Article

Australia’s Pacific Seasonal Worker Pilot Scheme: Why Has Take-Up Been So Low?

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Abstract

The Australian Government introduced the Pacific Seasonal Worker Pilot Scheme (PSWPS) in 2008 to allow Pacific Islanders to fill seasonal labour shortages in the horticulture industry, and announced in December 2011 that the scheme would be made permanent. Take-up of the scheme is increasing but has been very low. As of the end of March 2012, only 1,100 PSWPS workers have arrived since the scheme’s commencement. This study tries to explain why the PSWPS has not employed more Pacific workers. It distinguishes between different hypotheses that could explain the poor outcome, and uses quantitative and qualitative analysis to test each hypothesis, including a survey of growers. The study finds a number of reasons for the low take-up. Growers are largely satisfied with their current labour supply, in terms of both quantity and quality: 93 percent of growers interviewed said they had no trouble finding labour, and 81 percent were satisfied with the quality of their existing labour force. The scheme is not well known: half the growers surveyed had simply not heard of the scheme, and most of those who had lacked information about it. The scheme also suffers from perceptions of high levels of risk and costs, including excessive red tape. Despite its slow start, PSWPS might still succeed on the basis of the productivity gains it has already shown it can deliver. But this is by no means assured: even growers who are unhappy with their current labour supply arrangements are reluctant to try the PSWPS. For the scheme to expand, the Australian Government will need to promote the scheme much more vigorously, and reduce the scheme’s financial and compliance costs. The Government also needs to attend to illegal horticultural labour practices, and tackle the booming working holiday visa category. Most growers now rely mainly on backpackers, and their numbers have increased rapidly in recent years: we estimate the number of backpackers working on farms increased from 13,000 in 2001-02 to 37,000 in 2007-08. In particular, the special preference which horticulture receives under the working holiday visa category should be removed. The policy challenges involved in making the PSWPS work should not be underestimated. Other avenues should also be explored for promoting Pacific migration, including adoption of New Zealand’s quota-based Pacific permanent migration schemes.

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... In addition to the longer minimum work guarantee, several other differences between the two schemes are likely to have made the PSWPS relatively more expensive for employers in Australia compared to the RSE for employers in New Zealand (Hay & Howes 2012). Initially, approved employers had to be labour-hire companies rather than growers, while the RSE was agnostic as to whether growers or contractors employed workers. ...
... Initially, approved employers had to be labour-hire companies rather than growers, while the RSE was agnostic as to whether growers or contractors employed workers. Another source of relatively higher costs was red tape and compliance; while not easily quantified this was noted as a deterrent by many employers interviewed by Hay and Howes (2012), especially the market testing for whether local labour was available. The small size of the PSWPS also contributed to higher costs in two ways; many employers were simply unaware of the scheme so there was an information cost, and because it was just a pilot with no assurance that it would continue there was risk for employers investing in it. ...
... Perhaps the most important factor in making PSWPS a relatively costly source of labour compared with the RSE is the much greater reliance on backpackers by the Australian horticultural industry. The final factor considered by Hay and Howes (2012) is that seasonal work in Australia may not be attractive to Pacific workers because of unfavourable tax rules and remittance costs, compared with the situation in New Zealand-although they consider the labour demand side explanations far more important than any supply side explanations. ...
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... The composition of the harvest workforce has certainly shifted, largely in line with increasing flows of TMWs, but the overall quantum of labour supply each year is large and seems sufficient for grower needs. Direct results from recent grower surveys suggest that only a small minority of horticultural employers experiences difficulty in recruiting seasonal workers (Doyle and Howes 2015;Dufty et al. 2019;Hay and Howes 2012;Howe et al. 2017;Valle et al. 2017). Perhaps the most startling counter to common claims of labour shortage emerges from academic studies, supported by reports from enforcement agencies, unions and the media, which document mistreatment of seasonal workers, starting with effective hourly wage rates that fall below -sometimes well below -the legal award minimum (Berg and Farbenblum 2017;FWO 2018;Howe et al. 2019;MWTF 2019;Underhill and Rimmer 2016). ...
... Other grower surveys look specifically at recruitment for seasonal labour. The first two were prompted by concern about the low take-up of the SWP: i) a 2011 survey of 183 growers + 8 Approved Employers (Hay and Howes 2012); and ii) a 2014 survey of 217 employers (Doyle and Howes 2015). In addition, we can use a survey in 2016 of 252 vegetable growers who had hired or paid pickers, packers or graders in the previous five years. ...
... Other reasons for the slow uptake during the pilot phase of the PSWPS are discussed by Hay and Howes (2012) and include greater availability of low-cost substitutes in Australia, such as illegal migrants and working holidaymakers. Curtain et al. (2018) also note that the RSE is more employer driven. ...
... Even though the income gains for households supplying workers to the Australian SWP scheme were the same order of magnitude as for those supplying workers to New Zealand's RSE scheme (between 30% and 40% compared with similar households not supplying workers), aggregate gains were just 3% of those for the RSE program at that time because of the very small scale of Australia's scheme. Notably, during the multiyear pilot of the Australian scheme, available spaces were undersubscribed (Hay and Howes 2012). However, substantial changes were announced in June 2015, with the SWP becoming an uncapped scheme and expanding beyond the original focus on horticulture to include the aquaculture, cane, and cotton sectors within the broader agricultural industry. ...
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... Both Australia and NZ established such schemes in the mid-2000s. 2 These schemes have been analysed separately (see Hay & Howes, 2012, Doyle & Howes, 2015, and Howe, Reilly, van der Broek, & Wright, 2017, on Australia, and Bedford, 2013, and Gibson & McKenzie, 2014, but their comparative performance has only been analysed to date in a presentation and blog post by Curtain (2015Curtain ( , 2016, on which this paper builds. ...
... Although the growth has moderated and even turned negative in recent years due to a fall in the number of backpackers coming to Australia, the absolute number of backpackers applying for a second-year visa has remained large (Table 2). Hay and Howes (2012), in their nationwide survey of horticultural employers in Australia, found that 73% of growers report that backpackers are their main source of labour. Doyle and Howes (2015), in a second survey of horticultural employers, found that 46% of growers reported that backpackers are their main source. ...
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... Maybe the whole lot of them (Howes and Berry, 2012). Hay and Howes' (2012) study analyzing the low take-up rate of the Australian scheme found that undocumented labor was an important factor in hindering its success. Only 12 percent of the growers that agreed to answer a question concerning undocumented labor denied using illegal labor. ...
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Do remittances sent by overseas migrants serve as insurance for recipient households? In a study of how remittances from overseas respond to income shocks experienced by Philippine households, changes in income are found to lead to changes in remittances in the opposite direction, consistent with an insurance motivation. Roughly 60 percent of declines in household income are replaced by remittance inflows from overseas. Because household income and remittances are jointly determined, rainfall shocks are used as instrumental variables for income changes. The hypothesis cannot be rejected that consumption in households with migrant members is unchanged in response to income shocks, whereas consumption responds strongly to income shocks in households without migrants. Copyright The Author 2007. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.
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This paper analyses the temporary migration decision of workers who are credit constrained. As observed with data on Tunisia, migrants who invest after returning to their country have accumulated more savings and stayed longer abroad than salaried return migrants. To capture these features, we analyse the optimal migration duration and occupational choice of workers using a life-cycle maximisation model. An econometric test enables us to evaluate the extend to which liquidity constraints affect self-employment of returned migrants. The model predicts unexpected effects of policy measures on migration behaviour. In particular, migrants who receive funds to invest after return do not necessarily return earlier. Copyright 2004, Oxford University Press.
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Thesis (Ph. D., Dept. of Economics)--Harvard University, 2003. Includes bibliographical references.
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Few studies have examined the impact of international migration and remittances on poverty in a broad cross-section of developing countries. The authors try to fill this gap by constructing a new data set on poverty, international migration, and remittances for 74 low- and middle-income developing countries. Four key findings emerge: 1) International migration-defined as the share of a country's population living abroad-has a strong, statistical impact in reducing poverty. On average, a 10 percent increase in the share of international migrants in a country's population will lead to a 1.9 percent decline in the share of people living in poverty ($1.00 a person a day). 2) Distance to a major labor-receiving region-like the United States or OECD (Europe)-has an important effect on international migration. Developing countries that are located closest to the United States or OECD (Europe) are also those countries withthe highest rates of migration. 3) An inverted U-shaped curve exists between the level of country per capita income and international migration. Developing countries with low or high per capita GDP produce smaller shares of international migrants than do middle-income developing countries. The authors find no evidence that developing countries with higher levels of poverty produce more migrants. Because of considerable travel costs associated with international migration, international migrants come from those income groups which are just above the poverty line in middle-income developing countries. 4) International remittances-defined as the share of remittances in country GDP-have a strong, statistical impact in reducing poverty. On average, a 10 percent increase in the share of international remittances in a country's GDP will lead to a 1.6 percent decline in the share of people living in poverty.
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PIP This paper sets forth a procedure for calculating the annual efficiency gains from alternative changes in existing international immigration restrictions and evaluates the impact of wage rate changes on nonmigrating labor. Data on US gross national product (GNP)/capita across countries are used to infer differences in the marginal productivity both between countries and across major world trading areas. The method assumes that the worldwide labor supply is fixed, that full employment occurs in all regions, and that differences in labor's marginal product across regions arise because of barriers to inward mobility of labor in high-wage countries. When these barriers are removed, labor is assumed to be reallocated and efficiency gains occur. Results of the calculations suggest large gains from the removal of global immigration controls which, in most cases, exceed existing worldwide GNP generated in the presence of labor mobility restrictions. A large portion of the gain is accounted for by labor migration between the aggregated rich and poor countries. Over 40% of the total potential gain is realized when only 10% of the wage differential is eliminated, suggesting that small changes in global migration restrictions have large marginal effects. Wage rates increase in labor-losing regions and decline in labor-receiving regions, dramatizing the incentives for labor unions in high-wage countries to oppose liberalization of immigration restrictions. These results suggest large potential worldwide efficiency gains from a move toward an international labor market free of immigration controls. This issue may be far more important to the North-South debate than a focus on initiatives such as commodity price stabilization, relaxation of trade protection, or increased aid flows.
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We compare the wages of workers inside the United States to the wages of observably identical workers outside the United States—controlling for country of birth, country of education, years of education, work experience, sex, and ruralurban residence. This is made possible by new and uniquely rich microdata on the wages of over two million individual formal-sector wage-earners in 43 countries. We then use five independent methods to correct these estimates for unobserved differences between the productivity of migrants and non-migrants, as well as for the wage effects of natural barriers to international movement in the absence of policy barriers. We also introduce a selection model to estimate how migrants’ wage gains depend on their position in the distribution of unobserved wage determinants both at the origin and at the destination, as well as the relationship between these positions. For example, in the median wage gap country, a typical Bolivian-born, Bolivianeducated, prime-age urban male formal-sector wage worker with moderate schooling makes 4 times as much in the US as in Bolivia. Following all adjustments for selectivity and compensating differentials we estimate that the wages of a Bolivian worker of equal intrinsic productivity, willing to move, would be higher by a factor of 2.7 solely by working in the United States. While this is the median, this ratio is as high as 8.4 (for Nigeria). We document that (1) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination; (2) these gaps represent one of the largest remaining price distortions in any global market; and (3) these gaps imply that imply allowing labor mobility can reduce a given household’s poverty to a much greater degree than most known in situ antipoverty interventions.
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[eng] We present a two-sided search model where agents differ by their human capital endowment and where workers of different skill are imperfect substitutes. Then the labor market endogenously divides into disjoint segments and wage inequality will depend on the degree of labor market segmentation. The most important results are : 1) overall wage inequality as well as within-group and between-group inequalities increase with relative human capital inequality ; 2) within-group wage inequality decreases while between-group and overall wage inequalities increase with the efficiency of the search process ; 3) within-group, between-group and overall wage inequalities increase with technological changes. [fre] Immigration et justice sociale. . Cet article est d�di� � la m�moire d'Yves Younes qui nous a quitt�s en mai 1996, et dont les derni�res r�flexions sur l'importance du ph�nom�ne migratoire dans les �tats-Unis des ann�es 1980-1790 m'ont beaucoup influenc�.. L'ouverture des fronti�res entre le Nord et le Sud peut-elle se retourner contre les plus d�favoris�s du monde, c'est-�-dire les non-qualifi�s du Sud ?. Avec deux facteurs de production, les migrations Sud-Nord b�n�ficient tou�jours aux moins qualifi�s du Sud, puisqu'ils y sont le facteur le plus abondant. Mais avec trois facteurs de production (trois niveaux de qualifications, ou deux niveaux et un facteur capital imparfaitement mobile), l'ouverture des fronti�res peut conduire � une baisse du salaire des moins qualifi�s du Sud si leur compl�mentarit� avec le travail tr�s qualifi� ou le capital du Nord est suffisamment faible compar�e � celle des sudistes plus qualifi�s.. Plusieurs �tudes r�centes sugg�rent effectivement que les �lasticit�s de compl�mentarit� chutent brutalement au-del� d'un certain �cart de qualification. Cependant, rien ne prouve que ces effets soient suffisamment forts pour que l'ouverture optimale des fronti�res du point de vue de la justice sociale
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