‘Every time we had to ask for pay’: Workers are losing billions in migrant wage scandal

Two-thirds of migrant workers are being underpaid, with a quarter short-changed by at least $10 an hour, found a landmark study that identified repeated instances of exploitation, often linked to insecure work arrangements.

The study of nearly 10,000 temporary visa holders reveals what researchers describe as a “hidden system” of exploitation across the Australian economy, particularly in industries reliant on international students, backpackers and sponsored workers.

The new report estimates international students alone are losing $61 million a week in unpaid wages – more than $3 billion a year – highlighting the multibillion-dollar wage theft problem experts say is distorting competition and rewarding non-compliant employers.

Across the board, workers reported being paid inconsistent amounts, denied breaks and not being issued payslips. In one account, a worker reported being paid in cash, with their hourly rate varying depending on what the employer considered appropriate.

Another migrant worker said they were aware they were being underpaid but felt powerless to challenge it, describing feeling “robbed and trapped” in jobs with no leave entitlements or penalty rates.

For Brighton couple Vaishnavi Lella and Vineeth Kuddigana, the experience of wage exploitation left them struggling to cover their bills and rent while building a new life in Australia.

The pair arrived from India in their mid-20s on student visas and found work at an Indian restaurant on Chapel Street, where they were routinely underpaid.

Lella said they would go months without being paid until they begged for money. Their employer would occasionally ask how much they needed for rent before handing over small amounts of cash.

“He used to make all the excuses,” she said. “Every time, we had to ask for pay.”

The couple eventually sought help through Swinburne University and were connected with a lawyer. Four staff members later joined them in a combined legal action.

After a protracted legal battle, the former employer was ordered to pay the workers more than $20,000 in unpaid wages. But the company was later deregistered, and workers still have not received all the money they were owed.

Kuddigana and Lella said financial pressure and insecurity made it difficult for migrant workers to push back against exploitative conditions.

“It’s a necessity. Students need to earn for food and rent,” Lella said. “We were vulnerable, we were young and everything was new. But we should say ‘no, we are not going to do it’.”

The findings are detailed in the Migrant Justice Institute’s (MJI) report Off the books: Inside Australia’s hidden system of migrant worker exploitation.

Based on 9963 survey responses collected in 2024, the study was conducted in six languages through community organisations, unions and government partners, and led by University of NSW associate professor Bassina Farbenblum and the University of Technology Sydney associate professor Laurie Berg.

It found 65 per cent of migrant employees were paid below their legal entitlements, while 36 per cent were paid below the national minimum wage – currently about $24 an hour. A quarter were underpaid by at least $10 an hour, with the average underpayment estimated at $8.80 an hour.

Farbenblum, who is co-executive director at the MJI, said workers in insecure roles were particularly exposed. “These were migrant workers whose shifts could be easily cut or stopped altogether in retaliation for complaining about their conditions,” she said.

Rather than isolated breaches, the report found underpayment is closely tied to insecure work arrangements, revealing how employers conceal underpayments through use of cash wages, misleading payslips and contracting arrangements to keep work “off the books”.

A central feature of migrant exploitation was the widespread use of so-called “sham contracting”, where workers are hired on an Australian Business Number (ABN) as independent contractors rather than employees, allowing businesses to sidestep minimum wage laws, superannuation and leave entitlements.

More than a third of migrant workers (35 per cent) were engaged on an ABN – more than four times the rate in the general workforce – and 85 per cent of those workers were paid less than they would have received as employees.

Another 38 per cent were employed casually, often with no guaranteed hours, leaving workers vulnerable to having shifts cut or terminated if they complained. Casual and ABN workers were about twice as likely to be paid below the minimum wage as permanent employees.

Berg said underpayment, the misuse of ABNs and falsified records were “not separate problems” but operated together as “a single architecture of exploitation”.

“This isn’t a gap in the system. It is the system,” she said.

“It’s a market integrity failure … honest businesses are paying the price. No matter who it is, who is serving your coffee or building your house or caring for your grandparents, everyone deserves a fair and safe workplace.”

The Albanese government introduced tougher workplace laws in 2024, including criminal penalties for employers who deliberately exploit workers, new powers to ban repeat offenders from hiring migrant workers and protections for visa holders who report abuse.

But the report argues the reforms do not go far enough in addressing the structural drivers of exploitation. It recommends strengthening the Workplace Justice Visa – which allows migrant workers who have experienced workplace exploitation to remain in Australia to pursue legal action – as well as increasing proactive enforcement in high-risk industries and establishing better pathways for workers to recover unpaid wages.

A spokesperson for the Home Affairs Department told this masthead it will review the report, which will help it advise the government on any policy changes needed to target exploitation.

“The Australian government has zero tolerance for any exploitation of workers, regardless of their visa status – this includes the underpayment of wages and entitlements,” the spokesperson said.

“The government continues to progress a whole-of-government response to improve compliance and remove barriers that deter temporary migrants from reporting exploitation.”

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.