The exploitation of migrant workers continues to be a scourge across Australia, according to a new report from the Grattan Institute.

The report says up to 16 per cent of recent migrants are paid less than the national minimum wage and up to 9 per cent of all workers in Australia were paid less than the minimum wage in 2022.

Titled ‘Short-changed: How to stop the exploitation of migrant workers in Australia’, the report outlines recommendations to combat worker exploitation.

“Exploitation hurts migrants, but it also weakens the bargaining power of Australian workers, harms businesses that do the right thing, damages our global reputation, and undermines public confidence in our migration program,” the report said.

“Overall rates of underpayment fell during the pandemic, because of the departure of many temporary visa holders, the introduction of JobKeeper, and a strong jobs market. But we risk underpayment rising again now that the borders have reopened and many temporary visa holders are returning. Now is the time for the government to act,” it said.

The report sets out the three areas of reforms needed to stamp out the exploitation of migrant workers.

“First, visa rules that increase migrants’ risk of exploitation should be changed. Many temporary visa holders put up with mistreatment out of fear that their visa will be cancelled or they will lose their pathway to permanent residency if they are found working in breach of visa rules,” the report said.

“Temporary skill-shortage visas should be made portable, so migrants can flee from an exploitative employer,” it said.

The report said government’s recent decision to require employers to pay sponsored workers at least $70,000 a year will help reduce exploitation as higher-paid workers typically have more bargaining power.

But Australia’s working holiday visa program has drifted away from its original goal of promoting cross-country cultural exchange towards being a supplier of cheap labour on Australian farms.

“Rules that force working holiday-makers to work in regional areas to extend their stay in Australia should be abolished. Instead, working holiday-makers should be limited to a single one-year visa – what Australians are entitled to abroad,” the report said.

The report recommends the government commission a review of international higher education in Australia, with a brief to identify ways to reduce student exploitation and weed out dodgy course providers.

It says the government should also create a workplace justice visa, to enable migrants to remain in Australia for a limited time to pursue unpaid wages if their temporary visa is about to end.

The Grattan Institute report says workplace and migration laws should be strengthened and better enforced to deter exploitation.

“Few employers who underpay their workers get caught, and the penalties are far too small when they are caught,” it said.

“Employers who underpaid their workers were hit with penalties of just $4 million in 2021-22, compared to $3 billion collected by the Tax Office from tax offenders, and $232 million imposed by the ACCC for breaches of competition and consumer law.

“If we don’t take wage theft more seriously it will keep happening.”

The report recommends the Fair Work Ombudsman be renamed as the Workplace Rights Authority and be given greater powers and an extra $60 million a year to step up enforcement of workplace laws.

“It should have the power to fine employers who underpay their workers, not just those who fail to keep the right pay slips,” the report said.

“Maximum court-ordered fines for underpayment should be increased. And courts should be able to send employers who knowingly underpay their workers to jail for up to 10 years.”

Thirdly, the report calls for more support for exploited workers

“More support should be offered to migrant workers who pursue their employer for unpaid wages, because right now too few exploited workers try to get their money,” it said.

“Migrant workers centres should be established in each state, to help educate migrant workers about their rights and connect migrants with suitable legal advice if they need it. And funding for community legal centres should be boosted.

“Australians are rightly proud of our heritage as a migrant nation. But the mistreatment of so many migrant workers is a national shame. It’s time we stamped out the exploitation of migrant workers for good,” the report said.