Blurring the offshoring line

by 16 Sep 2008

A LOOPHOLE, that allowed foreign workers to be paid as little as $4.20 an hour is “totally unacceptable,” according to the Minister for Immigration and Citizenship, Chris Evans.

A recent investigation by the Workplace Ombudsman found no evidence to substantiate allegations that McDermott Industries (Australia), a Perth-based oil and gas company, unlawfully underpaid foreign workers on a gas pipeline project in Australian waters, 130km off the Western Australian coast.

The investigation found that the workers all held 456 Australian short-stay visas, which do not attract a minimum wage, opening a loophole for oil and gas companies to blur the lines between offshoring and employing foreign workers.

“Our investigation determined that because of the nature of the employment and visa arrangements of the foreign workers, we were unable to enforce a minimum Australian wage for these workers,” said Michael Campbell, Workplace Ombudsman executive director.

However, according to Evans, the findings highlight the vulnerability of overseas workers and the need to ensure that they are not used to undermine local wages and conditions.

He said that the original decision by the Department of Immigration and Citizenship (DIAC) to grant Subclass 456 visas to the employees was based on legal advice and information from McDermott Industries that its workers would be outside the Australian Migration Zone when employed on the barge.

Inspectors boarded the McDermott barge – the DB30 – in April and found up to 16 workers from Indonesia, Malaysia, India and the Philippines working 12 hour shifts on a 60 days on/30 days off basis for between $4.20 and $10.20 an hour. On the same barge however, Australians were being paid $40 per hour while the minimum wage is $13.74.

“I have directed my department to take steps to ensure that in future, people employed on vessels carrying out similar work will be required to apply for a Subclass 457 visa,” said Evans. “This will ensure that overseas workers employed within the Australian Migration Zone are properly paid and Australian wages and conditions are not undermined.”

The Australian Workers Union (AWU) national secretary Paul Howes criticised the company for a “cowboy work culture” and demanded back pay for the workers. The AWU, which made the initial complaint in January, accused DIAC of deliberately advising the workers’ employer, McDermott Industries, to use a legal loophole that helped them avoid paying higher wages.

Howes said that it was unfortunate that the “billion dollar profit earner” (McDermott Industries) was able to avoid Australian pay rates to improve their “enormous bottom line”, by paying the skilled guest workers less than an Australian 16-year-old working at a McDonald’s outlet could expect.

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