With skilled migration set to dominate day two of next week’s Jobs and Skills Summit, and talk of some kind of grand bargain over migration and wages, higher migration has taken on a near-untouchable status as one of the crucial policy fixes for worker shortages and skill deficits.
Fortunately, some have remained objective about the pluses and minuses of migration as, in the eyes of business, the panacea for our economic problems.
A new paper from Brendan Coates and Tyler Reysenbach makes for compulsory reading ahead of the summit, especially for starry-eyed Big Australia fans. Coates and Reysenbach systematically explain why more skilled migration may not deliver the results advocates believe it will.
For a start, increasing permanent skilled migration won’t have a major effect for some time, because “three quarters of permanent skilled visas are allocated to people already here on a temporary visa”. It would just mean fewer temporary workers leave — undoubtedly a good thing at this point, but unlikely to deliver a major increase in skilled migrants.
Moreover, increasing migration will add to demand for labour as well as labour supply. They reference data that shows migrants — even those who’ve been in Australia for a substantial period of time — spend significantly more than they earn, compared to long-term migrants or people born here (there’s a separate issue about the impact of migrants on specific industries, but that’s not germane to the overall national demand for labour).
And more skilled migration won’t fix worker shortages in areas like hospitality, agriculture and tourism, which heavily depend on low-skilled temporary migrants like foreign students and working holidaymakers.
Higher migration will also, inevitably, put more pressure on housing. “We estimate that increasing the annual migrant intake by 40,000 a year would, over a decade, lift rents by up to a further 5%. Lower-income renters would be hit hardest.” The only solution to that problem is for governments to get serious about housing supply.
What higher migration will do — and the reason why the government may be attracted to it — is increase tax revenue.
Skilled migrants generate a fiscal dividend because they pay more in taxes than they receive in public services and benefits over their lifetimes. Grattan Institute modelling suggests that increasing the size of the permanent intake from 160,000 to 200,000, and allocating those extra visas to skilled workers, could offer a $38 billion boost to federal and state governments combined over the next decade.
The Grattan team has previously called for improvements to skilled migration, such as dumping dud categories like the Business Investment and Innovation Program, and ditching priority worker categories for skilled visa entry in favour of a wage-based category — an employer could apply for the entry of any worker who would earn over $85,000 a year.
The reflexive demand by employer groups for more temporary migration to fix labour shortages has been a prominent feature of the last 12 months, even as wages growth has failed to shift, reflecting that employers are still refusing to increase wages to attract workers. As the Grattan paper shows, the demand for more migration fails even according to the short-term and self-interested goals of business themselves — and that’s before wider problems such as the increasing global demand for labour is factored in.
Employers may need to reflect on why workers around the world would want to move to Australia when they face wage stagnation and an epidemic of wage theft across the economy. It’s doubtful that kind of self-reflection will occur before next week, however.
but flying in workers will keep wages down … so you can see why business is into that
I am totally against any move to bring back a major migration program into this country for a host of reasons.
FULL STOP!!
If the ‘cloud of COVID had any silver lining’, it was that it brought immigration to a dead stop.
Bernard is right (as usual) with his comments. I would go further than to warn against the consequences for housing, health, education, traffic congestion, the environment, etc. of returning to a high (or even a medium) level of immigration.
hear hear!
So we bring in up to 200,000 migrant workers to cover Australia’s lack of sufficient skilled workforce.
Were do they live, given Australia’s housing shortage?
The article says
“Higher migration will also, inevitably, put more pressure on housing. “We estimate that increasing the annual migrant intake by 40,000 a year would, over a decade, lift rents by up to a further 5%. Lower-income renters would be hit hardest.” The only solution to that problem is for governments to get serious about housing supply.”
The answer, CB, is that they live in the houses, units and flats which poorer people currently inhabit before they get forced out onto the streets. Welcome to the New World Order. Wealth used to be more subtle about the way it dominated politics; now it doesn’t even bother to hide the bodies.
In Western Australia, social housing builds are difficult due to a lack of construction workers and high levels of activity. There is additional State Government social housing money but not enough construction workers to support building new homes. Migration of construction workers can be part of the solution.
Grattan suggests all the complications of specifying long lists of skilled labour categories with all its attendant bureaucracy would be better addressed by “… a wage-based category — an employer could apply for the entry of any worker who would earn over $85,000 a year.”
Looks good to me. Far simpler. Of course Australian employers would never undermine such a scheme by paying salaries that qualify but immediately clawing back a large part of it from their migrant workers by imposing various fanciful deductions, or just threatening them with being sent home if they don’t cough up. And our system of workplace regulations is easily robust enough to catch them if they try. Isn’t it?
Surely in the first place it’s about having Australian employers applying award conditions for local employees too, including lower paid in tourism/hospitality, logistics etc.? This where unions could come in by investigating postcodes, sectors etc.
Yes, but that’s a different issue to whether the skilled visa is far more complicated to administer than it should be.
We’ve been importing migrants with various skill sets into this country for close to 250 years now. It hasn’t fixed the problem so far.
What’s that Einstein quote about insanity?
Is that the quotation Einstein never said and which makes no sense?
There is any number of circumstances where doing the same thing repeatedly can and does result in different outcomes.
Yeah, SSR. That one.
What is the ‘problem’ or specifics when we are an immigrant nation; allegedly the ‘most successful’?
The problem? Apart from diminution of wages, conditions, housing availability, social coherence & tranquility and the general ecology?
How about the blatant absimulation which is now threatening much of Continental Europe & Britain?
Any credible evidence for those multiple claims, Sycorax? What’s Europe &/or Britain got to do with it? Issue with modern day ‘immigrants’?