Recent migrants, those who arrived in Australia within the past five years, are twice as likely to be underpaid as migrants who have been in Australia for at least 10 years, and those born here, according to a report by think tank The Grattan Institute.

The report cited two nationally representative Australian Bureau of Statistics surveys of employees and employers including ‘Characteristics of Employment’ and ‘Employee Earnings and Hours’, to find out whether employees are paid below the national minimum hourly wage in Australia, currently AUD 21.38 (USD 14.04) an hour or AUD 26.73 (USD 17.55) an hour for casuals.

The think tank found that in 2022, 5% to 16% of employed recent migrants were paid less than the national minimum wage. Between 1% and 8.5% of recent migrants were paid at least AUD 3 (USD 1.97) less than the hourly minimum. This compares with 3% to 9% of all employees in Australia being paid below the national minimum wage; with 0.5% to 4.5% paid at least AUD 3 (USD 1.97) an hour less.

The Grattan Institute noted that these numbers are likely to under-represent the extent of underpayment because the analysis only counts those being paid less than the national minimum wage. It does not count cases where workers are underpaid against appropriate award rates, which typically pay more than the national minimum wage, penalty rates, or are not paid their superannuation.

Part of the reason recent migrants are more likely to be underpaid is because they tend to work in industries where underpayment is more prevalent, such as hospitality and agriculture. For example, temporary visa holders account for nearly 20% of workers in hospitality, the industry with the highest reported rate of underpayment.

Migrants also tend to be younger workers. Employees aged 20 to 29 are nearly six times more likely to be paid less than the national minimum wage than workers aged 30 to 39.

After accounting for age, industry and other demographic characteristics, migrants are still more likely to be underpaid, the Institute stated. Migrants who arrived in the past five years are 40% more likely to be underpaid than long-term residents with similar skills working in the same job with the same characteristics. Migrants who arrived five to nine years ago are 20% more likely to be underpaid.

The report cited several reasons for this including visa rules, which make temporary visa holders more vulnerable to exploitation.

“For example, many international students put up with mistreatment for fear their visa may be cancelled for working more hours than permitted by their visa rules. Two-thirds of recent migrants are on a temporary visa,” the think tank stated.

“Migrants have less bargaining power than local workers, partly because they have small social networks to help them find a job,” the Institute added. “They may not know what workplace rights they are entitled to and face discrimination in the labour market.”

The analysis also showed the likelihood of underpayment is also higher among those working less-skilled jobs with fewer qualifications.

Meanwhile, the Institute noted that the rates of underpayment for migrant workers and locals alike have fallen since the pandemic began. In 2018, 8% to 22% of recent migrants were paid less than the minimum hourly wage (compared with 5% to 16% in 2022).

“This probably reflects the decline in the number of temporary visa holders living in Australia, especially students and working holiday makers, and labour shortages boosting worker’s bargaining power,” the Institute stated. “But with borders open again and temporary visa holders coming back in big numbers, the rate of underpayment seems sure to rise again without action from government to stamp out exploitation.”

The think tank said the Australian government needs to reform the visa rules that make migrants vulnerable, boost resources to enforce workplace and migration laws and make it easier for migrants to claim money owed.