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Tim Sonnreich, June 2005. Introduction
The South Pacific is probably the most overlooked region in international debating, which is unfortunate because it is fascinating and highly relevant to the security and economic sustainability of Southeast Asia and Australia/NZ. In a previous article I mentioned some of the security implications of failed states in the pacific (like piracy), but this article is more focused on the economics of the region and in particular, what role countries like Australia and New Zealand could play in improving regional economies through simple measures like increasing regional labour mobility. The specific issue is the formation of a "guest worker" program, and Fiji is the principle case study. But read this article more as a backgrounder to a broad range of issues including the Australia-China Free Trade Agreement, Australia's relationship with the Pacific, poverty reduction/aid programs to the pacific and many more. This article is not meant to prepare you for a specific debate; it's meant to give you a snapshot of one aspect of several overlapping, wider debates. A guest worker program could be a great example/model for various debates, and at the very least it should deepen your understanding of the impacts of labour-mobility issues and impacts of free trade (both positive and negative). Background Fiji is a country in crisis. While not quite a "failed state" in the same way that the Solomon Islands and Nauru have collapsed economically and socially, Fiji is teetering on the brink. That makes it of crucial concern to countries like Australia and New Zealand who would be asked to intervene and restore order (at great cost and risk) if it did implode. Australians have a right to be quite proud of the work the Australian Defence Force (ADF) and Federal Police (AFP) has done in the Solomons, but it would have been better if the problem had not been allowed to get that bad in the first place. Fiji, the Cook Islands, PNG and Vanuatu are all candidates for a just such a collapse, and all could benefit from what I am about to propose. Fiji's problems are complex, and without meaning to be overly simplistic they revolve around tribal/ethnic feuds, that play out in terms of access to land, jobs and resources. The coup in Fiji a few years ago was the culmination of those forces, with indigenous peoples fighting with ethnic Indians (brought over by the British during the colonial period) for land rights (fishing/logging rights were common complaints, as was access to prime agricultural land). Although democracy has been restored, the economic health of the nation is vital if ethnic tensions are to be kept from overheating again. The trouble is that Fiji's economy is sickly, and under great pressure from neighbouring states, and cheap-labour economies like China. The textiles industry is a great example - Fijians work for incredibly low wages (AUD$1 an hour is not uncommon) but it's more than enough to keep an entire family above the poverty line. But as more and more textiles are being produced in China, and as barriers to Chinese exports fall (due in part to the introduction of the Multi Fibre Agreement) Fiji is losing what little industries it has. The result is that many Fijian men are seeking work overseas, particularly in the Middle East, where they can work as labourers, and in transport and construction and earn many times more than the average yearly wage in a matter of months. But there are two problems, firstly the work is highly dangerous and exploitative (many work in transport in Iraq for instance, and others are not paid if they are injured or die) and secondly there is simply not enough work available to meet the needs of Fiji. One employment agency in Fiji, Meridian, has the names of roughly 20,000 men who want to work in the Middle East, but only 2000 places to fill. How Australia could help, but won't The Pacific Islands Forum (chaired by a Howard government appointee) is in the process of putting together a program, called "The Pacific Plan" to address the chronic corruption, instability and insecurity of the Pacific. One part of that plan is to create a 'guest worker' system in Australia and New Zealand. It's not the whole plan, but it's a significant part of it and this article will consider it in more detail. 'Guest workers' are foreign nationals who enter a country not to migrate, not as tourists, but simply to work for a period of time (say 3 to 6 months) and then return to their home. They work under the same conditions as local workers (so under the standard award for that industry), which means they pay taxes and national laws protect them. Simply put, they temporarily boost the pool of available workers, benefiting employers, the economy more generally and the workers themselves (who earn wages that are far above what they could get at home - and when they return there they can support their families for extended periods of time on just the fruits of a few months labour). As it stands Australia does not really have a guest worker program. What we do have is a system whereby people on tourist visas (backpackers usually) can extend their visa for up to a year if they work in particular industries (like fruit picking and other agriculture-based industries). Only nationals from a small list of mostly European countries are eligible for this type of work-tour visa. The government doesn't like this loophole much, but without it farmers in remote communities would find it impossible to function efficiently because they would either be short staffed around peak times (like harvests and planting periods) or be forced to pay inflated wages to attract workers. However even letting backpackers pick fruit isn't enough. Firstly many backpackers don't want to do it, and secondly they are not a reliable source of labour. Here is where Pacific Islanders come in. Put most bluntly, in Fiji there are many workers, but not many jobs. In Australia there are many jobs and not enough workers. The solution should be fairly obvious. Ah, if only things worked like that. The Australian government has resisted moves to set up a guest worker system despite the clear benefits for both sides. It seems ridiculous that the federal government is desperately trying to find 20,000 additional skilled migrants to boost the pool of available labour (even though we regularly fail to find enough suitable migrants under the current quota), but won't accept a guest worker system, which could provide an immediate increase in the size of the workforce. But let's analyse the situation more closely. What's in it for Australia? Beyond the obvious - jobs we need doing get done - argument, there are other reasons why Australia should do this. I'll briefly mention them.
At present Fijian textiles enjoy duty-free entry to the Australian market; thanks to a preferential trade deal that began in the 1980's. Up until 2000, the Fijian garment industry grew by 10% per year. However, due to recent political instability and a drop in demand, the industry is in decline. And now, just as Fiji recovers from the political crisis that stalled the economy, the textiles industry is about to be obliterated by the impending Aus-China FTA. If an FTA is signed, Fijian exports will be far too expensive to compete. Whilst it's fine for Australia to seek a deal with China that will benefit them and us (if by "benefit" you mean we get cheaper T-shirts while a nasty dictatorship gets richer and Fijians - who live in a democracy - get poorer) we still have an obligation - moral and practical - to our neighbours. Fiji relies heavily on Australia economically - Australia is the super-power of the Pacific - and we need to be careful how we act given the power that we have. When it costs us nothing to replace the jobs that we are destroying, we should do it. It's the right thing to do. But we benefit too of course (in this age of economic irrationalism you always need a financial reason for doing the right thing) because we get people to do important jobs that very few Australia's will even consider doing for $10 an hour.
The military and police operations in the Solomon Islands have been incredibly expensive, and has already led to one Australian solider being killed. This could have all been avoided and we shouldn't let Fiji get to point where have to repeat the same unnecessary and hideously expensive exercise. Beyond that, poverty in Fiji is something we can't ignore, even if we were stupid/cold hearted enough to try. When Nauru's economy imploded, impoverished bureaucrats found creative ways to supplement their almost non-existent wages: they sold Nauruan passports, for US$50, to anyone who wanted one. Apart from the fact that it might be funny to have a passport from a tiny Pacific country amongst your travel mementos, the people who really wanted these were criminals (and terrorists) who for many months travelled the world on fake (but officially minted) passports under any name they chose. That's obviously unacceptable, and Fiji has a similarly dubious record. On 10 June 2004 Fijian police, acting in conjunction with police from Interpol, Australia and New Zealand, busted up the largest methamphetamines laboratory ever found anywhere in the world. While this is a great victory for law enforcement, Fijian government officials were quick to admit that criminal gangs have entrenched themselves in the country thanks to the desperate poverty that has driven many unemployed men into crime. This is just a glimpse of the harm that Australia will suffer if it continues to watch as Pacific Island economies slide into ruin. Australia has the 3rd highest rate of meth usage in the world, so it doesn't take a Kim Little to figure out where that mountain of drugs was probably heading. What's in it for Fiji and other Pacific Island states? This is a pretty easy question to answer. There are a number of benefits.
Remittances (electronic transfers of money) from Fijian workers living in other countries have quadrupled since 1994 and are now Fiji's fourth largest source of foreign exchange. In other words, its not just Fijian families that benefit from having a member working overseas for a period of time, but the economy generally is stabilised thanks to the constant stream of foreign hard currency flowing through the banking system.
British American Tobacco has been exploiting a loophole in Victorian law for 20 years to allow some of its workers to effectively be guest workers on 3-month "training visas". Under this limited program workers can earn $100 a day, instead of the $80 a week they would have been lucky to earn in Fiji. In 3 months they can earn around $5000 profit, which is more than enough to build new houses and send their children to school for the entire year. Plus they can take their skills back with them and continue to work in Fiji if they want to. If tobacco plantations can see the benefit of Fijian workers doing stints on Australian farms, then imagine the benefits for the full range of agricultural industries. Sugar is Fiji's largest industry. Sugar cane is grown on small farms leased by predominantly Indo-Fijians from indigenous Fijian landowners. The industry has been in decline in recent years and that is expected to continue. Like the duty-free textiles deal with Australia, Fiji sells sugar to the European Union at heavily subsidised prices, but under a World Trade Organisation stipulation, it will not be allowed to do that after 2008. Conclusion. There is a lot of talk at the moment about "trade vs. aid" as the best way to help poor nations develop, and although every reasonable person knows that the answer is both, guest worker programs are a great example of just how effective and mutually beneficial 'trade development' can be. It doesn't have to be charity given by one nation to another, and it doesn't have to be exploitive trade relationships either. Simple ideas, like guest worker schemes can have an immediate and often profound benefit on whole communities, while building trust between nations and peoples. The alternative is patronising aid that lines the pockets of aid agencies and government officials, often without making a lasting impact on the people who need it most. Australia should feel shame for allowing European backpackers to pretend to be labourers while on holiday, when 100,000's of Pacific Islanders have the desire and skills to be real and dependable workers over the long term. Finally Australia needs to build bridges with the Pacific, for economic and political security. All the talk of Indonesian/Asian terrorism is fine, but it ignores the fact that the Pacific is the doorway to Australia's East coast. Currently, thanks to poverty, and the crime and corruption that follow poverty, that door is wide open. Tim Sonnreich For more information on Fiji and the Pacific Plan see: For more background information on the benefits of remittances see:
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