Proof rebooting mass immigration will slaughter Australia’s youth

Fairfax’s senior economics writer, Matt Wade, penned an article yesterday claiming that Australia is failing its youth, who have struggled for job opportunities and wage growth since the Global Financial Crisis (GFC):

Before the coronavirus outbreak economists were warning today’s young Australians were in danger of being the first generation in memory to have lower living standards than their parents’ generation…

The Productivity Commission points out that between 2008 and 2018 the average real incomes of those aged 15-34 fell, while older Australians’ incomes continued to rise. It has been a “lost decade” of income growth for the young, said the commission…

New research by Melbourne University economists Jeff Borland and Michael Coelli underscores how miserable the past decade has been for young workers. Between 2008 and 2019 the share of people aged 15-24 with a job fell by 4.3 percentage points, whereas for those aged 25 years and over the share increased.

The study found that since the 2008 global financial crisis young workers “were more likely to be: employed part-time or long‐term unemployed; start their work careers in lower‐quality jobs; and need to compete for jobs through activities such as unpaid internships”.

The “substantial deterioration” in employment outcomes for young people was put down to increased labour market competition…

Borland says Australia must find a way to push the unemployment rate down to about the 4 per cent mark – more than a percentage point below where it hovered for much of the past decade. “The big beneficiaries of that will be young people,” he said.

Interestingly, Borland’s and Coelli’s actual paper explicitly acknowledges that Australia’s high immigration intake, which rocketed after 2005, has driven the increased competition for jobs and undermined young jobseekers:

Our main contention is that worsening employment outcomes for the young in the decade following the GFC were caused primarily by increases in labour supply which have meant extra competition for jobs sought by the young, and resulted in them being ‘crowded out’ from employment…

For the young who are in full‐time education, the main source of increased labour market competition in the decade after the GFC was from within their own age group — from an increased number of young international students and holiday travellers seeking part‐time work.

Figure 5a shows the proportionate growth in labour force participants aged 15–24 years who are Australian‐born and immigrants. Between 2004 and 2019 the annual rates of growth in labour force participants in these groups were respectively 0.6 and 3.9 per cent. Over the same period, immigrants accounted for 52.6 per cent of growth in the labour force aged 15–24 years, despite being only 12.6 per cent of that labour force in 2004…

What is also critical is that the occupational composition of employment of recent young immigrants (aged 15–24 years who arrived in the last 2 years) is similar to full‐time students of the same age (Australian‐born and immigrants who had not arrived in the past 2 years). Young newly arrived immigrants are therefore most likely to be seeking jobs in the same small set of occupations into which it has been shown that young persons in full‐time education are largely segmented. This suggests that the increase in labour supply by young immigrants post‐GFC substantially increased competition for employment in those occupations…

For young persons who are not attending education full‐time, increased labour market competition has come from relatively strong and steady growth in aggregate labour supply…

In the years prior to the GFC the increase in labour supply was outpaced by employment growth. However, since the GFC that pattern has reversed. This has meant that the rate of labour underutilisation — the proportion of available hours of labour supply that are not being utilised in employment (reflected in unemployment or under‐employment) — has increased.

The increasing gap between labour supply and employment following the GFC has had a disproportionate negative impact on employment outcomes for the young…

In making forecasts of the labour market outlook for the young, it is also necessary to consider what may happen to labour supply. In the years prior to the onset of COVID‐19 there had been strong growth in aggregate labour supply; and relatively high rates of growth in the population aged 15–24 years had been projected for the 2020s. The impact of COVID‐19, of course, has been to substantially reduce that projected growth.

Interestingly, the collapse in international student numbers since the beginning of the pandemic:

Temporary visa holders

Big fall in temporary visa holders, especially students.

Has been a big driver of the sharp decline in youth unemployment and underemployment, despite more young Australians participating in the labour market:

Youth participation

Better job opportunities for younger Aussies.

Who would have thought? Not having to compete for jobs with hundreds of thousands of foreign students and graduates improves employment opportunities for younger Australians. May wonders never cease.

Obviously, rebooting mass immigration post-COVID, as explicitly projected by the Intergenerational Report:

Immigration projection

Back to a ‘Big Australia’.

Will slaughter Australia’s youth by reducing their job opportunities and wages, while also forcing them to live in smaller, more expensive housing.

Unconventional Economist
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Comments

  1. Lord DudleyMEMBER

    “Borland says Australia must find a way to push the unemployment rate down to about the 4 per cent mark”

    That would negatively impact profits. The Australian economy largely has no need for actual skilled labour. It has a lower economic complexity than Pakistan. Therefore, CHEAP labor is what is needed. Paying lazy greedy young Australians more would reduce capital’s share of the economic surplus. This is tantamount to theft from capital.

    Young Australians should be forced to compete with large numbers of highly efficient, inexpensive, and willing foreign workers. You’ll hear no complaints from the efficient foreigners when you simply stop paying their super, whereas Australian youth will moan about their supposed “rights”.

    Competition (and lots of it) is the only thing that will shake the laziness, complacency, and self-entitlement from Australia’s youth. And if Australia’s youth won’t shake those things, then they deserve to be replaced by efficient foreign workers who want the job more. A lot of Australia’s youth are simply eaters who believe the world owes them a living. We should cut off all welfare to them, because this mollycoddling has produced a lazy generation who simply won’t work. Just ask any farmer… they’ll tell you how unemployable Australian youth are.

    And don’t get me started about whining young Australians who want to STEAL equity from Australia’s hard working mum ‘n dad investors by forcing house prices down.

    • I’m starting to really warm to your pure interpretation of competition and it’s accompanying disregard for anything beyond ideological adhesion to this principle. I appreciate your relentless drive to convince others that the best outcome for society is the relinquishing of any concept which interrupts the efficiency of endless competition as divined by nature.

      I’ve got to admit that I’m looking forward to the day that this ideology reaches its natural conclusion when you and I are forced to physically compete for food, water and oxygen. Don’t worry, as I’m feeding, drinking and breathing deeply whilst standing over your broken carcass, I’ll make sure to pause for a split second and give silent thanks for your sacrifice in the make of ideological purity.

      Or maybe I won’t.

      • boomengineeringMEMBER

        Btw Fishing72 you are welcome to drop a line if you want, just look up Boom Engineering.

      • Lord DudleyMEMBER

        Ha ha! That’s a funny dream Fishing72 had. I once dreamt that I had a taking robot horse called “The Horsematic”.

        In any case, I live in a different country to you. You won’t be competing with me. You (or your kids) will be competing with desperate people from third world countries. They’ll work cheaper and harder, and since Australia’s economy is massively hollowed out, cheapness is the main thing. Meanwhile, I’ll be over here in the US, where there are industries that actually require skill and expertise.

        You hold onto that weird violent fantasy of yours though. Maybe it will help sustain you in the hard years ahead. Meanwhile, I’ll be watching from afar as your living standards approach Argentina’s. Now THAT’S a dream that is highly likely to come true.

        What’s even more beautiful is that no only will this come to pass, but it’s 100% induced by Australians. Collectively, you’ve no one to blame but yourselves. And remember what Gina said… there are kids in African mines that will work for $2 per day. Getting as close to that as possible is the plan of the 100% Australian powers that be. Ha ha ha!

      • His point is that those are the attitudes held by most Australians and they will produce those outcomes by continuing to vote as they have for most of the last 30 years, not that he agrees with them.

      • Fishing72 I think you are overreacting. He might be just a bit tongue in cheek, playing the devil’s advocate.

  2. SoCalSurfCreeperMEMBER

    You would think there would be votes in publicly abandoning Big Australia. Why can’t either party bring themselves to implement this policy, which they instinctively know would resonate with most voters? They are scared of backlash from retail, housing, banking and education special interests who will unite in a chorus of doom to defeat the first party to break rank. There is a massive populist opportunity here. Alas, the leaders are spineless.

    • I don’t think that votes are important as we used to believe they were. Perhaps politicians are so well remunerated for their positions that whether they get elected, re-elected or remain in opposition matters not beyond the effect on ego. When I say remunerated I’m not referring to official salaries.

      Whenever a politician introduces a policy or makes a decision which obviously goes against the interests of the electorate the commentariat focuses on how this will effect the politician at the ballot box as though this is the only stake at play. I don’t think the ballot box is the primary concern for many anymore. I think the payday for delivering satisfactory outcomes to the donors is the main game.

      • Display NameMEMBER

        We have some of the highest paid politicians and senior public servants in the world. I am of the view both these parties are overpaid now. Phil Gaetjens is paid 500K to run interference for our gormless PM. In an office with over 40 media people. No f**king wonder nothing ever gets done with that many media people involved.

        As JohnHewson mentioned on a Jolly Swagman podcast, when he was in parliament he and I cannot remember who, ruminated over who would be paid a similar wage in private industry compared to politics way back them. And even then the list was far too small. These days it would almost certainly be smaller with all the rusted on leaners we have. I find it hard to have anything positive to say about our politicians as a group. Individuals, there are some who appear to be still fighting the good fight. But far too few. We need a good batch of moderate independents in both houses to make it prohibitively hard for vested interests to purchase outcomes.

    • Parties are all neoliberal, only have eyes for each other, and despise voters. During the pandemic, exactly two public figures have questioned Big Australia. One, Keneally, walked it back in a flash, the other, Lowe, is simply being ignored by Treasury.

      • Kenneallys husband is a partner for BCG who own a company called vfs global which basically has contracts for all the outsourced visa contracts… BCG got paid 40 million to repudiate why PWC should not control the visa proccessing system.

    • SoCalSurfCreeperMEMBER

      Accidental. Very. Borders are closed. Mostly. Unless you’re a fruit and vegetable technician with mad harvesting skillz

  3. PalimpsestMEMBER

    The Agricultural visas are the perfect example of how this has gone wrong. Where has anyone said – what Australia really needs are a whole bunch of low skill manual workers to be granted permanent residency as our priority, for an employer group that rejected willing Australian applicants. No pretence that this is skilled migration. The returning Australians stranded overseas that they are displacing in quarantine would be higher skill. This one act has really disturbed my projection of where Australia is headed more than any other.

  4. If you’re a boomer with kids and a house, better hope those kids are good at sharing when the negotiations start after you fall off the twig.

  5. C'est de la folieMEMBER

    The simple fact of the matter is that Australia is throwing its future (and children) onto a pyre of a moribund economy with a single channel of commodity access to earn its way in the world, riddled with corruption in 3 levels of politics, completely trashed education, and the worlds most expensive houses, land, energy and internet, alll crammed into infrastructure doomed to be permanently a couple of sizes too small because of the population ponzi required to make that dynamic work.

    At some point something – and familiarity and experience of some revolutionary moments elsewhere leads me to the view this may not be a ‘big ticket issue’ (such as Covid, or houses or immigration, or even jobs or whatever) but is surprisingly often a completely trivial thing which has been overlooked by the decisionmaking dynamic – will just get so far up the noses of ordinary punters – and in our case we need to accept that these have been primed for a generation by political, policy and ‘elite’ level failure, and are often surprisingly hostile at a chat around the bbq level – that they will go off in some way.

    As someone with kids I note that I tell them on a daily basis to prepare for life elsewhere, if they want to do something with any sort of meaning, and to develop skills whch will help them do that something meaningful elsewhere.  I tell them that the only way they should anticipate staying in Australia for their adult years, after it has provided a safe and pleasant locale for their childhoods, is if they want to hang around in a world where they are likely to need to be sycophants to or part of a ruling dynamic which is at the core of the corruption I point out to them regularly, and want to be some of the decisionmakers embedding socio economic idiocy in this land.  I note for them that it is their deicsion if they want to be part of that or not.  I note that Australia offers a seemingly impressive quality of life for many, and has done for them as children, but that they can probably have a far superior quality of life for much less elsewhere with a little application of intelligence. 

    Regardless of whether they want to live here or elsewhere I note for them that they will have better econoomic earning opportuntiies offshore than onshore – and I think this dynamic is likely to hold for as much as another generation – and that it may be well worth their time to go offshore for a while and earn whatever they think they will need to have the life they would like in Australia later on, and then possibly slip back in and find themselves a nice comfy sinecure of some sort to sit back and chill out and not have to stress about the competitiveness of their predicament and to be plausibly sure of not having an insufferable debt burden hanging over them.  But even then the longer spent offshore, and making oneself comfortable there, would have to imply that Australia will continue to set itself apart in terms of quality of life in a way which any return of commodity prices to historical norms, or any significant volume of crush loading for population ponzi purposes, would suggest is unlikely.       

  6. Dahls ChickensMEMBER

    But Leith, you’re only reporting one side of the story. By slaughtering most of Australia’s youth, wealth can be funnelled to a small business elite – and the kids of those people will probably never need to work. Focus on the positives!

  7. Warren Hogan a economist gave a talk at our work yesterday. Keeps saying that immigration needs to reboot to bring it back to pre covid levels because business can’t find roles.. I was going to chime and say shouldn’t they just lift conditions and pay to attratch local talent but the speech was literally on teams and everyone from the business was there, I felt too chicken.

  8. The wont stand up for themselves. Young people are STUUUUUPID!!
    They still don’t see mass migration as a problem for them. They think blaming migrants (de tuk r jerbs) is an excuse for your own failure.
    So now I accept that the only way we will get them to see the truth is by absolutely crushing them into the dirt with massive, massive levels of migration. I actually prefer migrants. Theyre very rarely a flakey moron like the spoiled local brats. So I say we destroy them for their stupidity. And when they’re lining up with 100 other people and bidding up the rent on a $#!t box unit for 2/3rds of their income from their 4 dead end casual jerbs Im going to say “dont blame migrants for your failures”.

    Always find the silver lining.

  9. Professor DemographyMEMBER

    And there is no way any of the modeling trotted out by Treasury et al is able to model anything like the settings Australia has adopted this last decade. This is great analysis and points out, like housing debt statistics, that it is mostly (but not only) the upcoming cohorts that take the brunt of this shit.

  10. This is happening in any Western country with reasonable standards of living. With a world population increasing (mostly developing countries) people will seek a better life for their families. The US has people flocking from southern borders, Europe has African migrants and Australia has a melting pot.

    Its going to get worse before it gets better with division between the haves vs have nots growing annually.

    As for Australia’s youth, many haven’t been taught how to fight, too protected by the fake wealth of their parents fake housing values. A 3rd world person will always beat them at menial tasks simply because they want the job more. If kids have the protection of money its incumbent on parents that you give them the skills to compete in a global marketplace and learn how to grind. There are very few free kicks anymore, those days are behind us. They should always be paranoid and a little bit burnt out.

  11. edward smithMEMBER

    Psychology explains some of the dysfunction in the public conversation about this topic, as much as ideology does. Strong correlation between the impenetrability of certain Australian professions to competition from migrants due to various legal and cultural barriers (politics, journalism, humanities academic, CEO, management consultant) and members of same professions’ lack of understanding of the impact of more supply on the price of labour in the industries dominated by the young and the disadvantaged (hospitality, retail, cleaning).