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Backpacker exploitation?

By Mike Pope - posted Wednesday, 7 October 2009

More than 150,000 backpackers come to Australia each year, usually after paying $230 each for a “417 working visa”. This enables holders to remain for 12 months and to work and earn money to augment the limited funds they bring with them.

If they wish to stay longer, a second 12-month visa, leading to the ultimate prize of permanent residency in Australia, may be granted but only if the applicant has worked for three months in primary industry. This usually means working on a farm, picking or packing fruit and vegetables, pruning or weeding, in a designated regional area of Australia such as the Darling Downs in Queensland or the irrigation areas of Victoria.

Sounds like an eminently fair and reasonable arrangement, one which enables backpackers to earn money and stay longer if they wish while providing farmers with a much needed workforce of fit young men and women seeking and willing to work. The scheme directs backpackers to where they are most needed and welcomed by existing businesses such as hostels, clubs and pubs, the tourist industry and shops, all of which benefit from their spending.


However, the word is out among backpackers: if you want to work for the lowest legal wage - or less - in a menial job, go to a regional centre and find work in primary industry. There, a cosy little arrangement between farmers and hostel operators takes advantage of the conditions which apply to the working visa under which most backpackers come to Australia. Those arrangements sometimes do nothing to support our belief in “a fair go”.

The problem is that under these arrangements backpackers are sometimes exploited and, being intelligent, sensible people, they usually know when this is happening but seldom know what they can do about it. If government was concerned about this it would ensure that on arrival in Australia, every backpacker with a 417 visa was provided with written advice on how to make a complaint and who it should be made to.

Problems which arise do so because of the practice of backpacker hostels which make “arrangements” with local farmers to be the sole supplier of labour to their farm. Since there are more backpackers than jobs, hostels use this to entice backpacker to stay at a particular establishment, using the inducement of employment being either available or likely, with the added “attraction” that transport to and from the place of work is provided by the hostel - at a price.

Backpackers are rarely able to secure employment from other sources since hostels tend to corner the market. They must therefore stay at a hostel to gain employment. Sometimes that employment proves to be unavailable to those staying at the hostel, or is offered only to those spending big at the bar, or is only available for a day or two.

Those using this as a strategy to attract backpackers to stay at their hostel are able to price the accommodation they offer more highly than they otherwise might do. They can and often do sleep six or more backpackers to a room and charge them as much as $20 each per night for the privilege. The hostel owner can then make some $800 per room per week and if a hostel has five rooms fully occupied, the return is very lucrative indeed.

Two backpackers from Estonia wryly noted that they were paying more for hostel accommodation in down-town Bundaberg than they had in central Sydney. Why? Because they needed to work three months in primary industry to fulfil the conditions attaching to a 417 visa. The only way they could get any work towards this goal was to stay at a hostel which offered employment in a primary industry.


It is not only hostels which take advantage of backpackers in this way. Some farmers are not averse to hiring hostel-provided workers under conditions which, at the very least, can only be described as the absolute minimum. Fruit and vegetable picking is often undertaken in hot conditions in relatively remote open fields. The farmer may provide a shade area, toilet facilities and drinking water. Many do not. Any complaint can be (and is) met with an invitation to find work elsewhere.

A very few unscrupulous farmers turn a blind eye when it comes to employing “illegals” - those seeking work though not in possession of a work visa - provided the prospective employee is willing to work for less than the minimum wage payable by law. Such practices involve both parties breaking the law. They also involve exploitation by the farmer of those who are most vulnerable.

There is no agreement between Israel and Australia on employment of visiting Israeli backpackers who can only supplement their funds - and many do - by working illegally and being employed for “cash in hand” at rates which are below the legal minimum wage. Israeli’s have little difficulty in finding work.

Farmers, like many other employers, will seek to obtain the services of part time workers for harvesting or other farm activities at the lowest cost. Who wants to, or indeed needs to pay more than they must for a work force which is tied to them by virtue of their hostel residence?

Often there are more backpackers seeking work than there are vacancies. They have no bargaining power, are in transit to other parts of Australia and, being foreigners, probably don’t know how or who they should lodge a complaint with. Backpackers find themselves in a vulnerable position which may and does lead to exploitation.

A German backpacker expressed dismay that after working a 40-hour week and after tax had been deducted, he finished up with less than $250 in hand. Over half his income went to pay for accommodation and the rest paid for a frugal diet and other living expenses. There was certainly no capacity to save and while he had completed a further five of the 88 days work in primary industry stipulated as a visa condition, he felt as though he had been exploited. He probably was.

What can be done to ensure that backpackers have a choice of reasonably priced accommodation to choose from in rural areas, are protected from wage exploitation and are paid a fair wage for a fair days work?

Conditions attached to the 417 visa specify the regional areas where backpackers may seek employment in primary industries such as fishing, farming and mining. Job Services Australia (JSA) is represented in the major centre of each those regions - eg. Bundaberg, Shepparton, Ballina etc. It could be made a requirement that primary producers seeking casual labour lodge their requirements with JSA or some other appropriate offices, while remaining free to reach agreements with backpacker hostels should they wish.

JSA offices would then become the focal point where backpackers seeking a part-time job in primary industry could go in person or consult via its Internet site for advice on the availability of employment, including advice on location, nature of work, wages offered and other conditions. A JSA officer would then be in a position to monitor conditions advised by the employer to ensure that they complied with legal requirements and deal with any complaints from employees.

Backpacker hostels would no longer have monopoly agreements with employers, an arrangement which mitigates non-backpackers gaining employment in this area, notably Aboriginals. This inequity would be overcome if information about jobs available were freely available to any interested party from a JSA office or its Internet site.

Hostels could continue to offer employment and transport to and from work sites for residents. However, they might have to compete for custom more on the basis of the quality and price of accommodation and other facilities offered such as availability of kitchen and crockery, wi-fi or computer services provided, or a reputation as a clean, friendly and well run establishment.

With competition for custom more soundly based, hostels might be encouraged to improve their amenities in order to attract custom. Word of the best value for money would soon spread among backpackers, all of whom are computer literate, most of whom have mobile phones and can readily contact each other.

Government has devised a scheme which provides farmers with the cheapest labour available through the ultimate lure of backpackers gaining permanent residency status. Having done so, it has a responsibility to ensure that participants in its scheme are not exploited.

Making information on employment availability and conditions more widely available to backpackers, involving JSA in monitoring work conditions and providing a focal point for backpackers to make complaints, seem essential.

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About the Author

Mike Pope trained as an economist (Cambridge and UPNG) worked as a business planner (1966-2006), prepared and maintained business plan for the Olympic Coordinating Authority 1997-2000. He is now semi-retired with an interest in ways of ameliorating and dealing with climate change.

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