie et al.
2008:4).
The Howard Government, re-elected for a fourth time in 2004, did not support
temporary seasonal migration programs from the Pacific. Instead, in response to
horticulturalemployerpressure,itintroducedthesecond-yearbackpackervisain2005.
10
And in response to pressure fromPacific island countries for greater labourmobility
opportunities, it fundedtheAustralia-PacificTechnicalCollegetoupgradetheskillsof
PacificworkerstoenablethemtomigratetoworkinAustraliaasskilledworkers.
AnAustralianparliamentaryInquiryintoPacificRegionSeasonalContractLabourwas
setupinDecember2005butrecommendedagainstaseasonalworkerprogramforthe
Pacific.Thiswasdespitemostsubmissionsarguingthereweremajorlabourshortages
in theAustralianhorticulture sector (AustralianSenate, 2006).This conclusionof the
committeewasinstarkcontrasttotheWorldBankreport.
WiththeelectionofLaborin2007,thenewPMKevinRuddsaidthenewgovernment
“will closely monitor New Zealand’s experience of seasonal employment of workers
from the Pacific to decide whether Australia should create its own seasonal worker
program”(Maclellan,2008).Australiaintroducedapilotschemein2007whichbecame
anongoingprogramin2012.
The two schemes are very similar in design, not least because the design of the
Australianpilotdrewheavilyonthepre-existingNewZealandscheme.Employerswho
wishtoemployseasonalworkersinbothAustraliaandNewZealandmustengagewith
arobustregulatoryframework.Employerobligationsincludeobtainingpriorapproval
from government to employ seasonal workers, testing the local labour market
(advertising job vacancies), and meeting pastoral care responsibilities, such as
arrangingaccommodation,andhelpingwithsomecosts(particularlyflights).Underthe
Australianscheme,workersmustbesourcedfromthePacificorTimor-Leste.TheNew
Zealand scheme allows employers to recruit from Asian countries, due to legacy
arrangements, but in practice the focus of recruitment for the RSE is also from the
Pacific. The New Zealand scheme has always been capped to ensure that domestic
workershavepriority.However, the caphasbeengradually increasedover time.The
Australianschemewasinitiallycapped,but,afterseveralyearsoflowgrowthinwhich
thecapwasnotmet,thecapwasremovedin2015.
Seasonal workers are definitely a more expensive option for employers than
backpackers. Employers have to cover part of the airfare of theirworkers; they also
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havetoincurthecostsofmeetinggovernmentapprovalandreportingrequirements;as
wellascostssuchasrecruitmentandpastoralcare.Thesecostscan,however,beoffset
bytheproductivity,qualityandreliabilitybenefitsofusingseasonalworkers.ForNew
Zealand, Bedford (2013) finds seasonal workers are more efficient than both
backpackers anddomestically sourcedworkers.This leads toproductivity gains from
“thetimelyremovalof thecropfromthetree/vineaswellasmoreskilfulselectionof
the individual pieces of fruit that are picked” (Bedford 2013: 311). She shows that
seasonal workers have “significantly higher rates of attendance at work, higher
maximum,minimum,medianandaverageearnings,andthereismuchlessvariabilityin
earnings between Pacific RSE workers than there is among the non-RSE workers”
(Bedford 2013: 312). There is also evidence from New Zealand to suggest returning
seasonal workers are more productive. The use of piece-rates in the horticultural
industry allows straightforward comparisons based on firmwage data. Bedford finds
the12-weekaveragewageforreturningseasonalworkersinHawke’sBay,NewZealand
wasapproximately10percenthigherthanfornewseasonalworkersin2011(Bedford
2013)..
In an analysis of payroll data for a large Australian horticultural employer, Pacific
seasonalworkerswere found tobe “significantlymoreefficient thanworkingholiday
makers”(LeithandDavidson2013:1).Theauthorsfoundthatseasonalworkersearned
anaverageof$24perhourwhilebackpackersearned$20.Theauthorssuggestthiswas
duetohigheron-farmexperience,returningemploymentandgreaterincomeincentives
forseasonalworkerscomparedtobackpackers.
Despite their similar designs and benefits, the two schemes show very different
trajectories(Table3).TheNewZealandschemequicklyreacheditscap,andhassince
increasedinlinewithmodestincreasesinthecap.NewZealandemployersconstantly
call for an increase in or removal of the RSE cap to address labour shortages (for
exampleHorticultureNZ2016),bothofwhichwouldleadtoalargeincreaseinseasonal
workers.TheAustralianprogramhasgrownmuchmoreslowly.Evenin2015-16,after
more rapid recent growth, therewere, despite theNZ cap,more than twice asmany
seasonalworkersinNewZealandasinAustralia.
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Table3:SeasonalworkersinNewZealandandAustralia,2007-08to2015-16
NewZealand–RSEapprovedvisas(cap)
Australia–SWPapprovedvisas(cap)
2007-08 4,426(4,500) --2008-09 7,617(8,000) 57(2500over4years)2009-10 6,829(8,000) 63(2500over4years)2010-11 7,619(8,000) 423(2500over4years)2011-12 7,742(8,000) 1,067(2500over4years)2012-13 8,175(8,000) 1,473(2,000)2013-14 8,415(8,000) 2,014(2,500)2014-15 9,275(9,000) 3,177(3,250)2015-16 9,757(9,500) 4,722(*)
*Capremovedforthe2015-16financialyearonwards.Sources:Variousgovernmentdocuments.
The limited take up of the SWP in Australia supports the claim that employers in
horticulturepreferlowcostandirregularmigrantworkers.However,theNewZealand
experience contradicts this claim. As Table 4 shows, the ratio of seasonalworkers to
backpackers in horticulture is approximately 1:2 in New Zealand but only 1:10 in
Australia(measuringbackpackersusingthesecond-yearvisadata).Whiletheseratios
are only estimates, they are telling, especiallywhen it is recognised that demand for
seasonalworkersinNewZealandissuppressedbythecap,whichisbinding.Itisclear
thatthereisamuchhigheremployerpreferenceforregulatedseasonalworkersinNew
ZealandthaninAustralia.6
Table4:Ratioofseasonalworkerstoperthousandbackpackerswithasecondvisainhorticulturalindustry,2009-10to2015-16
Australia NewZealand2009-10 2 5,8722010-11 19 5,1652011-12 35 3,9442012-13 38 3,8432013-14 44 2,8912014-15 77 3,0052015-16 130 2,615
Source:SeeTables2and3.
6Another interestingdifference in thescheme is that inNewZealandthemajorityofseasonalworkersarehireddirectlybyfarmers,whereasinAustraliathemajorityarehiredbylabourhirecompanies.ThismayreflectthegreaterfragmentationoftheAustralianhorticulturalsector.
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Thedifferences inpolicy formation also suggest that inNewZealand there is amuch
greaterinterestinregulatedlabouroptionstoprovideamorereliableandexperienced
workforce than in Australia. According to two key participants in this process
(WhatmanandVanBeek2008),NewZealandgovernmentofficialssawthehorticulture
industry as facing a crisis in the early 2000s. Thiswas due to tight profitmargins, a
growingdemandforlabour,lowwagesandpoorworkingconditions,poorqualitywork,
and low productivity due to the use of casual, often illegal workers (Whatman et al.
2017:2).ThepushfortheRSEcamefromemployersfacinga“crisisintheprofitability
ofthehorticultureindustrybecauseofaninabilitytogetsufficienthigh-qualityfruitand
vegetablespicked,packedandtothemarketintime”(Whatmanetal.2017:2).TheRSE
also had a long period of preparation involving a series ofworkshopswith growers,
governmentofficialsfromdifferentagencies,andresearchers(Whatmanetal.2017:3).
By contrast inAustralia the SWPwas designed and introducedwith very little direct
employerinput.7
Survey evidence from Australia confirms a lack of interest from employers in the
scheme. Howes and Doyle (2015: 11) show that even in 2015, after six years of
operation(includingthepilot)onlytwooutofthreehorticulturalemployerswereeven
aware of the program. Howes and Doyle also note that “28 out of 43 industry
associations had not received any information about the SWP from Government”
(Howes and Doyle 2015:12-13). While this lack of awareness can superficially be
regardedasacauseofthelackoftakeupoftheSWP,itismoreanindicationofthelack
of employer interest in the need for a stable, reliable and experienced workforce to
increaseproductivity.
The employer surveys also reveal a lack of aggregate labour shortage in the
horticultural labourmarket in Australia. Most employers, when surveyed, responded
they had no need to use the SWPprogram to provide a supply ofworkers,with this
figurerisingfrom60percentin2011to67percentin2014(HowesandDoyle2015:
Fig.4.2).
7ThenameoftheNewZealandscheme(RSE)stressestheemployer;thatoftheAustralianscheme(SWP)the worker. The objectives of the two schemes are defined in similar terms, but the wording of theobjectives in the NZ case places greater weight on the benefits for business. Both of these facts areconsistentwiththegreaterrolebusinesshadtoplayinintroducingtheRSE.
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Why has a regulated labour supply of temporary migrants been crowded out in
AustraliabutnotinNewZealand?Thenextsectionofthepaperattemptstoanswerthis
keyquestion.
5. Economic,policyandsocialfactorsshapinglabourmarketoutcomes
Thissectionconsidersfoursetsoffactorswhichhelpexplainthedifferenthorticultural
labourmarketoutcomesinAustraliaandNewZealand:thegreaterexportorientationof
the New Zealand horticultural sector, differential costs of collective action and
regulationinthetwocountries,differences inschemedesignandtiming,andexternal
factors.
5.1Exportorientation8
HorticultureisNewZealand’sfourthlargestexportindustry.Thesectorexports61per
cent its total production to some 124 countries, particularly Europe, USA, Japan and
China (Horticulture New Zealand 2017: 1). In Australia, domestic consumption for a
limitednumberofretailersisthemajorproductdestination.Forexample,over60per
cent of New Zealand’s apple harvest in 2014was exported, but only 1-2 per cent of
Australia’stotalmarketableproductionofapplesandpearswasexported(PipfruitNew
Zealand2015,ApplesandPearsAustralian.d.).
Thishasimportantimplicationsforthelabourmarket.InNewZealand,growerswanted
toremoveanythreattotheirexporttradethroughbadpublicitybystoppingtheuseof
illegalworkersandimprovingtheworkingconditionsoftheworkforce.Thisprovideda
powerful incentive forsupporting theRSE.Moregenerally,high-valueexportmarkets
putexternalpressureonemployerstomeetqualitystandardsthroughcompliancewith
asourcingcodeofqualityandemployerconduct,supportedbyconsumerpreferencefor
ethicallysourcedproducts.TheEuropeancodeofpractice,GlobalGap,requiresgrowers
to show that they have production practices that meet specified quality and
environment standards. It includes the standard ‘Ensuring a responsible attitude
towardsworkerhealthandsafety’.Compliancewiththecodeisindependentlyaudited8ThissubsectiondrawsonCurtain(2015,2016).
15
(Tipples andWhatman2010:49). Related toGlobalGap is an add-on assessment tool
calledGoodRisk-basedAgriculturalSocialPractices(GRASP).This11-pointchecklistis
usedtoauditagrower’scompliancewithemploymentlawandworkerrightsonfarms
(TipplesandWhatman2010:49).9
EmployercompliancewithGlobalGapismuchmorewidespreadinNewZealandthanin
Australia.Accordingtothe2012annualreportofGlobalGAP,thereare1,516accredited
producers inNewZealandandonly153 inAustralia.HorticultureNewZealandnotes
thatabout80percentoftheproducegrowninNewZealandiscoveredbyathird-party
assurance certification program (Horticulture New Zealand 2017:13). In addition,
meeting higher product quality standards means employers place more value on
workforcereliabilityandquality.Asaresult,NewZealandemployersaremorelikelyto
bewilling to incur theadditional costsofhiringseasonalworkers,andmoreeager to
employmoreproductivereturnworkers.
Australian growers, by contrast, have been more focused on domestic markets with
their strong emphasis on price competition and cost minimisation. This means that
Australian growers are more likely to view transient, inexperienced backpackers as
adequate for the task.Without codes of conduct and quality requirements related to
exportmarkets,Australianproducershavehadlittleincentivetoincurgreatercoststo
meet quality standards. The incentives for Australian growers have been to cut
operating costs. The major supermarkets confirmed in their evidence to the Senate
InquiryintotheSeasonalWorkerProgrammethattheyplacestrongpressureonfresh
foodproducerstocuttheircosts(AustralianSenate2016:178,282).
Australia’shorticulturesectorisfocusednotonlyondomesticdemand,butspecifically
on the demands of the two largest supermarket chains. Coles and Woolworths
supermarket chains have 73 per cent of the Australian market serviced by
supermarkets and 350 to 400 fresh food suppliers (Leigh 2016). The supermarkets’
trading terms with suppliers require that they abide by all laws, regulations and
community standards in Australia, but in practice there has been littlemonitoring of
supplierstoseewhethertheyaredoingso(AustralianSenate2016:283-287).9SeetheNewZealandwebpage:‘GLOBALG.A.P.RiskAssessmentonSocialPractice(GRASP)Add-on’,http://www.newzealandgap.co.nz/programmes/grasp/
16
Insummary, thedifferentnatureof theirmarkets forhorticulturalproductshave two
significant effects which have favoured the greater use of seasonal workers in New
Zealand.First,inNewZealand,employersaremorelikelytofearlossofaccesstohigh
payingexportmarketsduetopoorlabourconditions.Thisgivesthemastrongincentive
toinvestinmeetinghigherlabourstandards.Second,NewZealandemployersaremore
likelytogiveagreaterweighttoqualityrelativetocost.
5.2Differentialcostsofcollectiveactionandcompliance
ThedecisioninNewZealandtoturntoseasonalworkerswasacollectiveone,madeat
the sectoral level. As noted earlier, in New Zealand growers played an active role in
settinguptheRSE.Theyhavealsotakentheleadinworkingwithgovernmenttoensure
thattheschemeissuccessful. InAustralia,growersplayedapassiverole insettingup
the SWP and have no direct role in shaping how it is implemented. It is argued that
collectivedecisionmakingiseasierintheNewZealandhorticulturalsectorthaninthe
Australianone.
HorticultureNewZealandrepresents5,500commercialfruitandvegetablegrowers.It
was formed in2005basedon22affiliatedproduct groups.AkeyaimofHorticulture
New Zealand is to increase the collaboration between product, sector, regional and
district groups. Another aim is to develop and encourage industry-wide projects to
benefitallgrowers.Aprimeexampleofthiscollaborationonanindustrywideprojectis
the Association’s funding of a National Labour Steering Group. This committee
represents the key horticulture and viticulture employers and master labour
contractors. Horticulture New Zealand chairs the committee and provides
administrativesupportaswellasfundingaNationalSeasonalLabourCoordinatorwho
worksfulltimeontheRSE(HorticultureNewZealand2017:14).
Incontrast,industryrepresentationforhorticultureinAustraliaisfragmentedbyboth
product focus and geography. The Australian Department of Agriculture lists 43
horticulture industryassociations.Thetwoorganisationsthatplayanationalrole, the
NationalFarmersFederationandtheVoiceofHorticulture,appeartobelittlemorethan
lobbygroupswhosemainactivityismakingsubmissionstogovernment.Asonereport
17
put it: “agribusiness in Australia today is highly fragmented andmany industry-wide
intentions ‘fail at the gate’ because of a lack of an agreed peak industry body to
represent this ...sector of the Australian economy” (Agribusiness Council of Australia
2012:4).Thesamereportnotedthat“government-industryinterfacescanbefractious,
adversarial, and politicised at times, given the historical past of some representative
groups”(AgribusinessCouncilofAustralia2012:4).
ThecostsofusingtheregulatedmigrationoptionarealsolowerinNewZealand.Wages
inthehorticulturalsectorarecloselylinkedtotheminimumwageinbothcountries.In
NewZealand,theminimumwageis$NZ15.25perhourasatJanuary2017.InAustralia,
theminimumwageinthesamemonthwas$17.70.WhiletheNZ$/A$exchangerateis
variable, typically oneAustraliandollar buysmore thanoneNewZealanddollar. The
highertheregulatedwage,thegreatertheincentivetoavoiditbyusinganunregulated
option.
Second, the weaker the enforcement regime, the greater the incentive to use the
unregulatedoption.EnforcementtendstobemuchstrongerinNewZealand,foratleast
two reasons. First, theNewZealandGovernmenthasput inmore enforcement effort.
Alongside the development of the RSE program, the New Zealand Government
established a national contractor registration in 2008 for new and existing labour
contractorsforseasonallabour(Bedford2013).Similarreformsareonlynowbeingput
in place in some Australian states (Sherrell 2017). Second, the horticulture sector in
Australia ismuchmore geographically dispersed than in New Zealand. This not only
makes collective action harder to achieve in Australia, as discussed earlier, but also
makesbothself-regulationandexternal-regulationcheaperoptionsinNewZealand.
5.3Differencesinhorticulturallabourmarketpolicy
While Australia and New Zealand’s seasonal worker and backpacker programs are
broadlysimilar,therearethreedifferencesinthedesign,historyandimplementationof
theseschemes,whichmayalsohelpexplaintheirdifferenttrajectories.
First,AustraliaprovidesamuchstrongerincentivethanNewZealandtobackpackersto
work in horticulture. In Australia, the prize is another year ofwork anywhere in the
18
economy, whereas in New Zealand, the prize is just three months more and only of
horticultural work. This helps explain why 15 per cent or more of Australian
backpackersapplyforthesecond-yearvisa,butonly5percentorlessofNewZealand
backpackersdo.
Second, New Zealand developed its RSE first (in 2007), and then introduced a
backpacker visa extension (2009). In Australia, the sequence was reversed with the
backpackervisaextensioncomingin2005,andtheSWPpilotbecomingoperationalin
early 2009. Hysteresis may play a role here. It seems clear that there was a labour
shortageintheAustralianhorticulturalsectorpriorto2005.Itishardtounderstandthe
industrylobbyingthegovernmentifthiswerenotthecase.Thesecond-yearreformgot
ridof the labourshortageproblem. In thewordsofoneexperienced industry insider,
that one change “almost singlehandedly … pretty much rectified the issue of labour
shortages inhorticultureforunskilledworkers.”(HayesquotedinHowes2012).Once
thatproblemwasovercome,employerandgovernmentinterestintheseasonalworker
optionnaturallywaned.InNewZealand,bycontrast,thelabourshortageproblemwas
solvedbytheregulatedoption.IfAustraliahadintroducedaseasonalworkprograma
couple of years before its backpacker reforms, it is likely that industry would have
gottenbehindit,andtake-upwouldhavebeenmuchfaster.
Third, theNewZealandgovernment agencies involved in implementing theRSEhave
beenbettercoordinatedthanthoseinvolvedinAustralia.TheNewZealandDepartment
ofLabourwas initially responsible for theRSE (Whatmanet al. 2017:3).However, it
waslatersubsumedintotheMinistryofBusiness,InnovationandEmployment(MBIE),
which also includes Immigration New Zealand. MBIE therefore provides a “one-stop
shop”fortheRSE.Inaddition,ithasastrongfocusontheneedsofemployers.Asenior
MBIE manager told the RSE Employers Conference in Apia in July 2015 that “the
governmentwill continue tosupportRSE ...wedowant tomake itaseasy foryouas
possible.”(Mannering2015).
In Australia, the program is operated by the Department of Employment, which
approves employers for participation in the scheme. Approved employers are then
required to enter into a Special Programme Agreement with the Department of
19
ImmigrationandBorderProtection.Australia’semployers thereforehavetodealwith
thesetwodepartments,insteadofoneinthecaseofNewZealand.Inaddition,whereas
New Zealand’s MBIE sees its primary role as being to support employers to engage
seasonal workers, the Australian Department of Employment acts as a gatekeeper,
basedonitsprimaryobjective,whichis,asperitswebsite,to“helpAustraliansfindand
keep employment andwork in safe, fair and productiveworkplace”. TheDepartment
does little to promote the scheme, and it has a reputation for imposing a heavy
regulatoryburdenonemployers.10
5.4Externalfactors
Finally, there are two other explanatory factors between Australia and New Zealand
thatareexternal,i.e.,havenothingtodowithhorticulture.
First,AustraliaismoreattractiveasadestinationforbackpackersthanNewZealand,so
the potential unregulated migrant horticulture labour supply is much larger in the
former.Accordingtotheofficialdataofthetwogovernments,in2014-15Australiahad
230,000 backpackers and New Zealand 63,000 (references as per Table 2). If New
ZealandhadasmanybackpackersasAustralia,butstillonly5percentapplyingforan
extension, that would give them not 3,000 but 13,000 backpackers working in
horticulture.
Second, it is possible that New Zealand’s greater Pacific diaspora has facilitated the
higher take-up of theRSE.Massey et al. (1994: 1525) argue that the development of
migrant networks “makes migration an increasingly common social and economic
practiceandlowersthecostsandrisksofmovement.”Thatsaid,itshouldbenotedthat
the largest worker-sending nation in the RSE is Vanuatu, which has a very limited
diaspora in New Zealand, so not too much weight should be given to pre-existing
diasporanetworks.
10ThoughwhethertheregulatoryburdenisbiggerthaninNewZealandisunclear.RecentreformsaimtoreducetheregulatoryburdenoftheAustralianSWP(MinisterforEmployment2017).
20
6. Conclusion
Thispaperexplainsthegreatersuccessofaregulatedlow-skilledmigrationprogramin
NewZealandrelativetoAustralia,withreferencetofoursetsoffactors.First,thereisa
strongerfocusbyemployersonreputationandqualityinNewZealandhorticulturedue
toitsgreaterexportorientation.ThismakesNZgrowersvaluethebenefitsofthemore
expensiveregulatedoptionmorehighly.Second,thecostsofbothcollectiveactionand
regulation for employers are lower in New Zealand’s horticultural sector, due to
strongerindustryorganisationandlowerenforcementcosts–bothatleastinpartdue
to the lower degree of geographical dispersion and product fragmentation of the
industryinNewZealand–aswellaslowerminimumwages.Third,subtledifferencesin
policy settings, timing and implementation arrangements have worked in favour of
regulated labour in New Zealand. Fourth, factors completely external to the two
countries’horticulturalsectorsmayfavourthegreateruseofregulatedworkersinNew
ZealandandunregulatedonesinAustralia.
It is certainly not possible to assign quantitative weights to this mix of economic,
institutional, geographical and policy factors. However, we would argue that the
differencesinpolicydesign,implementationandtimingarelikelytoreflectthedifferent
preferencesofthetwonationalgroupsofemployers.GiventhatAustralianhorticultural
employers in general prefer unregulated employees, it is not surprising that
backpackers got a first-mover advantage and a stronger incentive to work in
horticultureinAustraliathaninNewZealand.Andwearenotconvincedofthediaspora
argument, given Vanuatu’s success. Thus, we are left with four factors we would
primarily stress: New Zealand horticulture’s export orientation, its lower costs of
regulation and of collective action (both tied to its lesser geographical and product
dispersion),andAustralia’sstatusasabackpackerMecca.
Intermsoftheimplicationsofourfindingsforthebroaderliterature,thecrowding-out
hypothesisofCastles(2006),AndersonandRuhs(2010)andothersisover-simplistic.
There is no guarantee that unregulated will crowd out regulated migration labour
options. It will depend on the extent towhich regulated employees aremore valued
thanunregulatedones,andonthecostsofgoingwiththeregulatedoption.Thetrade-
21
offemployersmakebetweenthesecostsandbenefitswillvaryfromsectortosectorand
countrytocountry.
In terms of policy, thosewho support regulatedmigration options should take heart
from our findings. Preferences for regulated labour will depend on a wide range of
factors,someofwhichwillbeamenabletopolicyinfluence.Toillustratethis,consider
the case of the Seasonal Worker Programme. Whether to counter exploitation in
Australian agriculture or to promote development among Australia’s poor Pacific
neighbours,therearestrongreasonstosupportanexpansionofAustralia’sSWP.This
paperpointsthewayforward.
First, over time, Australia’s horticultural sector might itself become more export
oriented, certainly, Australia aspires to be ‘Asia’s food bowl’. Second, repeatedmedia
exposureandconsumerpressureonsupermarketsmightleadthosesupermarketstobe
more concerned with labour supply issues. Both these developments would shift
employers’ preferences in favour of the SWP. The same pressures might also lead
governments to invest more in enforcement, in particular, to follow New Zealand’s
exampleandrequire labourcontractingcompanies tobe licensed:anapproachwhich
has the advantage of pushingmany of the costs of regulation back on to the private
sector. Indeed, these developments are not just hypothetical, supermarkets and peak
bodiesarealreadyworkingonstrongercodesofconducttoimprovelabourpracticeson
farms (Field 2016), and three Australian state governments have moved to regulate
labourhirecompanies(Sherrell2017).Itishardtoseebackpackerslosingtheirplaceas
Australianhorticulture’spreferredlaboursource,andthereseemstobenoappetitefor
radical reform such as reduction in the incentive for backpackers to work in
horticulture. It is possible, nevertheless, to envisage a scenario in which Australia’s
SWP,nowuncapped,continuestogrow.Indeed,whilethenumberofseasonalworkers
in Australia is still small compared to the number in New Zealand, and miniscule
comparedtothenumberofbackpackersinhorticulture,therecentrapidgrowthinSWP
numbers (50 per cent in 2015-16) combined with the decline in the number of
backpackers(Table2)givescauseforhope.
22
Rightnow,Australianhorticulturesupports thecrowding-outhypothesis,but it isnot
inconceivable that in the future itwill joinNewZealandhorticultureon the rejection
sideoftheledger.
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