The Reserve Bank of Australia (RBA) has released its Statement on Monetary Policy, which explicitly notes that Australia will face “wage pressures” if the international border remains closed to migrants:
The effects on labour supply have been observed mainly in some labour supply shortages in the industries that typically employ a larger share of migrants…
Given the current domestic availability of labour, strengthening labour demand as the economy transitions from recovery to expansion is likely able to be met from within the domestic population in the near term.
However, a sustained period of economic recovery could lead to wages pressures emerging more quickly if new labour supply remains constrained, particularly and foremost in areas of domestic skills shortages…
The longer border restrictions remain in place… the more likely that localised labour shortages could translate into some wage pressures as the economy continues to strengthen.
Given that lifting wage growth is now a priority of the RBA, will it now speak out against the Morrison Government’s plan to reboot immigration to pre-COVID levels by:
- Abolishing labour market testing requirements;
- Lowering costs and speeding up approval times for importing foreign workers;
- Expanding the skilled occupation list to include almost any role;
- Providing all ‘skilled’ visa holders with a clear pathway for transition to permanent residency; and
- Granting ‘skilled’ visa holders priority access to flights and hotel quarantine ahead of stranded Australians.
Rebooting immigration via the above would obviously lift unemployment and lower wages (other things equal), thereby working against the RBA’s employment and wage goals.
