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NZCPD Guest Forum 
Should Australia & NZ open their doors to guest workers from the Pacific?
By Helen Hughes and Gaurav Sodhi
4 November 06

Proposals for Australia and New Zealand to open their doors to guest workers for fruit picking and processing have been rejected by the Australian government, but support for such a scheme continues to intensify. Media, academics and farmers’ organisations claim the scheme is a win-win deal, with benefits accruing to labour poor Australian farmers, cash poor Pacific islanders and, most prominently, Pacific governments faced with high unemployment and rising instability.

International organisations are now at the forefront of reviving gastarbeiter and bracero schemes in spite of their troubled history in Western Europe and the United States . 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.

Little consideration, however, has been accorded to the details of a Pacific guest worker scheme. Estimates of likely numbers of guest workers range from 10,000 to 38,000 places a year. But the Pacific’s failure to adopt growth policies over the past 30 years has resulted in a pool of a million and a half unemployed and underemployed. Some 200,000 school leavers are added to these jobless every year. Even if the intake of seasonal workers coming to Australia and New Zealand were to rise to 50,000 workers a year, the impact on the Pacific would be negligible. To be other than symbolic, recruitment would have to be focused on those small islands that are not already becoming ghost economies through emigration. For most Pacific islanders a Pacific guest worker scheme would thus be a cruel deception.

This paper applies a cost-benefit analysis to the guest worker proposals. It argues that income gains for migrants selected for seasonal work would be achieved at high economic and social costs in terms of employment opportunities for long term unemployed and other welfare dependants in Australia and New Zealand .

Long term unemployment and growing disability rolls indicate that Australia ’s and New Zealand ’s welfare systems discourage labour participation. Both countries have significant pools of underutilised labour. In Australia , not employing Aborigines and Torres Strait Islanders from fringe and remote communities in labour short rural Australia is an egregious anomaly. Given low literacy, numeracy and English among Aboriginal and Torres Strait Islander working age adults, seasonal fruit picking and processing are among the few jobs available for the transition from welfare to jobs. Seasonal work could also provide transitional employment opportunities for unskilled Pacific islanders resident in New Zealand . International migration experience suggests that neglecting domestic sources of employment ratchets up welfare rolls and unskilled immigration numbers at the cost of economic efficiency and equity. The policy challenge is to unlock this supply with welfare reforms.

If seasonal immigrants were paid Australian wages and farmers had to pay the additional costs inherent in employing labour from the Pacific, fruit picking wages would have to rise substantially, perhaps to $25 or $30 an hour. Alternatively the additional costs would have to be subtracted from guest workers’ wages or contributed by Australian and New Zealand taxpayers.

Agreements reached between employers and employees reflect private costs and benefits. But to be considered seriously, schemes for unskilled seasonal migration not only have to reflect market arrangements, but also account for social costs and benefits. Seasonal movements must, moreover, be managed within overall migration policies. The latter are constrained because the demand for immigrant places exceeds Australia ’s and New Zealand ’s absorptive capacities for immigrants.

Australia and New Zealand have responded by developing selective immigration policies that have been successful in avoiding the unemployment, alienation and apathy of second generation immigrant youths that is evident overseas, most recently in France and the United Kingdom . Considerable numbers of Pacific islanders have successfully settled in Australia and New Zealand and they should continue to be welcomed as long term immigrants. But the experiences of Pacific migrants in Australia and New Zealand show that integration becomes more problematic as selectivity is diluted. A guest worker scheme would move away from proven immigration models.

International experience suggests that unskilled seasonal workers, with their limited English and literacy, are vulnerable. Australia and New Zealand would have to introduce highly interventionist measures to avoid substantial overstaying by unskilled immigrants.

Remittances from long term migration exceed export incomes by considerable margins in several Pacific countries. But remittances are predominantly spent on replacing local foods such as fish and vegetables, with imported packaged foods and beverages with ensuing severe health problems. Remittances are also spent on education—for further emigration. But in the absence of land and other private property rights only a negligible share of remittances goes to investment and economic development.

The World Bank’s pressure on developed countries to accept more immigrants, regardless of costs and benefits, follows its abandonment of the key role of growth in development in favour of welfare, including the international redistribution of income through aid. But productive employment in farming, in manufacturing and in services must be created in the Pacific if the stagnation of the past 30 years is to give way to rising living standards. The reforms that are essential for growth and job creation are well known. The failure to pursue them is leading to ever increasing social problems and political instability. 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.

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