The chair of the Migration Council of Australia (MCA) and big business lobbyist for the Australian Industry Group (AIG), Innes Willox, repeatedly claims that Australian businesses are experiencing widespread skills shortages, and uses this claim to justify current mass immigration policy settings.
For example, in February Willox argued that “now is not the time to cut migration” because Australia has a “skills problem”, and “this means our economy will continue to require a significant supply of skilled labour through the various temporary and permanent visa stream”.
And in September, 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.”
Shortly afterwards, Willox’s claims were blown out of the water by the Grattan Institute’s 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:
I will also add that 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.
Regardless, if Willox’s members are having trouble finding staff, there is a very simple solution: offer higher wages. This is exactly what America’s largest trucking company – JB Hunt – has done to combat a driver shortage, with stunning success. From Bloomberg:
J.B. Hunt Transport Services Inc. said late Monday its contract-services unit has raised wages by around 10 percent over the last 12 to 18 months to recruit new drivers. That compares with a 2.8 percent increase in average hourly earnings for all U.S. private-sector workers in the 12 months through September, and 4.3 percent over the past 18 months, according to Labor Department figures…
“We have been recruiting drivers very well in this difficult market because of the pay that we’ve been able to price into our deals for our drivers,” Nicholas Hobbs, president of the contract-services business, said Monday…
This highlights a key point: 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. It also discourages employers from training Australians in favour of hiring ready-made workers from overseas. 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 lie.
