Ian Verrender explodes skills shortage myth

Earlier this month, the ABC’s business editor, Ian Verrender, penned a fantastic article debunking the business lobby and Coalition’s incessant claim that Australia is experiencing chronic skills shortages, thereby necessitating the large-scale importation of foreign workers.

Verrender’s key arguments were as follows:

  • The shortage claim lacks empirical evidence: “If it really is the case that skilled labour is in such short supply, why aren’t wages being bid into the stratosphere by desperate employers? In fact, the opposite is true”.
  • How could Australia’s ‘world class’ tertiary education system fail so badly to equip people with skills, yet “legions of foreign students fight to get a place in our universities and colleges and pay through the nose for the privilege”.
  • In 2002, the business lobby told a Howard Government inquiry that Australia was experiencing skills shortages and required skilled migrants. Twenty years later, the argument is exactly the same. How can this be after decades of strong immigration?
  • In any event, “there’s an easy fix to skills shortages — pay higher wages”. But “instead, the push has been on to import large numbers of extra workers”. Why? Because businesses want to “depress the price of labour” and grow the population to create “a bigger economy and a larger potential market which makes it easier for businesses to make more money without any need for innovation”.

Verrender then concluded with the following insightful observation:

The Organisation of Economic Co-operation and Development — now led by former finance minister Matthias Cormann — last week delivered its latest assessment of our progress…

Per capita GDP was 9 per cent lower than the OECD’s best performers and our productivity was 15 per cent below the star performers.

Our problem isn’t so much a skills shortage as a policy ruse.

We’ve bodgied up the numbers to make it appear we are world leaders when it comes to economic growth. But in the process, we’ve squeezed wages, living standards and productivity.

Ian Verrender last week gave an interview on ABC’s Nightline (listen from 1.02) where he once again demolished the claim that Australia is experiencing purported skills shortages:

“This [the skills shortages claim] has been going on for decades now. I went back to at a Senate Inquiry from 2002, which was put forward by the Howard Government, essentially with the same arguments that we are hearing now. That there is a huge shortage of skilled workers in this country and unless we do something about it – i.e. import a lot of workers – we will not develop and will simply end up going out the back door”.

“So, 20 years down the track, we don’t seem to have improved one little bit. And this argument has been going on and on for decades… How could this possibly be? How could we have such dramatic skills shortages after all this time? Over the past 20 years we’ve brought in probably 1.5 million or more immigrants into the country. That should have been enough to have done something about the skills shortage”.

“The other problem is that if we do have such a dramatic shortage of skilled workers in this country, why are wages growing at the slowest pace ever if we’ve got a skills shortage?  Because if you’ve got a shortage of anything, the price should rise. Whether it’s bananas or cauliflowers or labour. If you’ve got a shortage of labour, then wages should be rising really, really rapidly. But they’re not. They are hardly rising at all. And it’s the biggest problem the economy is facing”…

“It [skills shortages] just doesn’t stack up at all. The business lobby groups, in particular, are the ones arguing for increased immigration because otherwise we won’t get the economy on track”…

“It [immigration] is one of the reasons why we’ve had such huge price growth in real estate over the past 30 years, as well… So, you’ve got an shortage of housing and an oversupply of workers. So you’ve got high house prices and not much wages growth”…

“If you strip out the effects of population growth… we’ve actually had a number of recessions since 1991-92… Our economic performance is not as good as we’ve all been led to believe”…

“If we really do have a skills shortage in a particular industry, then people would pay more for it… Our biggest problem in the past decade is a lack of wages growth…”

“If you look at the experiences of skilled migrants that come into this country… unemployment is at least double the general Australian community. And then you have a large underemployment factor as well. So, a lot of the people that came out here were not working in the professions in which they trained, they were working as Uber drivers and taxi drivers… So, a lot of heartbreak there. This is not really the kind of picture we are being told”…

“Businesses always lobby [for mass immigration] because they can get a bigger market, they can make a lot more money, without having to do any innovation or invest”…

“You’ve got so many vested interests that rely upon it [the skills shortage myth]. It’s just been taken to be the truth. If you just say something often enough, keep repeating it and repeating it, without any empirical evidence [it becomes true]”…

“Over the past seven or eight years, over one million migrants have come into Australia. Yet our federal and state governments have not spent enough on infrastructure. Our cities are choking. And our productivity is falling as a result of that”.

MB has provided similar analysis over many years.

No matter how the Australian economy has tracked, or how many migrants have arrived, the business and property lobbies have always cried ‘shortage’ and demanded more cheap foreign workers.

It’s time our politicians stopped listening to these parasites and instead allowed the labour ‘market’ to distribute workers to areas of highest return (as measured by wages).

Unconventional Economist

Comments

  1. It’s like he took your letters and read each one out loud.

    (With apologies to Roberta Flack).

      • You know your delightful flattery will get you nowhere, Kanniget. On the other hand, when I look today at David Crowe’s nauseatingly indulgent NineFax excuses for Morrison’s looney-tunes “beliefs”, then I’m not so sure…

  2. Its been 20 years of this BS. Its not like it just started yesterday.

    If I was offered the perfect job in Australia, I’d probably refuse it on account that Australias no longer a trustworthy country anymore. I’d rather remain self-employed. I’d rather earn peanuts then be on a high wage where you get shafted every five minutes.

    If you asked me to move to Sydney or Melbourne, then I’d tell you which end of the stick you can shove up your a$$ . Not only do I detest those states but you wouldnt catch me moving to a place where the real estate prices are higher then the wages.

    Australia is lies… lies and more lies. The lies just keep on coming.

    Im really surprised the woman havent taken over. They are malleable, easily influenced and government controlled. All the men have probably just given up. They probably dont care anymore.

    Everyones in it for themselves these days. There’s no care or concern for the well being of others. Everythings a con or a trap. Everyone wants something for nothing.

    I wonder how many people think the same. Im willing to bet, there are many.

    Whatever this BS is called Economics and Canberra, is so divorced from the realities of peoples lives that I dont think people give a rats about any of it.

    Canberra has become a vested interest of its own making and no longer represents anyone in Australia anymore.

    I cant see how population rates wont decline somewhat severely in the future. You’ll have baby boomers dying and you’ll have tonnes of homeless young suiciding. My guess is a large proportion of Australias population is about to shrink.

    Quality over Quantity. It wouldnt matter if we migrated millions into Australia. Migration only works for as long as they dont realise they are being screwed. The moment they end up like me and turn away from the system completely, Liberals end up with another batch of Un-Involved Citizens who couldnt care less about Government institutions anymore. They just walk away lol. The more migrants they bring in, the more are going to be Un-Involved. The greatest fallacy is the Liberals actually think they are in control of this Country. They lost control years ago.

    Same sh*t… different day… except now its Wednesday. I think I’ll fall asleep. Wake me when the next election comes.

    • boomengineeringMEMBER

      Australia is no longer a trustworthy.
      Since when was it then ?.
      Didn’t you read “Game of Mates” endorsed by MB.
      Since when have we acknowledged the International Law which states that the 1642 claim of New Holland by the Netherlands still stands. How many schools teach of our first permanent resident’s of 1629.
      Where in our history b looks does it mention, slavery,, holocaust, genocide, ethnic cleansing..
      Our politicians have never patriotic to Australia preferring allegiance to a foreign country.

      • International law is as good as the international police that enforce it…

        Same as any other law.
        Of course the international police don’t actually exist though..

        • boomengineeringMEMBER

          Ben.
          True our banknotes used to have that written on them, meaning the common people of Australia owning the wealth of Australia.

    • They dont understand that the 15 or so years that this has been going on, the unattainable houses, the lower wages, the longer hours, the lower standard of living…that 15 or 20 years…that was OUR LIVES. Those were the years we were meant to lay the foundation for the future. Our lives sold out from under us.

      You bet Im mad.

  3. reusachtigeMEMBER

    Yeah so what. It will be boom times again in migrants soon enough. Can’t wait, we need fresh workers!

    • Display NameMEMBER

      Hey bloke you will just have to zhuzh up the migrants you currently have for a while. Maybe an extra tip after the relations party.

    • You do realise this is a ruse promoted by the conservatives, yes? Remember they were the ones that stopped the boats and opened the planes. And they are the ones calling all the shots now. But yeah, labor’s / The Guardian’s fault.

      • Agreed. Howard opened the floodgates but it’s Labor that is soft on borders. It’s also Labor’s fault for not shutting the floodgates. Classic political shenanigans. The fact is in this unbalanced political environment once the floodgates for cheap workers were opened the business lobby were always going to slaughter politician that tried to close them. Morrison (or any leader) will have a tough time pushing back against them once C19 is dealt with.

      • WhatcouldgowrongMEMBER

        I think you might be jumping to conclusions a bit about what I’m talking about but if that makes you happy more power to you! My point is some things (negative effects of immigration) should not be discussed in polite company (the Guardian)

  4. Ritualised Forms

    When all is said and done any ‘skills shortage’ is utter bullshido.

    The only shortage of real need is arguably nursing – but even here it isnt that difficult to train nurses, and encouraging those in the profession and their mainly state employers to upskill those already in the game would go some way to addressing any need.  But as for the rest what sort of shortages are we actually talkig about?  Shortages inside the bubble? – facing the domestic economy of the most heavily indebted and overly remunerated people on the planet and reliant on those going further into debt or their employers shellling them out more? – or shortages outside the bubble? – mining and agriculture where one (mining) has been given an employment free pass for generations for any skills they do actually need, and the other (agriculture) has spawned a neo-slavery industry?

    That of course has all been exacerbated by a generations worth of government policy to feed the top end of the income chain – and take a look at average GP salaries compared with their counterparts overseas – with what can be contracted or made more precarious at the bottom end.

    Australia has a bubble economy, made even more bubblicious by the government  shaping JobKeeper as a professional handout.  Australia has not any internationally exposed sector apart from mining and some agricultural resources – no selling citizenship with education ‘exports’ doesnt count.  Every occupation in Australia is remunerated better than counterparts offshore and all occupations are essentially oversupplied.  Accountants and Lawyers are on the skilled migrants list.  Australia churns out about 18 thousand new lawyers every year and has a standing population base of about 65 thousand – of whom about half are essentially conveyancing clerks – and legal firms around the country are trying to bill people for services they can otherwise get for free (witness the unclaimed returns emails some people get, or the range of legal firms applying for records from public service agencies which can be got for free). How many accountants have migrated here to become bookkeepers?

    Alll the rest – with very very few exceptions in mainly advanced engineering, some advanced IT and some advanced scientific research [all government or government controlled] – of our ‘skills shortage’ is about keeping employer pockets warm and moist, or making sure selected occupations dont experience too much competition.

    There is bugger all which wouldnt be sorted out by a properly functioning university and vocational education sector – a shame these have been deformed for ponzinomics

    • Arthur Schopenhauer

      ‘Advanced Engineering – Advanced IT’ skills are a global market. Australian companies generally have to pay the same rate as the rest of the world, but they neither value nor think they should have to pay for ‘advanced skills’.

      They should be lumped in with the rest, RT.

      Edit: When they hire lower priced ‘skilled’ labor for OS, the results are usually underwhelming. That reinforces the management perception of engineers adding little value. Meanwhile, our ‘rock star’ engineers, fluent in code and an engineering specialty, end up in Silicon Valley, doing very well for themselves.

      • Generally technology in conservative “Australia”, and lets be honest we have a very conservative culture when it comes to innovation (i.e. show me something that’s proven, don’t give me your sales pitch which is common in Silicon Valley). This works for health, and general engineering where process/standards/caution is desired but not in software. Things move too fast in software and the culture of “fake it till you make it” definitely wins here; by the time you have proven it it should of been already built, hyped up and pre-marketed. That conservatism IMO applies also to how we finance ventures here making it easier for overseas companies to finance/acquire/invest than local companies. Analysing many US startups who barely have an app together become highly successful vs locally where people only lend/fund once profitability is high its easy to see why there is bigger money overseas in software.

        Believe it or not there are some good engineers locally as well; not everyone wants/can move to another country. But the culture of treating software as a cost centre rather than an innovation/R&D venture hurts it even for those talented people. Many big corps still treat Engineering as capital (proven method, built equipment) or operating expenditure (BAU), but I personally believe they need to start treating it like R&D expenditure where if your not failing on some things your not trying hard enough to push your boundaries.

    • Professor DemographyMEMBER

      This is true. And those true skills shortage areas have salaries well over 100K, and often well over 150K. The simplest rule change could leave these roles still available for skilled migration. 80K (or more) minimum criteria for such visas.

      • kannigetMEMBER

        My Business is in one of these demographics, There is a real skills shortage and the reason the wages are so high is purely because you cant even get immigrants with the skills. I keep getting asked to supply staff for a project, I identify another candidate, convince them to come work for me and before I get them to sign up they get a better offer, usually in the range of another 20k to 30K a year.

        I dont make any money on them as it is, I dont bother to try and renegotiate as its a fools errand for me.

  5. Bravo. Controlled immigration dependant on successful application of a skills shortage role. Not more uber drivers and electricians

    • boomengineeringMEMBER

      My son walked past and saw your electrician word and said ” all the electrician migrants are from UK, gyprock ers Chinese.

  6. Lord DudleyMEMBER

    Simple litmus test for skills shortages… are employers paying signing bonuses to new hires? If the answer is no, you ain’t got a skills shortage.

    In the US, signing bonuses of $30k to $50k are quite common in my sector.

    • This should be adopted as policy, a skill may only be added to the skills shortage list if eg 80% of new hires are getting paid a sign on bonus of 50% of their wage for their role (or whatever makes for a true market)

  7. “Per capita GDP was 9 per cent lower than the OECD’s best performers and our productivity was 15 per cent below the star performers.”
    This is telling us we are becoming a banana republic, it happens slow at first thin all at once. Our glorious leaders will probably only realise when Xi blocks our iron ore once his Pilbara killer Simandou is online (and no doubt once we have no way to pressure Xi he’ll slap bans on a heap of other things)

    How did these other OECD countries manage to do so much better than us without high immigration & massive populations and mostly without massive commodity income? According to the LNP & bossiness lobbies it’s not possible. Our leaders have failed, they ran a policy for 10, if not +20yrs, that has failed to fix the problem of skills shortages. They claim to believe in free market capitalism but then ignore the market signals like low or no growth in real wages!

    • They claim to believe in free market capitalism but then ignore the market signals like low or no growth in real wages!

      O.o

    • Mining BoganMEMBER

      That’s what happens when you try to fix a problem that never existed. All you do is f#ck up the good bits.

  8. I could earn double in the US with what I do.

    Convert what I earn in AUS to USD and I’m still wayyyyyyyyyyyyyyyyyyyyyyyyy behind.

    • Lord DudleyMEMBER

      I left Australia 10 years ago for the US. Basically, take what I was earning in Australia, and multiply the number by 3. Then cross out ‘AUD’, and write in ‘USD’.

      Exactly the same job.

  9. TailorTrashMEMBER

    Well isn’t it nice to see a recent immigrant doing his best to fill the skills shortage by setting up an international education( migration ) business . Selling off the public capital of straya ……and getting his aged parents in to help grow the skilled shortages in aged care .
    This is definitely what the country needs more of
    Send a plane for him and his parents tomorrow .
    If he willing to provide his full name .

  10. working class hamMEMBER

    Why do they even bother with a list? When you simply list every occupation, it kinda makes it pointless.
    Sectors jus ask to have their chosen occupations included and wage suppression quickly follows. The problem I see with the current system is that politicians, their immediate family and friends all directly benefit from this BS. It will never change.

  11. I’m beginning to think Ian V would make a wonderful PM, and with it, imagine how our nation would prosper!

    • It seems being an economic dimwit is a pre-requisite, and cow-towing to the political donors, is required. Ian would have to have a brain transplant with a scorpion to meet all those requirements.

  12. The Greens and Labor want unlimited grannies.
    The LNP want unlimited unskilled.
    One Nation want white migration.
    SAP don’t want to offend, so are now just a NIMBY party.

    Mass immigration is pretty much part of the political establishment. Only differs in what type of migrants.

  13. Oops, I posted this comment on the wrong post:

    Ian Verrender blamed our educational system for the skills shortage. But I think it’s unfair to pin all the blame on the educational system. The dysfunctional job hiring culture is also a major culprit for the atrophy of skills in Australia. Basically, employers want to hire workers that are trained and experienced at someone else’s expense. The problem is, since most employers have that attitude, then who’s the one doing the training and giving workers the chance to grow to gain experience?

    These article explained the situation brilliantly:
    https://terence-kam.medium.com/why-is-the-job-market-so-brutal-because-its-rigged-against-you-e74507d8e000

    The macro-economic consequences are as follows:
    https://terence-kam.medium.com/why-the-unemployment-rate-will-get-higher-and-stay-higher-indefinitely-3b879105f608

    Give that Medium author some love and clap for writing these 2 articles.