ANZ: Rebooting immigration will crush wage growth

It’s amazing to see economists finally acknowledge that mass immigration drives wages lower – something MB has argued for nigh on a decade.

The latest salvo comes from ANZ economist Daniel Gradwell, who last week warned that restoring mass immigration would suppress wage growth:

Once Australia’s international borders reopen and Australia’s labour market is re-attached to the global labour market, it will be harder for wage pressures to build locally.

As ANZ economist Daniel Gradwell said last week, at an event hosted by the Urban Development Institute of Australia, when international borders do re-open, “if anything, they’ll be suppressing wages growth”.

“I think it’s really a fascinating experiment that we’re living through at the moment where part of the reason why unemployment has come down so much is surely because there aren’t as many people coming into the country looking for work,” Mr Gradwell said.

“If we had absorbed another 200,000 people over the last 12 months instead of actually losing people [overseas], then surely unemployment would be sitting higher that where it is.

“And we know that we need to get the unemployment rate lower before we see some material improvement in wages growth.”

Mr Gradwell said there’s a fair way to go before wages start growing across the board, and we’ll need to keep creating jobs at a decent rate to get there.

“Having said that, I do think we’ll start to see some wages growth coming through before the borders are opening,” he said.

“But it’s really hard to see wages picking up at 3 or 4 per cent per annum like they used to do in the past while we have, potentially, a really strong overseas migration intake coming through.”

Despite this inalienable truth, the Morrison Government and its business mates continue to lay the foundation to flood the economy with migrant workers at the earliest opportunity:

[Immigration] Minister Hawke said migration will be crucial for Australia’s economic recovery from COVID-19 during a live session hosted by the Committee for Economic Development of Australia (CEDA)…

“The government sees the migration program as integral to how Australia will recover from COVID as well and accessing the skills that we need, the shortages that we will have in our economy as it recovers, will be a high priority for the migration program in coming years”…

Minister Hawke assured that migration policies would be more flexible in post-pandemic times…

CEDA chief executive Melinda Cilento said migration, particularly of skilled migrants, is integral to reimagining our economy and the post-pandemic economic recovery in Australia…

“What we are hoping for is that the government… are going to bring more agility into the (migration) program and actually make it easier for businesses to get the skills they need”.

The property lobby has also heard the call to arms:

A new report [by BIS Oxford Economics commissioned by apartment developer Meriton and property group Ceerose on behalf of the Urban Taskforce] into the nation’s migration levels warns of potential economic harm if skilled migrant numbers are not restored…

Property developers are calling for a return to positive net migration levels in light of the economic research, which reveals migrants were responsible for 57 per cent of Australia’s population growth over the past decade and are among the biggest buyers of housing…

The Urban Taskforce, which works on behalf of developers, called for a return to positive net overseas migration as soon as it was safe to do so…

The report will be launched on May 19 by Mr Triguboff, BIS Oxford Economics and federal Immigration Minister Alex Hawke.

Clearly, the business and property lobby are pulling the strings of its federal government puppet, Alex Hawke.

These lobbies are only concerned with three things:

  1. Lowering their labour costs;
  2. Expanding their customer base; and
  3. Paying less taxes.

Ramping up immigration is an easy way to achieve the first two goals. But this comes at direct expense of ordinary voting Australians, who will suffer lower wage growth, be shoe horned into smaller and more expensive housing, and face rising congestion and reduced amenity from a bigger population.

When will Labor stand-up and fight against the Coalition and its big business cronies, who have effectively declared war on working Australians?

Unconventional Economist

Comments

  1. “When will Labor stand-up and fight against the Coalition and its big business cronies, who have effectively declared war on working Australians?”

    Good question, come on ALP and Albo, we need you to back Australians first and foremost, without equivocation!

        • Wow, we blew away the highly touted Nordic countries and the industrial heavy-weights like Germany and Japan, not to mention the UK and France. We must be highly functional as a nation. The Strayan model works after all.

          It is all good then.

          • Thats why they want to come… it genuinely is a country where you can get a fresh start, make something of yourself! Half of Asia would move here in an instant, if they could.

          • To tell you the truth, I have never been more proud about our great country in quite a while, perhaps since the Sydney Olympics in 2000. I sincerely thank you for helping me rediscover our greatness!!

          • reusachtigeMEMBER

            It sure is great but you wouldn’t know it on here with all you whinging pricks! Go out, stop whining, and be successful

        • You’re kidding right? The stats behind that study are predicated on housing “wealth” built on a Ponzi pyramid of debt and a general foundation of lies, such as the $40B “ exports” generated by the importation of international students.

        • LOLs, sure I love Australia and it is a good place to live but strip out housing as wealth and we are not looking so successful. Now jump forward 10yrs to when China has iron ore coming from Africa, and likely selling it to other countries as well, not to mention coal revenue falling through the floor etc ie little commodity wealth. Add in 10yrs of excessive wage crushing immigration (just a few extra Canberras) with low to no productivity increases, still flat wages and quite likely the longest drought yet (this years rains not having returned in the decade), lowest levels of livestock in a hundred years, food inflation. Well you get the picture. The few bright spots in our economy simply don’t have the muscle to overcome these negative downdrafts. We’ll be in a hole we will not be able to doing ourselves out of, a bona fide banana republic, if we are not very careful. We need action now to drive productivity & innovation!

          • @Zulu: construction and safety standards are notoriously poor in Africa, including storage of large amounts of high explosive. Just prior to scheduled opening, there will be a major incident at Simandou which will shutter production indefinitely. This will be found by local authorities to be due to the negligence of the mine operator. There will be no foreigners seen in the weeks prior to this in military gear and no helicopters will be coming from the direction of the Ziama Forest.

    • Arthur Schopenhauer

      They will have to lose the next election. The very same interests that support the LNP, lobby Labor too.

      • Two festering boils on opposite arse cheeks.

        There is very little difference between the LNP and ALP.

    • TheLambKingMEMBER

      Labor are funded by and are owned fully by the unions. The unions (mostly) don’t care about workers. They (mostly) don’t represent the wishes of their constituents (like the shop front workers continually agreeing to below wage deals, and campaining against things like same sex marriage when their constituent is ~80% in favour.) They (mostly) care about money and power. They allow overseas workers because they enforce union membership which gives them more money without threat of being overthrown.

      The only thing worse than the corrupt Unions we have would be not having Unions at all (have a look at conditions in the US or other countries with little or no Unions)

  2. I think it’s a long way off.

    One COVID case and they close the state

    Also, we are headed into the biggest and widespread devastating financial crisis in H2, our extreme household debt could make us one of the worst hit countries in the world. Unemployment could be so high than many may not want to come. We have nearly the most expensive property in the world and after our bubble bursts later this year, it’s hard to say how that will affect the desire to come here

    Further we are headed into this decade with much much higher inflation and very high interest rates ……we will see 7,8,9,% home loan interest rates

    Also the cost to build a property will be probably double what it is now

    Immigration and the property Ponzi scheme is finished……what we’ve seen over the last 20 years, disinflation, constantly falling home loan interest rates to 1.99% and rising house prices is over

    There will be no easy money in property, high interest rates, much higher cost to build, higher property taxes, higher council rates ……

    We have to see how high unemployment is post crisis in H2

    Unemployment could be 25% next year….and house prices experiencing the same fate as United States 05/06 ……might make AUST not as attractive as we used to be

    There are so many unknowns

    When the new housing estates in outer melbourne fall 50 to 70%, will many just pack up and go home,…….I think it’ll look like states that got hit so hard in the USA, there will be half finished homes everywhere next year….materials are becoming so expensive those on the home builder program won’t reach completion

    2022 onwards will be a completely different AUSTRALIA …..we may have mass exodus from Melb and Sydney

    • Arthur Schopenhauer

      Your argument is a little contradictory.

      Yes, the Covid pandemic is only just starting to take off, and it will preclude international travel. But, if there was a financial crisis, would anybody want to return to a virus riddled home country if Covid was under control in Australia?

      • Arthur
        I really think we need to see how this plays out,
        In AUST we haven’t seen what financial devastation can do.
        Things will be very different next year……
        We are headed into the greatest financial crisis ever, the collapse of the global banking system ……when it gets to something unprecedented in history, how do you know how people will react.
        It’s really unimaginable now to anyone what the world is going to experience in Q4 this year….maybe sooner….and the destruction it will leave us to deal with 22/23

  3. I see dual citizens as being a root cause of the problem of seemingly never reducing numbers of “Australians ” stranded overseas. Many nations do not allow dual citizenship and neither should we. Make it a little less attractive to the border hoppers and maybe they will seek out greener pastures? And currently, this thought is only one I cannot get printed in the MSM where I lurk in between my other hobbies.

    • Even StevenMEMBER

      Agree that dual citizenship should not be permitted. People must pick their poison. There may be some complexities where citizenship is unknowingly / automatically granted to some, so I’m leaning towards a practical solution… whatever your passport says (one country).

      • Rrrright. The country has been heading down a catastrophic policy path pretty much across the board since the ’80s (if not earlier), and yous think a couple of decades of allowing dual citizenships, the vast majority of which are inherited by native-born Australians, are a *root cause* ?

        Please show your working.

  4. Jumping jack flash

    I’d expect that the banks will get on board soon and tap the government on the shoulder and explain to them that slaves aren’t eligible for the colossal piles of debt that are essential to be obtained to buy a house, and most importantly, keep the debt economy growing.

    Wage theft doesn’t work to create enough demand for debt to counter the deflation caused by debt existing.

    It has also been proven that relying only on wage theives to grow the debt isnt adequate.

    What must happen is CPI and wage inflation and that doesn’t occur when slave labour is used to suppress CPI and wages growth.

    Their policies are still locked into the lies fabricated decades ago, when we actually had CPI and wage inflation. These so-called leaders of ours haven’t had an original thought since then!

    • The truth is going to come out over the next year ……really 22 people will know the lie they’ve been fed
      There are going to be a lot of very angry people

    • But the wage slaves need somewhere to live and are forced to rent. This enables the IP landlords to load up on MOAR MOAR MOAR debt. Result is the same. Wage slaves are kindling for the house Ponzi bonfire.

      • Jumping jack flash

        Not good enough though.
        Think about what was happening by 2019.
        What was Myer doing? Target? These were large companies that were supposed to be stable. And what about the smaller businesses you didn’t hear about?

        One could argue these businesses deserved to die, they were dinosaurs… but really?

        The facts were the economy was deflating, and quickly.
        There was a shortfall of $600 billion dollars due to missing debt growth. COVID really helped fill the hole, but it is proving to be a once-off and they missed their opportunity to expand the debt capacity of the economy by initiating the economic symbiosis of CPI and wage inflation.

        “But the wage slaves need somewhere to live and are forced to rent.”

        Slaves are also very efficient in their use of rentals…

  5. Display NameMEMBER

    It has got to the point when I hear that there is a skills shortage I immediately, reflexively think BS. Now I grant in some narrow areas there might be skills shortages in specific niches but this must be the one of the most concerted pushes to tell everyone that up is down that I have seen.

  6. I still remember reading a forum of Indians a few years back. Australia was their strategy, couldn’t wait to take over and they were calling the place South South India. It’s great to have leaders who just play into their hands.