'Being treated like slaves': Migrant labour exploitation as an essential feature of late capitalism

Last month an Australian billionaire property mogul made headlines when he welcomed more “pain” for Australian workers through increasing unemployment to remind them they are lucky to be in a job.

Gurner Group chief executive Tim Gurner took aim at “unproductive tradies” for being “paid a lot to do not too much” and younger workers embracing more work-life balance.

“We need to remind people that they work for the employer, not the other way around,” Gurner told the Australian Financial Review Property Summit in Sydney on September 12.

“We need to see unemployment rise, unemployment has to jump 40-50 per cent. In my view, we need to see pain in the economy. There’s been a systematic change where employees feel the employer is extremely lucky to have them as opposed to the other way around.”

What the billionaire is describing is actually how markets work. The right-wing advocates of free market policies as always delivering the best result economically, hate it when the labour market actually operates to lift wages.

In a capitalist society labour is meant to be “free” — unlike the forced labour associated with slavery. Workers are not meant to be the property of an individual owner. But it is also meant to be free in the sense that the worker is not bound to the land like serfs were under feudal conditions. Back then, the serfs had no right to leave the land but the owner had no right to evict them either.

Creating a class of “free labour” under capitalism involved the forced eviction of peasants from their land. Under capitalism, workers are meant to be free from any attachment to the means of production that is owned by the capitalist class.

Capitalism appears to be full of freedoms. Landowners are free to rent their land to someone else or not. Big businesses can sell anything they own — be it a factory or an iPhone — when or if they like. Workers are “free” to sell their labour power to an owner at a certain price. But I may not find a buyer for my labour if my price is too high. Slaves or serfs did not have this problem. They could not be “laid off” when business was bad. A slave could be whipped, beaten or killed for poor performance but not sacked. The serf always had a piece of land to work.

Capitalism is a system of markets — for commodities, money, shares and bonds — but the most important market of all under capitalism is the “labour market”. In this market a worker must offer their labour power for sale at the prevailing price or “wage”. For this market to function properly it needs a certain surplus of supply relative to demand — a permanent pool of unemployed people — otherwise the price would be so high profits would be undermined and the system, which relies on making profits as its driving force, would cease to function.

Reserve army of labour

In his brilliant analysis of capitalism last century, socialist theorist Karl Marx called this relative surplus labour the “reserve army of labour”. Current immigration policies in advanced capitalist countries such as New Zealand are aimed at creating and preserving a “reserve army of labour” to hold down wages — the price of labour power.

In NZ over the last two decades we recreated the reserve army of labour with weak access to full labour market rights by allowing a massive growth in “temporary” labour associated with the search for permanent residence. This included those here on “skilled work” visas, as students with work rights, as seasonal workers from the Pacific, or working holiday visas. Each of these categories just kept growing ever larger each year.

Since 2008, temporary work visas have increased six-fold from 40,000 a year to 250,000 pre-Covid. During the same period, new permanent residency numbers stayed roughly the same at about 40,000 a year. New temporary visa holders were being lied to about their chance of transitioning to residency and became trapped on a treadmill of ever-more expensive renewal of their temporary status once here.

Prior to Covid, the NZ labour market was massively dependent on people working here on temporary visas. The total labour force was 2.7 million people employed and 100,000 unemployed, making a total labour force of 2.8 million. Of that total 300,000 were on temporary work visas of one form or another. That's 11% of the workforce — one in every 10 jobs. Other countries that are favoured destinations for workers are Australia, which has a temporary visa rate of 7%, Canada at 3% and the United States at 2%.

In some industries, such as hospitality and agriculture, temporary visa holders made up 30% of the workforce or more. Most of these workers are tied to particular bosses through their visa conditions. This made it virtually impossible for them to stand up for themselves in the same way as workers with full residency rights.

So it was important that people were able to access residency as easily as possible once Covid happened. That is why Unite Union launched the “Pathways to Residency” campaign that has been at least partially successful with around 200,000 people accessing residency.

But the Labour Party policies remain full of contradictions because they appear to want to maintain the elitist system for accessing permanent residency. Doctors can access residency immediately, but nurses and teachers must wait two years. Meanwhile, carpenters or agricultural laborers can only access residency if they are paid twice the market rate for these jobs, which will not happen, of course.

But if we actually need carpenters and labourers, why not allow them to come on a living wage with a pathway to residency and the right to change jobs? Then the systems of exploitation we have had operating for the past two decades would not be able to be recreated and workers who were here could join the fight for a better life.

The government has also introduced requirements that make it harder for those applying for less well-paid jobs from bringing partners with full work rights if their partner does not also have the points for a job offer in their own right. This seems particularly inhumane.

During the Covid health emergency, temporary work visas could not be issued. Employers reliant on workers in this category were screaming to get access to cheap labour again as soon as the emergency restrictions were lifted.

Meanwhile, the NZ Labour Government set up a new system of 28,000 “Accredited Employers” who were given the right to recruit workers. This year, as soon as the Covid-19 related restrictions were lifted, temporary visa issuing exploded back to the pre-Covid level of 20,000 a month immediately. Most visas are bonded to employers for up to three years.

Many of the new visas are meant to be paying the median wage to discourage exploitation. Instead the visas ended up being sold by agents for $10,000s with no actual jobs being provided for many. The employment agreements nearly all have a 90-day right to fire clause included.

What has become obvious is that there were virtually no checks done as to whether they were genuine employers. The capitalist economic theory that rules in places like MBIE and Immigration NZ is a neoliberal fantasy that treats employers as basically honest and sees no difference between someone running a liquor shop or an export industry that actually produces something useful. This time they also allowed dozens of labour hire companies without guaranteed work to qualify compared to a handful pre-Covid. Immigration NZ is an instrument for creating a system of mass migrant labour exploitation.

Labour markets are meant to work like other markets. As shortages appear, first for skilled workers, the employer is forced to offer higher wages. This helps restore margins for skills that are needed to encourage young workers to undergo apprenticeships and other training that may be required to obtain those skills. If the economic boom continues and shortages appear for less skilled labour, then the price of that labour needs to again rise to bring people into the labour market from out of the existing reserve army of labour that exists.

This begins with jobs for the official unemployed who are “actively” seeking work, which was 3.6% of the labour force in the June Quarter 2023, or those deemed underemployed and wanting more hours, which was 9.3% of the workforce. These numbers do not include discouraged workers who are deemed to have dropped out of the workforce. This is NZ’s actual reserve army of unemployed.

When unemployment is low, employers are forced to offer work to people less-skilled, less experienced, beneficiaries, former prisoners and so on that they may not want to. That is how the labour market works. It is clear that this process has been blocked by the surge in temporary work visas. Pre-Covid, employers were paying no more than minimum wage for often very skilled work, like that associated with running dairy farms in Otago-Southland.

In my view everyone who is currently in NZ on a temporary visa should be offered permanent residence if they want it. That is the only way to end the super-exploitation that is daily being exposed. No employer should be able to bring in a worker from overseas as a bonded worker to that particular employer. All workers should be able to change their employer if they want to. NZ bosses need to treat workers better if they want to keep them. They should also be responsible for providing safe and affordable accommodation. Many workers coming to NZ have no idea of the cost of accommodation. Industries wanting to import labour should also have an obligation to take on young unemployed people as apprentices or similar training commitments.

Why this is happening

Since class society arose a few thousand years ago, a class of non-workers has monopolised ownership of the means of production. Serfs and slaves worked for these owners, with a portion of their work going to their own reproduction and a portion going to the owners. It appeared that the slave was paid nothing but there were costs associated with their production and reproduction — food and shelter at a minimum — that needed to be met. What was paid to the slave was “necessary labour” and the wealth produced beyond that was “surplus labour”. The owner wanted to minimise the former and maximise the latter.

Under the “free” wage labour system, it appears a worker is paid for all their labour. If I work a 20-hour week, I get 20 hours pay. If I work a 40-hour week, I get 40 hours pay. If I want more money, I work more hours. If I want more leisure, I work fewer hours. That seems fair. It appears I am working only for myself. It appears I am selling all of my “labour” and am rewarded fully for it.

What I am actually selling is my ability to work — my “labour power”. The distinction is important. What I am paid is less than the value I produce — just like under serfdom or slavery. “Value” is simply a quantity of labour measured by a unit of time and embodied in a commodity or service. The wage I receive, however, must be less than the value I produce or I would not be employed. During part or my workday I reproduce the value of the money wage paid to me — “necessary labour”. After this, the labour performed is creating surplus labour which takes the form of “surplus value” under capitalism and is realised when the commodity or service is sold for money.

“Necessary labour” must include the minimum necessary for eating and clothing myself and the next generation of workers. There is also, as Marx explained, a “historical and moral” component of wages that can get built up over time, especially if the reserve army of labour declines for a prolonged period. Workers can use their increased bargaining power in a period of so-called labour shortage to expand that element of their wages. Trade unions can also be used to combine and reduce competition between workers when they bargain with the boss. But any gains made will always remain at risk of being lost again in a future capitalist crisis.

That is precisely what happened in NZ in the late 1980s and early ’90s after real wages peaked in the early ’80s and were then driven down by 25% by the mid-’90s according to official statistics. It was no coincidence that to achieve this goal the capitalist state and their government radically attacked workers' legal rights to join unions. They also cut unemployment and other benefits drastically to increase pressure on workers when they were unemployed.

A deep and prolonged recession in the late ’80s and early ’90s saw a dramatically enlarged reserve army of labour established that was at least in part induced to help crush workers' resistance. Official unemployment hit 10% overall and was at the Great Depression level of 25% for Maori and Pasifika communities.

The great advantage of the system of “free wage labour” for capitalism is that the capitalist only needs to pay for the labour they use if it creates surplus value — profit. They have the right to discard the labour when it no longer produces surplus value, as happens periodically under capitalism during the so-called business cycle.

In part, the purpose of the business cycle for capitalism is to recreate the industrial reserve army and restore or improve the profitability of employing labour. Labour power is part of “circulating capital”, like raw materials used in production rather than “fixed capital” like buildings and machines. Wherever possible, capitalists prefer to convert fixed capital to circulating capital. This reduces the risks associated with a total loss of value tied up in fixed capital as a result of business reduction or complete failure of a capitalist enterprise. Sacking a worker or cancelling an order for raw materials is easier than selling a building in distressed times.

In advanced capitalist countries the strong post-World War II economic upturn reduced this reserve army considerably. As a consequence, nearly every country has turned to the “world market” for labour power to help recreate that surplus. They deliberately create situations where there is a pool of accessible labour that can be exploited or, even better, super-exploited.

All workers are exploited. No employer in the history of capitalism has ever hired a worker as a favour to the worker. They hire us because they can make more money from selling the things we produce with our labour than they pay us in wages. Exploitation is built into the wages system — this is where their profits come from, at the normal price of labour. Super-exploited workers are paid even less than the usual value of labour power in the particular country. This is achieved by having a pool of workers with fewer rights and less ability to assert them.

In the US this is done by having so-called “illegals” who cross the border from Mexico in their millions. They also issue hundreds of thousands of temporary work visas for agriculture and other industries each year. Right wing campaigns in the US, such as that advanced by former US President Donald Trump against so-called “illegals”, are not designed to keep them out of the country but to keep them down and exploitable when they are inside the US.

Working people must fight for a country where full employment and more generous welfare systems with benefits for the unemployed are important protections for workers. But if we achieve these goals it will only be temporary under capitalism. So long as we have a system based on private ownership of the means of production, and a competitive search for profit, the class of owners will fight back, and destroy the economy if needed, to restore their power and privileges. We must be prepared to go beyond capitalism towards a democratically planned socialist economy for NZ and the world.