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Australia’s Seasonal Worker Program

November 27, 2018

Australia's hired horticultural workforce includes mostly legal temporary and unauthorized foreign workers. However, fewer than 10 percent of horticultural workers are guest workers admitted after employers test the labor market for local workers. This makes Australia different from Canada, New Zealand, and the US, where most temporary foreign workers are admitted only after farm employers try and fail to recruit local workers under government supervision.

Estimates of the peak number of hired horticultural workers center on about 75,000, including 40,000 Working Holiday Makers or backpackers who are able to stay in Australia a second year because they worked at least three months in fruit and vegetable agriculture during their first year of work-and-vacation in Australia, 15,000 foreign students who may work 40 hours a fortnight while studying and full time during study breaks, and perhaps 10,000 unauthorized workers. There are also almost 10,000 Pacific Island guest workers admitted under the Seasonal Worker Program (SWP).

In the past, Australians migrated seasonally to pick fruit crops in the southern states, including Queensland cane cutters who migrated south and local workers who were unable to obtain full-time nonfarm jobs and picked fruit in season. There are also legal Asians and Pacific Islanders such as Samoan NZ citizens who are organized into crews by contractors, but farm employers complain that "Ozzies" have lost their work ethic and desire to be seasonal farm workers.

Local observers say that the number of unauthorized and quasi-authorized workers could be reduced with aggressive enforcement of immigration laws, which would force employers to choose between backpackers and SWP guest workers. Most farmers appear to prefer backpackers because they are cheaper than guest workers.

In 2005, Australia allowed backpackers who did at least three months of work in regional or agricultural Australia to remain a second year as an alternative to a guest worker program. This policy encouraged foreign youth 18 to 30 to perform three months of farm work in order to stay in Australia a second year. During their second year, they may work in any job.

In 2017-18, some 36,000 backpackers obtained a second-year visa, almost always by working in agriculture during their first year in Australia. NZ also allows backpackers to extend their stays if they work in agriculture during their first year in the country, but only for three months, and in NZ backpackers must continue to work in agriculture during their second year. There were 4,100 second-year backpackers in NZ in 2016-17.

Many backpackers in Australia want to obtain skilled worker (482) visas that allow them to remain longer in nonfarm jobs and eventually to become immigrants; about a seventh of backpackers actually become Australian immigrants. Backpackers seeking extended stays are attractive to employers because they pay their own way to Australia and are often housed in hostels, paying for their accommodations and paying hostels to transport them to the fields. In this way, hostels often act as contractors or gatekeepers to seasonal farm work.

Studies and surveys find that backpackers are often paid less than Australia's minimum wage or the typically higher award wage for a particular commodity and sector. However, few backpackers complain and try to obtain back wages because of the complexity of the complaint process to the Fair Work Ombudsman and their sense that their employer or contractor will not provide back pay even if ordered to do so. Backpackers willing to move on rather than complain of labor law violations make WHMs an attractive workforce to employers, albeit not totally "reliable" in the sense that backpackers may change employers.

The Australian government approved a pilot program in 2008 that offered 2,500 visas for Pacific Islanders recruited to do farm work in Australia over four years. Farm employers sought fewer than 100 Pacific Island guest workers in each of 2008-09 and 2009-10, less than 450 in 2010-11, and about 1,100 in 2011-12. The cap was raised to 3,250 in 2014-15, when 3,200 guest workers were admitted, and lifted entirely after 2015-16.

Farmers complained in July 2018 that they faced a shortage of 100,000 workers for the 2018-19 crop year. There is little evidence of wage spikes to suggest labor shortages, but the government responded in November 2018 with a proposal to allow backpackers to stay in Australia a third year if they do at least six months of farm work during their first two years in Australia. In addition, more backpackers from Southeast Asian countries will be admitted, with their age range extended from 18 to 30 to 18 to 35. Backpackers will be permitted to work for the same employer for up to 12 months during the three years they are in Australia.

Farmers who believe there are not enough legal workers to harvest crops are persuading a friendly Liberal-National government to provide labor-supply insurance in the form of making farm work ever more attractive to backpackers.

A separate Pacific Labour Scheme announced in July 2018 will allow employers in rural and regional Australia to employ workers from seven Pacific Island countries for one to three years if they try and fail to find local workers.

About 8,500 SWP guest workers were admitted in 2017-18. The largest source countries are Vanuatu and Tonga. Half of guest workers from these countries reported that they would rest at home before returning to Australia to work again.

Australia has about half as many Pacific Island guest workers as New Zealand

Visas issued under New Zealand's and Australia's seasonal worker schemes

Figure by Devpolicy Blog / CC BY-NC-SA 4.0

Why does Australia admit so few Pacific Island guest workers for a fruit and vegetable agriculture that is larger than that in New Zealand? Curtain et al (2018) point to three major factors. First, Australia produces fruits and vegetables primarily for the domestic market, where two supermarket chains, Coles and Woolworths, account for three-fourths of sales and exert downward pressure on producer prices, which encourages growers to cut costs. Neither buyer requirements for producers to abide by all laws, nor enforcement of minimum wage and other labor laws, appears sufficient to ensure that all Australian growers pay at least the A$18.93 minimum wage in 2018.

Second, backpackers are cheaper and readily available in Australia. Backpackers pay their own transportation to Australia, usually arrange and pay for their own housing and transport to fields, and are generally quick to learn the work. On the other hand, backpackers may be less "reliable" or "loyal," since they are not required to remain with one farm employer, and backpackers may be less willing than guest workers to work extra hours. Studies suggest that, after a year's experience, the Pacific Island guest workers selected by employers to return are more productive than backpackers.

Third, Australia is attractive to backpackers, so that foreign youth are willing to do farm work for an average of about 90 days in their first year in order to stay in Australia a second year and work in any job. Australian horticulture is fragmented, so there is little industry pressure on growers to abide by labor laws to protect "Brand Australia," as with industry pressure to protect Brand New Zealand. Australian growers are also less involved in the design and operation of the Pacific Islands guest worker program than NZ growers.

Recent declines in the number of backpackers in Australia may explain the growth in the number of SWP guest workers in Australia. If the number of guest workers grows, what will be the effects on Pacific Islands, which offer few jobs? Vanuatu's government, noting that grower preferences to rehire experienced workers could limit the number of residents able to earn A$10,000 ($7,200) from working seasonally in Australia, has discussed limiting how many times the same worker may be a guest worker, setting up a potential conflict with Australian farmers.

Development experts warn that Vanuatu could kill the golden goose of foreign jobs by imposing restrictions on guest workers and corrupting the recruitment industry. The government recently lifted restrictions on the number of agents allowed to recruit workers for the SWP, and ended requirements that recruiters have genuine job offers from Australian farm employers. This could lead to corruption in Vanuatu's recruitment industry with the now 100+ recruiters sending workers willing to pay for jobs rather than capable of doing farm work, making Vanuatu guest workers suspect. There are also concerns that the already limited agricultural output on Vanuatu may fall, prompting proposals to require departing migrants to do a certain amount of farm work at home and reducing the attractiveness of migration.

Tonga provides a cautionary lesson. The number of Tonga guest workers recruited fell sharply after many overstayed rather than returning at the end of their contracts.

Curtain, Richard, Matthew Dornan, Stephen Howes, Henry Sherrell. 2018. Pacific seasonal workers: Learning from the contrasting temporary migration outcomes in Australian and New Zealand horticulture. Asia & the Pacific Policy Studies Volume 5, Issue 3.

Dornan, Matthew, 2018. Vanuatu grapples with seasonal worker success, Devpolicy blog

Gibson, John and David McKenzie. 2014. Development through Seasonal Worker Programs. The Case of New Zealand's RSE Program. Policy Research Working Paper No. 6762. World Bank