Last week, the chair of the Migration Council of Australia (MCA) and big business lobbyist for the Australian Industry Group (AIG), Innes Willox, repeated the claim that Australian businesses are experiencing widespread skills shortages:
The AI Group surveyed about 300 businesses and 75 per cent of them reported skills shortages, meaning they cannot find the staff they need to fill the jobs they have.
“These are quite often in areas around the technical trades, or in jobs that require reasonably high level maths skills, or science skills, or technical education skills,” AI Group chief executive Innes Willox said.
“And particularly skills around the emerging parts of industry where they are looking to compete more, areas like skills in use of big data, automation and artificial intelligence.”
Mr Willox said the manufacturing sector is feeling the brunt, partly because it is transitioning from needing low-skilled to more advanced, digitally skilled workers…
This followed Willox’s claim in February that “now is not the time to cut migration” because of “skills shortages”.
Yesterday, the Grattan Institute released its Mapping Australian Higher Education Report 2018, which contained the below chart – compiled using Department of Employment data – showing that skills shortages in Australia are tracking near historical lows, close to recessionary levels:
The sad reality is that Australia’s open immigration system has destroyed career prospects for Australian university graduates – a point also acknowledged by the Grattan Institute in yesterday’s report. It has also discouraged employers from training young Australians in favour of hiring ready-made workers from overseas.
Moreover, if skills shortages were pervasive across the economy, Australia would be experiencing strong wages growth. The fact that wages growth is running at historical lows highlights the lunacy of Willox’s argument, as does the persistently high level of labour underutilisation.
Except in very limited circumstances, there is no such thing as a shortage of labour. There is only a “shortage” of labour at the price/ wages firms are generally willing to pay. Given faster wage growth: a) the least productive businesses would lose people, shrink and go bust, transferring workers, land and capital to more productive businesses, raising average productivity across the economy; and b) all businesses, observing higher wages, would invest more in labour saving technologies, training and restructuring to raise productivity.
This is how the labour “market” is supposed to work. But allowing the mass importation of foreign workers circumvents the ordinary functioning of the labour market by enabling employers to pluck cheap foreign workers in lieu of raising wages. This is deleterious for both Australian workers and the broader economy.
Innes Willox and the MCA need to be called out for perpetuating the skilled shortage myth.
