Skilled migrant visa restrictions lift mining wages

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Research by BDO Remsmart shows that wages for a number of jobs in the mining sector have risen above the peaks seen during the last resources boom. Western Australia, in particular, is seeing a surge in mining industry wages, as BHP, Rio Tinto and Fortescue Metals Group invest in new iron ore mines. Factors such as stricter rules on the use of foreign labour has helped put upward pressure on wages, according to BDO. From The AFR:

A study of remuneration paid to 35,000 mineworkers by advisory firm BDO Remsmart found at least 12 mining jobs were now commanding higher wages than at the peak of the last resources boom…

‘We are having more trouble attracting east coast skills definitely, and because the federal government has abolished 457 visas (which allowed foreign citizens to work in Australia) it is hard to also attract international labour.”

Foreign labour can still enter under ”Designated Area Migration Agreements”, but Mr Everingham said that policy was more bureaucratic and less appealing to skilled workers because it did not offer the same pathway to citizenship that previous skilled migration policies did…

This is economics 101. If the supply of foreign workers is restricted, then local workers’ bargaining power increases and employers have to raise wages to attract talent, as well as provide greater training. This is a positive outcome and is precisely how the labour “market” is supposed to work.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.