PART 8 - OTHER FACTORS AFFECTING RISK OF UNDERPAYMENT
Part 8 —OTHER FACTORS AFFECTING RISK OF UNDERPAYMENT
Union Membership and Perceptions of Peer Experience Shape Underpayment Risk More Than Geography, Gender or Length of Stay in Australia
Underpayment risk is greatest for new arrivals but remains substantial regardless of length of stay
The risk of underpayment was greatest for those who had arrived within 6 months of the survey, with almost half (46%) paid below the National Minimum Wage and 81% paid below the casual minimum. Wage rates improve and the risk of underpayment drops somewhat the longer migrants are in Australia.
These figures suggest a benefit to industry and regulators of especially targeting information, detection and enforcement efforts towards newer arrivals. However, the problem is not confined to new arrivals. Even for migrants who had been in Australia for at least three years, over a quarter (28%) were still paid below the National Minimum Wage and two thirds (65%) were paid below the casual minimum. Indeed, once we control for job characteristics and other factors, the impact of length of time in Australia on risk of underpayment is diminished.
The risk and extent of underpayment are most acute for newer arrivals and progressively reduce (but remain substantial) over length of stay
Wages earned per hour in lowest paid job in 2023-24 by year of arrival (n=8,184)
Geographic location does not significantly affect likelihood of underpayment
More than half of the participants’ lowest pay jobs were located in New South Wales (31%) and Victoria (26%). Another 35% of lowest paid jobs were in Queensland (13%), South Australia (11%) and Western Australia (11%). The remainder were dispersed across Tasmania and the territories.
In capital cities, 26% of participants were underpaid by more than $10/hour, compared with 20% who were underpaid by that amount in inner regional areas and 21% in regional or remote areas. However, when we controlled for industry and other demographic characteristics, geographic location did not significantly affect the likelihood of underpayment. This was the case for both state/territory location during lowest paid job, and ABS remoteness classification of location. This aligns with results from the Grattan Institute that found that controlling for job, demographic and other characteristics, geography did not have a significant impact on underpayment.[i]
Gender has little impact on migrants’ risk of underpayment
We found that once the impact of job characteristics and other factors have been accounted for, females are less likely than males to be paid their full individual minimum entitlements. However, gender has no impact on the risk of payment below the National Minimum Wage.
Migrants’ perception of the prevalence of underpayment among peers on their visa is strongly connected with their own likelihood of underpayment
Migrants who believed other migrants on their visa are underpaid were also much more likely to be underpaid themselves.
When one controls for participants’ visa, job and other demographic factors, participants who believed that ‘many’ or ‘some’ people on their visa are underpaid were 67% more likely to be paid below the National Minimum Wage themselves.
Migrants’ perception of their peers’ experiences of underpayment likely shapes their expectations of ‘reasonable’ wage rates within their labour market, independent of the wage rates required under Australian workplace laws.
“In some areas, employers take it for granted that they pay international students less than the statutory hourly wage and pay them in cash because they generally believe that international students have "poor English" and "low ability”
— Female international student from China, 27, in South AustraliaOne in two (50%) international students perceived underpayment as widespread among their peers, with a further third (33%) believing that ‘some’ international students are underpaid. Figures were similar for Temporary Graduate visa holders. Among Working Holiday Makers, 39% believed underpayment was widespread and 42% believed ‘some’ of their peers are underpaid.
“I feel that being an immigrant with an Asian English accent and having no local experience makes it difficult for me to find a normal, good job, even though I am willing to learn and don't mind going the extra mile... To pay the bills and expenses, especially when first arriving in Australia, many of us ( students) agree to work for lower-than-minimum pay rates, often paid in cash without a payslip and superannuation.”
— Female international student from Vietnam, 30, in TasmaniaEven among those on skilled visas that generally have minimum annual salary thresholds, a third (32%) believed many skilled visa holders are underpaid, and a further third (32%) believed some are underpaid.
Employers also anchor migrants’ expectations of reasonable wages based on prevailing wages in industries with high numbers of migrant workers.
“Sometime the boss would say the wage rate is already better than the other cafes to convince you accept the wage.”
— Female international student from Taiwan, 28, in QueenslandMigrants believe underpayment is widespread across all major visa classes
Perception of the proportion of people on the same visa who are underpaid (n=7,943)
Among international students, Working Holiday Makers and temporary graduates, perception of the prevalence of underpayment was especially high among those who worked in certain industries in their lowest paid job in the 18 months prior to the survey. Among those who worked in cafes and restaurants, 56% believed many others on their visa were underpaid. Only 13% believed very few were underpaid.
Although risk of underpayment decreased somewhat over participants’ time in Australia, their perceptions of the prevalence of underpayment among peer visa holders were remarkably similar regardless of participants’ year of arrival.
Union members have a reduced likelihood of underpayment, insecure work and noncompliance
It is widely reported that most temporary visa holders are reluctant to join a trade union in Australia.[ii]
Seven percent of survey participants reported that they had been a union member in Australia - around half of the proportion of employees across Australia who were union members in August 2024 (which was 13%), and around the same proportion of workers aged 20-24 across Australia who were members at the time (7%).[iii] It is higher than the proportion of migrants who reported they were union members in our 2016 survey (which was 4%).[iv]
Nevertheless, we found that union membership had a distinct impact on underpayment.
Holding all other factors constant, union membership was associated with decreased likelihood of underpayment in participants' lowest paid job.
It is likely union membership in our survey cohort is higher than the incidence of union membership among temporary visa holders in Australia generally. This is because unions assisted with dissemination of the survey to their members in several industries, as reflected in particularly high unionisation rates in jobs such as aged care (24%), healthcare including nursing (17%), disability care (10%) and petrol station attendants (11%).
“After joining union i feel safe and secure”
— Male Graduate visa holder from India, in VictoriaOver a third of non-members (35%) reported receiving $22 per hour or less in their lowest paid job, compared with 25% of union members. It is difficult to determine whether union membership positively protects migrant workers against underpayment, or whether more empowered workers who insist on compliant wages are more likely to join a union.
“If I have more access of the information about the trade union I will know about my right”
— Male Graduate visa holder from Colombia, in WAUnion members were less likely to report wages below the National Minimum Wage floor
Participants’ hourly wage in their lowest paid job, among union members and non-members (n=7,357)
“Can the government make it mandatory for the workers to be a part of the workers union they are working in? In this way, the workers will feel safe and can escalate issues directly.”
— Female Bridging visa E holder from India, 35, in VictoriaIn addition to reduced underpayment, participants who indicated they had been a union member during their time in Australia were also less likely to be engaged in insecure employment structures including misclassification in their recent lowest paid job, and less likely to experience noncompliance with super and payslips in that job.
Union members were 31% less likely to be denied super compared to non-union members (in relative terms)
Union members were 25% less likely to receive no payslips or misleading payslip than non-union members (in relative terms)
Union members were 32% less likely to be a casual (rather than permanent) employee than non-union members (in relative terms)
References
[i] Brendan Coates, Trent Wiltshire and Tyler Reysenbach, Short-changed: How to stop the exploitation of migrant workers in Australia (Report, 23 May 2023) 17, 98.
[ii] Ibid 66.
[iii] Australian Bureau of Statistics, 'Trade union membership' Australian Bureau of Statistics (Web release, 9 December 2024) https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/trade-union-membership/latest-release.
[iv] Bassina Farbenblum and Laurie Berg, 'Migrant workers' access to remedy for exploitation in Australia: the role of the national Fair Work Ombudsman' (2017) 23(3) Australian Journal of Human Rights 310, 314.