Yesterday, the chief executive of Australian Chamber of Commerce and Industry (ACCI), Andrew McKellar, penned an article in The AFR spruiking a massive increase in ‘skilled’ migration to 200,000 people a year.
Let’s evaluate McKellar’s key arguments:
From construction workers to chefs, engineers to educators, and mechanics to managers, approximately one in three skilled occupations could be facing shortages if we don’t shift the dial on migration soon…
ACCI has been advocating for a return to a higher intake of skilled migrants of up to 200,000 a year by reopening our international borders as soon as it is safe to do so, and adopting ambitious targets to address the critical shortages across industry.
The ACCI and other business lobbies made exactly the same skills shortage arguments in 2002 to a Senate Inquiry whereby they complained of “serious skill shortages and skill gaps” in Australia and warned that unless we did something about it – i.e. import a lot of workers – Australia’s economy would not develop and would simply end up going backwards:
“According to the Australian Chamber of Commerce and Industry (ACCI), the lack of suitably qualified staff has been a major concern for Australian industry over the past decade, and is one of the most significant barriers to investment…
“The Australian Industry Group (AiG… reports that several of industry sectors, including manufacturing, are continuing to experience serious skill shortages which, unless effectively addressed, may have severe and lasting consequences for Australian enterprises…
“The Business Council of Australia submission points to the risk of future broad-based skill shortages resulting from an ageing population”…
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Australia’s population has grown by around 6 million people since then, mostly via ‘skilled’ immigration, and yet ‘skills shortages’ remain.
How could this possibly be? How could Australia have such dramatic skills shortages after all this time? And why then is wage growth tracking at close to its lowest level in history if skills shortages are so pervasive? Something doesn’t add up.
Back to the ACCI:
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Predictably, hysteria has already set in.
The Australian Workers’ Union and other proponents of an Australian hermit kingdom are already rolling out the scare campaign.
Citing concerns that Australia is already too full, that we’re not investing in the skills of our own, and that migration is just an excuse to pay lower wages, their arguments against increasing the intake of skilled migrants could not be further from the truth.
The reality is that cutting migration does not restore lost wages growth or increase rates of employment for Australian workers…
Further, there’s no evidence to suggest a relationship between higher rates of skilled migration translates to higher unemployment rates for Australians.
Really? Australia’s wage growth collapsed to record lows in the decade leading up to COVID as immigration boomed. The RBA has explicitly acknowledged that one of the most important reasons for persistent labour market slack and low wage growth was high levels of immigration.
The collapse in immigration has also driven the unemployment rate to a decade low as foreign workers have been replaced with locals. As noted recently in The AFR:
An exodus of more than 300,000 foreign workers since the virus hit early last year helped drive the unemployment rate below 5 per cent before the recent lockdowns in NSW and Victoria.
But when the international border reopens and foreign workers return, it will become harder to reduce the official jobless rate, according to economists.
[The monthly ABS labour force survey] showed resident employment was 100,000 above pre-pandemic levels at more than 13 million people. But these stronger figures only include the civilian Australian resident population…
“It [the international border closure] makes it easier for the labour market to tighten and the unemployment rate to fall as more jobs open up for domestic workers,” [CBA head of Australian economics Gareth Aird said]….
CBA’s Mr Aird said when the international border reopened to non-resident workers… it’s possible the job vacancies start to go down but you won’t see the consummate lift in employment because it will be foreign workers taking the jobs”…
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Research from Professor Peter McDonald from Melbourne University shows that migrants took 83% of jobs created between 2011 and 2016:
From July 2011 to July 2016, employment in Australia increased by 738,800. Immigrants accounted for 613,400 of the total increase…
Migration has had a very large effect on the age structure of employment with most new immigrant workers (595,300) being under 55 years.
The Treasury’s own immigration propaganda report, Shaping a Nation, also explicitly acknowledged that the overwhelming majority of Australia’s jobs growth went to migrants between 2011 and 2016, thus keeping unemployment elevated:
Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years. For full-time employment, the impact is even more pronounced, with recent migrants accounting for 72.4 per cent of new jobs created.
Thus, Australia will never achieve ‘full employment’ or solid wage growth while it continues to import migrant workers in bulk.
Back to the ACCI:
With our immigration rates plummeting, productivity growth dwindling, and wages stagnating the consensus is clear – skilled migration is one of the most effective methods to deliver substantial economic benefit to all Australians.
The above is an argument against mass immigration.
The collapse in Australia’s productivity growth (and wages) in the decade leading up to the pandemic:
Corresponded directly with the ramp-up in immigration, most of which was supposedly ‘skilled’:
Australia’s immigration intake accelerated after 2005, coinciding with the collapse in labour productivity.
Thus, doubling the ‘skilled’ migrant intake over the next five years would achieve exactly the same result: stagnating productivity, low wage growth, and crush-loaded infrastructure and housing.
The only beneficiaries from this policy would be big business and the property industry, which would gain more consumers to sell to and more cheap migrant workers.
An ‘Australia First’ immigration policy would cut the migrant intake to historical pre-2005 levels and concentrate policy on training and employing locals for jobs.
Sadly, the ACCI doesn’t represent ordinary Australians, just the big end of town. We must stop pandering to vested interests.
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.
