Decades of mass immigration haven’t stopped skills shortages

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ABC’s business editor, Ian Verrender, has recently done a superb job 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 (see here).

Today Verrender has repeated the dose, questioning why purported skills shortages have persisted across the economy despite decades of mass immigration:

A quick flick through the Skilled Occupation List for workers from abroad shows everything from carpenters to chief executives, chefs and composers, clothing trade workers. And that’s just the Cs.

The list seems to go on forever.

And even if your chosen occupation is removed, never fear.

“Pending nomination and/or visa applications will not be adversely impacted by the subsequent removal of any occupation from the skilled occupation list,” the Home Affairs department website says…

At the same time as we’ve been tough on refugees, Australia has thrown open the doors, with one of the largest per capita immigration programs in the developed world.

It has enticed around 4,000 new arrivals a week, mostly into the two biggest cities, Sydney and Melbourne.

But even now, after decades of mass immigration, it appears we still are suffering critical “skills shortages”.

Fruit pickers, waiters and baristas are in short supply. Almost daily, there are calls to throw caution to the wind when it comes to COVID-19 and start importing workers again.

Low wages growth is hurting our economy

It has taken quite a while. But Reserve Bank governor Phil Lowe set himself on a collision course last week with big business and sections of the federal government by stating the bleeding obvious.

And that is, Australia has used immigration as a means for keeping the cost of labour subdued… It’s pretty basic economics, really…

In the past 12 months, there’s been almost universal agreement that stagnating wages pose one of the greatest dangers to derailing our recovery, particularly given our eye-watering levels of household debt.

But whenever wages start to rise, the calls to bring in more workers start immediately.

Interestingly, those making the most noise now are the ones who have benefitted the most from a constant influx of tourists, students and temporary workers.

The flood of overseas workers, particularly in hospitality, has left many with barely enough work upon which to survive. And it has opened the door to exploitation and wages theft on a grand scale…

Somewhere along the way.. canny politicians figured out the great immigration con job: that by adding ever greater numbers of people, you automatically get GDP growth.

That’s because GDP is a crude yardstick. It simply measures the amount of stuff you produce. The more people you’ve got, the more you consume, and the more you produce…

Big business loves it too.

Not only does the influx of workers keep wages low, but all those extra people also end up consumers of your products. You sell more, your profits rise and so do your bonuses.

What GDP doesn’t measure is whether or not we all are better off as individuals…

And the problem is that many of the new arrivals end up working part-time, in lower-paid jobs and in occupations that require far fewer skills than they possess. Doctors and engineers end up as Uber drivers.

Foreign workers are greatest victims of wage theft…

But for months now, almost every day brings forth a new claim of “skills shortages” and the need to start importing workers because firms have to pay more.

MB has provided similar analysis over many years.

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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. And their cries have been supported by Australia’s corrupted economics profession and media.

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).

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.