Australia's Seasonal Worker Program has key development impacts, says World Bank

Discussing the launch of the World Bank Seasonal Worker Program report, in Canberra, Australia. Photo by: Lisa Cornish / Devex

CANBERRA — Since 2006, the World Bank has been advocating the benefits of seasonal workers to improve labor mobility and economic advancement of Pacific Island nations. On Wednesday, in Canberra, Australia, the World Bank released a new report analyzing the development impacts Australia’s seasonal worker program has achieved and provided recommendations to the Department of Foreign Affairs and Trade for making the scheme more effective.

Australia’s seasonal worker program, enabling residents of select Pacific Island countries to enter Australia for employment in low-skilled sectors such as fruit picking, has been fully operational since 2012. The scheme has continued to flourish under the coalition government, which came into power in 2013, and has been supported across party lines.

Today, the seasonal worker program is open to participants from Fiji, Kiribati, Papua New Guinea, Samoa, the Solomon Islands, Timor-Leste, Tonga, Tuvalu, and Vanuatu. It brings in more than 6,000 people annually to perform low-skilled work and since 2012 has employed a total of 17,320 Pacific Islanders and resulted in net gain of approximately $144 million Australian dollars ($110.8 million) for these island nations.

The scheme is heavily regulated, requiring both employers and employees to undergo extensive checks, but despite this there is known exploitation — including underpaid workers as well as 14 deaths as of January this year.

The new report from the World Bank, however, sees initiatives such as this as important in filling the funding gaps that exist in the Pacific.

“Labor mobility remains clearly as important today as it ever was,” Michel Kerf, country director for Papua New Guinea and the Pacific Islands with the World Bank, said at the launch of the report, discussing the long history of the World Bank in advocating for programs such as this.

He explained that Pacific Island countries face a number of human development challenges creating unique impacts on access to good and well-paying jobs — including remoteness and young and fast-growing populations.

And to continue progressing opportunities, improving labor mobility was a high priority for development programs.

What did the World Bank find are positives of the scheme?

For employees working in Australia, the World Bank assessment of the seasonal worker program found that in all cases, the incomes earned were a significant increase on potential earnings at home. Tongan participants in the scheme received the highest increase in potential earning, bringing in 5.6 times the average local income.

Key insights from the OECD review of Australian aid

The Organization for Economic Co-operation and Development have had their say on Australia’s aid program, its first development cooperation peer review conducted under Australia’s coalition government — and the first review following the 2013 integration of AusAID into the Department of Foreign Affairs and Trade. And Devex has the key insights from their review.

Within the households of Pacific Island participants, development impacts were evident. School-age children were more likely to be enrolled and attending classes, especially in Tonga. But the report did not show any noticeable improvement of health or labor supply within households.

Money from the scheme was able to make improvement to living conditions, including household renovations or purchase or farm equipment, cars, and trucks.

And seasonal program workers were also contributing at the community level, making financial contributions to churches, community infrastructure, and local schools.

Despite working in low-skilled jobs, the workers reported to the World Bank that they were receiving skills that could help improve employment prospects back home. This included picking, packing, operating a forklift, leadership skills, and English language skills.

What is the experience of seasonal workers?

The World Bank report surveyed workers to understand their motives for participating in the program and their experiences before, during, and after their time in Australia.

For the majority of participants, increasing earnings to build a better house, start a business or pay school fees were among the highest factors for participating. To be successful in getting a place in the scheme, many found that education was not a barrier to participation as it was low skilled work — but being located in urban settings and having connections within Australia were more likely to see them offered a position in the program.

With the exception of participants from Vanuatu, the majority of workers surveyed intended to participate in the scheme for years to come.

In ranking satisfaction with the program, the average from Pacific participants was 8.6 out of 10. The highest was in Tonga (9.9) and lowest in Vanuatu (6.3). Although the report did not detail the reasons for a lower satisfaction rating from Vanuatu participants, the World Bank’s Social Protection Economist Jesse Doyle suspected the issues at the predeparture end, including unresolved issues with fees and commissions.

For participants, the program improves economic prospects and skills. And on returning home, it does not stop them seeking additional employment. Many workers reported their intention to continue with previous jobs, take a new role or engage in further study that took up six months of the year — allowing them to return again to Australia for seasonal work.

Despite employers contributing AU$500 to predeparture costs, participants were required to pay between AU$1,199 and AU$1,822 for airfares, visas, clearances, medicals, work clothes, and more — a financial burden that limits the ability for some of the most disadvantaged people to join the program.

What are the areas of improvement?

The World Bank report provided 11 recommendations to support a range of issues that were identified as part of their research.

Nauru, Kiribati, Papua New Guinea, and the Solomon Islands had a low participation rate in the program. And investing in resources that could improve the ability for these countries to send workers would improve economic prospects of these countries.

The program also skewed towards urban areas — but regional areas with poorer communities could benefit greatly from the program. Having decentralized passport or visa services and health checks could improve participation of these areas and reduce domestic costs associated with additional travel.

Similarly, ensuring poor households were educated on the program and understood how they could participate as well as focusing on unemployed labor could improve options for poorer members of the community.

Improving the rate of female participation in the program was also an important recommendation. While the number of women in the program has grown, their participation rate has remained steady at approximately 14.4 percent since 2012. Potentially expanding industries the seasonal worker program supports, including hospitality and tourism, could improve opportunities for women.

Reducing costs was an additional recommendation that the World Bank felt needed to be prioritized — and this included predeparture costs as well as costs to connect from Australia to home. Communicating with family was excessively high for some participants, but so was sending money home. Services on offer could charge up to 19.9 percent in fees. In fact, Doyle explained that since 2012, Western Union has made AU$16.5 million through remittance fees received via the seasonal worker program.

And addressing demand-side constraints within Australia to encourage employers to look at the seasonal worker program for labor instead of working holiday makers, such as backpackers, would see the scheme grow rapidly within Australia and potentially grow Pacific Island economies with them.

What is the response to the report?

At the launch of the report, Robert Christie, assistant secretary of the Pacific Aid Effectiveness and Advice Branch with DFAT, told the audience the report was “ticking all the boxes.”

“We absolutely applaud the great recommendations that you have put towards us,” he said.

Christie explained that DFAT were already working on key recommendations, including reducing costs to participate and remit money as well as improving governance structures of participating countries to reduce barriers to access.

As part of their next steps, DFAT will be looking to the Pacific Labour Scheme, beginning in July 2018, which will see an initial intake of up to 2,000 workers from Kiribati, Nauru and Tuvalu — countries with low participation rated in the seasonal worker program.

And Kerf said the World Bank too will continue to promote greater investment in schemes such as these that advance labor and economic opportunities for small island developing nations.

About the author

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    Lisa Cornish

    Lisa Cornish is a Devex Reporter based in Canberra, where she focuses on the Australian aid community. Lisa formerly worked with News Corp Australia as a data journalist for the national network and was published throughout Australia in major metropolitan and regional newspapers, including the Daily Telegraph in Melbourne, Herald Sun in Melbourne, Courier-Mail in Brisbane, and online through news.com.au. Lisa additionally consults with Australian government providing data analytics, reporting and visualization services. Lisa was awarded the 2014 Journalist of the Year by the New South Wales Institute of Surveyors.