Late last month, The Australian’s David Uren penned a spurious article in support of mass immigration and a ‘Big Australia’, claiming that it is central to Australia’s economic success and that “fertile, educated Asians are saving our economy”. At the time, I demolished Uren’s arguments, which were both illogical and failed the evidence test (read here).
Rather than learning from the experience, David Uren has returned today with another cherry-picked treat, this time claiming that young migrants are a “boon” for the growing workforce. From The Australian:
Migration is transforming the age profile of the labour force, with young migrants, predominantly in their 20s, accounting for 80 per cent of the growth in the workforce in the past five years.
Employment grew by 730,000 people between 2011 and last year and, of this, 600,000 were migrants arriving in that period.
In a presentation to be made to the Melbourne Institute/The Australian Economic and Social Outlook Conference this week, leading demographer Peter McDonald says that, without migration, there would have been no increase at all in the number of workers younger than 55 over the past five years.
“All the workforce growth would be at ages 55 years and over. The migrants coming in at a young age change the age structure of the labour force,” Professor McDonald says…
Professor McDonald, of the University of Melbourne, says it is wrong to say migrants are taking jobs from the Australian-born population.
“Older and younger workers most of the time are not substitutes, they’re complements,’’ he says. “Younger workers have the hi-tech skills while older workers have the experience. It’s a good thing to have the mix”…
Kelly Hotta is typical of the new generation seeking to make Australia home. Born in Singapore, she studied in the US and shuttled between Japan and Hong Kong for work before falling in love with Sydney.
The 30-year-old graduate of Cornell University in New York brought her skills in data analytics to Australia in April last year, but already she feels she has found her dream city. She says being useful to her new country is important to her.
David Uren should really examine the data before posting articles like this.
First, this notion that you can keep Australia young by continually importing younger people via mass immigration has been debunked over and over again by the Productivity Commission (PC). For example:
- PC (2005): “Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure [to an ageing population]. It affects population numbers more than the age structure”.
- PC (2010): “Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary“…
- PC (2011): “…substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age… It follows that, rather than seeking to mitigate the ageing of the population, policy should seek to influence the potential economic and other impacts”…
- PC (2016): “[Immigration] delays rather than eliminates population ageing. In the long term, underlying trends in life expectancy mean that permanent immigrants (as they age) will themselves add to the proportion of the population aged 65 and over”.
Thus, trying to overcome an ageing population through higher immigration is a Ponzi scheme. It requires ever more immigration, with the associated negative impacts on economic and social infrastructure, congestion, housing affordability, and the environment, which boosters like David Uren never properly consider.
In any event, economists at MIT recently found that there is absolutely no relationship between population ageing and economic decline. To the contrary, population aging seems to have been associated with improvements in GDP per capita, thanks to increased automation:
If anything, countries experiencing more rapid aging have grown more in recent decades… we show that since the early 1990s or 2000s, the periods commonly viewed as the beginning of the adverse effects of aging in much of the advanced world, there is no negative association between aging and lower GDP per capita… on the contrary, the relationship is significantly positive in many specifications.
Second, the notion that migrants are “skilled” and deepening Australia’s labour force is not supported by the evidence.
The PC’s recent Migrant Intake Australia report explicitly stated that around half of the skilled steam includes the family members of skilled migrants, with around 70% of Australia’s total permanent migrant intake not actually ‘skilled’:
…within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…
Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…
The PC also showed that while primary skilled migrants have marginally better labour market outcomes than the Australian born population in terms of median incomes, labour force participation, and unemployment rates, secondary skilled visas, and indeed all other forms of migrants, have much worse outcomes:
The Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants report, released last month, also revealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%):
Another point that needs to be recognised is that the most popular categories of skilled migrants – accountants, engineers and IT professionals:
Are also the categories with the biggest surplus of workers:
Thus, the skilled migration system is destroying career prospects for local graduates in these (and other) areas.
David Uren needs to recognise that the threshold issue in the immigration debate is the living standards of the incumbent Australian population. Living standards in the major cities are unambiguously being eroded by mass immigration via negative externalities that are not captured in either the national economic accounts nor the economic modelling, such as increasing congestion, falling housing affordability, and environmental degradation.
If Uren was my economics student I would give him a ‘D’ for only considering the benefits of immigration in a superficial way and completely ignoring its costs.