VANGUARD - Expressing the viewpoint of the Communist Party of Australia (Marxist-Leninist)
For National Independence and Socialism •


For a future free of exploitation: a response to Four Corners on slave labour

Nick G

Australians have been outraged by revelations of slave labour conditions, standover tactics and sexual abuse of s.417 visa holders working in the food production sector.

The ABC’s Four Corners program made the revelations with the assistance of the National Union of Workers whose frustration at the failure of politicians to acknowledge and deal with the rampant exploitation led them to seek the ABC’s support.

For those who missed it, the program can be watched on iView or read as transcript here:

What is the s.417 visa?

It is a working holiday visa for people from Belgium, Canada, the Republic of Cyprus, Denmark, Estonia, Finland, France, Germany, Hong Kong SAR, the Republic of Ireland, Italy, Japan, the Republic of Korea, Malta, the Netherlands, Norway, Sweden, Taiwan and the United Kingdom.

It is a one year visa that requires holders to work at one place of employment for no more than 6 months.  It can be extended for a second year if a person shows that they have had at least three months’ employment during the first year.

S.417 visa holders should be paid award wages and the employer should contribute to their superannuation which may be redeemed by the visa holder (but taxed at a 35% rate) when they leave the country.  They are not covered by Medicare and are encouraged to have private medical insurance.

Enter Labour Hire

Some food production (eg grapes) is necessarily seasonal and subject to the vagaries of climate.  Food producers in this category are dependent on seasonal labour and don’t generally have a permanent workforce for harvesting and packaging.  Other food stuffs are grown in temperature- and humidity-controlled glasshouses using hydroponic techniques and harvest and market their produce all year round.  Food producers in this category are not so reliant on the availability of a transient and temporary workforce.

However, the reproduction circuits of capital encourage employers to minimise their core permanent employees and to enlarge the peripherally employed workforce.  Labour hire companies exist for the convenience of producer capitalists to access workers from the periphery.

The expansion of the periphery grew with the adoption throughout industry of just-in-time production processes which enabled core capitalists to source raw materials and components as they were required instead of having to buy bulk quantities that remained dead capital so long as they were part of an unused inventory.  If the capitalist has too much labour power on stand-by courtesy of permanent employees then that is also dead capital from his or her viewpoint.  Labour supply had to be as flexible and unpredictable as the supply of material inputs to production, but reliably available on demand; hence the emergence of labour hire companies.

The peak body for labour hire firms, Recruitment and Consulting Services Association, claims that the labour hire sector represents around half a million Australian workers and is worth approximately $20 billion as an industry. 

Four Corners showed how some s.417 visa workers were paid as little as $3.95 an hour by labour hire firms, although the general practice seemed to be for s.417 workers to receive around $15-$18 an hour when the award is around $25-$26 per hour.  

For the food producers, labour hire employees represent not so much a savings in the base rate of pay as a savings in total hours of employment, and a savings in entitlements paid to permanent employees such as various types of paid leave, overtime and holiday entitlements.  The base rate of pay is paid to the labour hire company which deducts whatever it likes through fair means or foul from the pay packets of workers.

The Duopoly cannot deny their responsibility

Food producers are a disparate group.  They range from small-scale local growers to corporate giants.  D’Vine Ripe, the Adelaide tomato grower featured in the Four Corners program operates the largest indoor horticultural facility of its type in the southern hemisphere.  It ploughed $65 million into a Stage 2 expansion of its 27-hectare glasshouse facility in 2011 and a further $25 million in 2012.  In June 2014 it was taken over by two Australian capitalist companies, Perfection Fresh Australia Pty Ltd, owned by the NSW Simonetta family, and the Victor Smorgon Group based in Victoria.

Regardless of the size of the food producing companies, all are subject to intense pressure from the major supermarket duopoly of Woolworths and Coles .  Other purchasers also exist, but the duopoly sets the pace.  There have been various exposures from time to time of the aggressive and bullying tactics imposed on growers by the duopoly, and farm gate suppliers have been loud in their complaints.  Most of this has fallen on deaf ears within parliamentary circles.

Yet the shonky labour hire operators could not exist outside of the symbiotic relationship they have with the duopoly.  The orderliness and neat presentation of fruit and vegetables by “fresh food people” whose prices keep going “down, down” is in stark contrast to the social devastation and dislocation imposed on workers in the periphery from whose labour power the duopoly profits.  It is a global phenomenon.  Robert Biel, author of The Entropy of Capitalism calls it “the dissipation of responsibility”, an important element of which is for the core firms such as the duopoly to “hook up with criminal elements in the periphery” (p. 205), evidence of which was most certainly a part of the Four Corners program.

Arresting the decline in the rate of profit

All capitalists are beset with a problem first revealed by Karl Marx: the law of the tendency of the rate of profit to fall.  Competition compels capitalists to reduce the component of capital expended on wages.  There are various ways to do this, most obviously by investing in machinery and technology and divesting the number of workers employed.  However, human labour power is the source of surplus value realised at the point of sale as profit, so there is a tendency for the  amount of surplus value to decline as fewer workers are employed and as capital is increasingly tied up in fixed assets.  This law applies equally to Woolworths as it invests in fixed assets related to procurement, storage, distribution and sale, as it does to D’Vine Ripe and its investment in super-sized glasshouses, advanced hydroponic equipment, water, seeds and nutrients.

But the system of capitalism is more than the sum of its parts.  There is an advantage to capitalism generally as much as there is an advantage to individual elements such as Woolworths and D’Vine Ripe in reducing production costs.  If food can be produced more cheaply through precarious employment at the point of production combined by GM technology and other fixed capital innovations, then the production (and reproduction) cost of labour available to all capitalists can be frozen or reduced, or if not reduced, then diverted into new areas on consumer spending (ie new areas for the realisation of surplus value as profit).

Briel describes it this way:  “The rate of profit can be maintained by reducing the cost of living, making it possible to pay lower monetary wages; thus the argument for repealing the protectionist Corn Laws in 19th century England was that cheap imported food would benefit the general rate of profit (the interest of landowners being therefore sacrificed for the sake of industrial capitalists).  At the same time, according to Engels’ law (formulated by mid-19th century economist Ernst Engel) the poorer a household the higher the proportion of its income goes on food: if only the price of food could be reduced, poverty would seem to be reduced, while also leaving a larger slice of income to buy other goods and thus providing a market for new consumer industries.  In this way, the interlinked responses to pauperisation and to the rate of profit issue resulted in a huge effort to drive down the cost of food” (p. 119). 

Here lies at least in part some of the explanation for the reluctance of politicians of all capitalist parties to effectively tackle the sort of exploitation revealed on Four Corners.  The cost of food production and of food prices are studied meticulously by the Bureau of Statistics, by the Stock Market and by academia – all privy to this general understanding of the importance to limiting  wages growth of keeping food prices “down, down”.  The Labor politicians in Victoria and SA who have set up parliamentary enquiries into labour hire in the wake of Four Corners are typically opportunistic: they have known about labour hire scams and shonky sub-contracting arrangements across a range of industries and have done next to nothing to weed out these practices.   Likewise, the federal government has now announced that it will audit pay-slips of s.417 workers, but has rejected a cross-jurisdictional approach that would bring together the relevant government departments as well as state and territory representatives.  It’s a froth and bubble response and won’t unduly worry criminal elements and stand-over merchants running labour hire companies.

Finance capital speculates on market chaos

When we talk about the interests of the capitalist class as a whole we have to also acknowledge contradictions between its various sectors.  The food industry has become the plaything of hedge companies and private equity firms whose financial capital requires market chaos as a condition of its drive to profit through speculation.  The futures and options markets in fact operate against the interests of productive capital (industrial capital) by manipulating an increase in food prices to advantage and therefore works counter to a stable or reduced cost of living.  The great food riots in Mexico, Egypt and elsewhere in 2008 were attributed to just such a market manipulation that caused some grain prices to rise by up to ten times their historic prices.  It was not a problem with supply: the world produced more wheat than ever before in 2008, yet great masses of the international proletariat were driven into hunger by financial speculation in food commodity markets. 

A thorough explanation of food commodity derivatives is beyond the scope of this article, although information is easily accessed online for those who wish to look into the issue themselves.  Suffice it say that in the era of imperialism, and after the neo-liberal stage characterised by the complete victory of finance capital over the circuits of all capital (industrial, merchant and so on), there can only ever be a tendency to impoverish both the peripheral workers and the peripheral consumers, those for whom “food price rises adversely affect their purchasing power by reducing real income…and increasing the risk of malnutrition and its consequences” .

Defend the workers; end the system

In the immediate sense the Four Corners program requires all sections of the working class to unite to drive out the exploiters of workers in the periphery, to drive out the sexual predators and thugs who live in this peripheral social environment.  It requires united action to bring workers in the periphery into the core of the workforce where there are acceptable levels of wages and entitlements, safety and security at work, and good accommodation and services.

This is the aim of the National Union of Workers whose national secretary has called for “a new compact of enforceable, transparent and fair collective workplace protection for workers…” .

In the longer term, workers who are conscious of and appalled by the exploitation of workers as a systematic feature of capitalism, as something inherent to capitalism rather than the product of one or two rogue elements with criminal features, must put their efforts towards developing the revolutionary movement for anti-imperialist independence and socialism.  Such a movement exists, although it is small and likely to remain so in the absence of a real revolutionary situation.

The Communist Party of Australia (Marxist-Leninist) strives to bring together the advanced revolutionary element within the working class and by unifying and organising this element, better position the working class as a whole for the giant battles ahead. 

Understand the issues….join in and strengthen the movement….make a commitment for a just future free of exploitation.

Such is our perspective arising from the expose of slave labour by Four Corners.