HSBC chief economist Paul Bloxham is the latest to acknowledge that rebooting Australia’s mass immigration program will stifle wage growth:
HSBC chief economist Paul Bloxham says workers from overseas are more readily available and the recent pace of decline in the national unemployment rate will slow.
“It could mean that the labour market does not tighten much further, as labour demand starts to be met by increasing supply from overseas,” Bloxham said.
“Of course, this process could take some time or the outflow of Australian workers to offshore could offset, or more than offset, this effect.”
Hilariously, after last year claiming “the RBA got it wrong on immigration and wages” and that “more migrants do not mean lower wages”, The AFR’s Economics editor, John Kehoe, also admitted that keeping the border closed to immigration lifts wages:
Premier Mark McGowan’s decision to defer the border reopening beyond February 5 will strain the state’s already tight labour market and exacerbate skills shortages…
Unless the laws of economics are suspended, WA should experience a noticeable pickup in local wages and inflation…
In the short-term, WA’s closed economy could be good news for workers as they receive outsized pay rises.
But there could be a sting in the tail: if nominal wages jump and are not offset by productivity gains, inflation pressures in WA will build.
Businesses forced to pay higher wages may offset these costs by raising the prices of their goods and services.
ABS data unambiguously supports the notion that immigration lifts the unemployment rate and slows wage growth.
Since Australia’s international border was closed in March 2020, the working-aged population has virtually stopped growing:
This lack of growth in labour supply has, in turn, helped to drive the employment-to-population ratio to its highest ever level as well as driven the nation’s unemployment rate to its current 14-year low of 4.2%:
Obviously, rebooting mass immigration, as advocated by the Morrison Government, the Treasury, the NSW Government, and the business, property and edu-migration lobbies, would increase the supply of labour, reduce worker bargaining power, push-up the unemployment rate, and stifle wage growth.
The only upside is that preventing wages from rising would also lower inflation.
Perverse isn’t it? Crush wage growth via immigration to ensure lower interest rates and higher house prices: win-win for chosen elites.
Shelter inflation good, wage inflation bad.