The impact of the China-Australia free trade agreement on Australian job opportunities, wages and conditions

6 Oct 2015


Significant controversy surrounds the impact of the China-Australia Free Trade Agreement (ChAFTA) in a number of areas. This report focuses on two of these areas by examining the ChAFTA’s provisions on labour mobility.

The first area of controversy is whether the ChAFTA will enable Chinese workers to replace local workers in the Australian labour market. This question hinges upon whether the Australian Government can impose labour market testing to determine whether a genuine skills shortage exists in the local labour market. Without labour market testing there is no regulatory mechanism to ensure that local job opportunities are protected.

The second area of controversy is whether the ChAFTA allows for, or will result in, Chinese workers receiving poorer wages and conditions than local workers in the Australian labour market.

This report is structured in two parts. Part One considers the three provisions in the ChAFTA that provide the opportunity for Chinese workers to access the Australian labour market. The labour mobility clauses in Chapter 10 and the two memorandums concerning large-scale infrastructure development projects and the annual entry of working holiday makers each facilitate this opportunity. This report identifies each of these entry pathways into the Australian labour market and examines how they will operate in practice.

Part One of the report makes a number of findings. Firstly, the report finds the ChAFTA greatly increases the access of Chinese workers to the Australian labour market. The report recommends the Australian Government use its enabling legislation to clarify that labour market testing will apply to certain categories of Chinese workers. In particular, there needs to be labour market testing in a manner that is consistent with Australia’s 457 visa program, before employers can access Chinese workers who are ‘contractual service suppliers’ or ‘installers and servicers’. Without labour market testing, there is no regulatory mechanism to prevent an employer from preferencing a Chinese worker over a local worker for these two categories.

Secondly, the report also finds that there needs to be greater protection to ensure Chinese workers are not used as a way of undercutting local wages and conditions. This can be done by making it a requirement that Chinese workers be paid the applicable market salary rate and not merely the award rate for their occupational category. The market salary rate can be determined through taking into account the current major employing collective agreement registered by the Fair Work Commission in the sector and/or region, ABS average salary rate data and the Department of Employment’s Job Outlook data.

Thirdly, the report finds that the current regulatory framework for Investment Facilitation Arrangements (IFAs) requires reform in order to ensure it is a legislated framework that mandates labour market testing, market salary rates and the achievement of greater public accountability and transparency around IFAs.

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