Prof. Bill Mitchell: Immigration reboot will reverse jobs gains

Over the past two months, we have witnessed the Morrison Government reduce visa requirements on foreign workers to alleviate so-called skills shortages via:

  1. Extending post-study work rights for international students;
  2. Uncapping the number of hours that international students can work; and
  3. Waving visa fees for ~175,000 arrivals international students and backpackers to encourage them to come to Australia and work.

These reforms form part of the Morrison Government’s plan to import at least 200,000 migrant workers to arrive in Australia by July 2022:

“We are working on a figure of 200,000, it may well be more than that but we will be actively looking to bring as many people into Australia as soon as we possibly canKaren Andrews, 22 November 2021.

In his analysis of yesterday’s December labour market data, Bill Mitchell – Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE) at the University of Newcastle – warned that the Morrison Government’s mass immigration play will inevitably unwind the recent labour market gains enjoyed by Australians, in turn crushing wage growth:

Employment growth slowed but was still strong and unemployment and underemployment fell significantly. We are seeing the impact of flat population growth coming up against growing demand for workers and that is the reason the unemployment rate has fallen so quickly. It is good for workers but that won’t last long because the government is already trying to lure foreign workers to fill so-called labour shortages. This will stop the wages growth that would benefit domestic workers from occurring…

Given the variation in the labour force estimates, it is sometimes useful to examine the Employment-to-Population ratio (%) because the underlying population estimates (denominator) are less cyclical and subject to variation than the labour force estimates. This is an alternative measure of the robustness of activity to the unemployment rate, which is sensitive to those labour force swings.

The following graph shows the Employment-to-Population ratio…

There are two forces working here – the denominator (population) is clearly providing favourable pressures due to the slower population growth as a result of the lack of immigration arising from the external border closures.

This is forcing employers to search harder for workers already in Australia rather than discriminate against the unemployed.

The numerator (employment) is clearly stronger as the restrictions ease…

The following graph shows Australia’s working age population (Over 15 year olds) from January 2015 to December 2021.

With the external border still largely closed, immigration has shrunk to virtually zero and the impact is very clear.

This flattening out has forced employers to work harder to get workers and is one of the reasons unemployment is falling quite quickly, given the circumstances.

The Federal government is now working against the workers by offering enticements for people to come on foreign visas to increase the labour supply under the guise of worker shortages…

My overall assessment is:

1. The cessation of most Covid restrictions has allowed the labour market to recover somewhat.

2. There are still 1.5 million Australian workers without work in one way or another (officially unemployed or underemployed) and several hundred thousand who have left the active labour force due to lack of employment opportunities.

3. We are seeing the impact of flat population growth coming up against growing demand for workers and that is the reason the unemployment rate has fallen so quickly. It is good for workers but that won’t last long because the government is already trying to lure foreign workers to fill so-called labour shortages…

None of Professor Mitchell’s findings should come as a surprise. The Australian Treasury’s own research showed that the overwhelming majority of Australia’s jobs growth went to migrants between the 2011 and 2016 Census’, thus keeping the unemployment rate 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.

Migrants stealing jobs

Migrants took most jobs between 2011 and 2016.

If pre-COVID levels of migration are restored, an extra 180,000-plus workers would join the Australian labour market every year, putting upward pressure on unemployment and placing downward pressure on wages.

Australians experienced a decade-plus of crushed wages and living standards on the back of extreme immigration. This failed policy must not be allowed to return.

The Morrison Government’s recent immigration reforms are the equivalent of Work Choices 2.0 – designed specifically to neuter Australian workers and fatten select company profits. So why is Labor remaining silent on this issue?

Unconventional Economist

Comments

  1. Exactly. All this talk of great resignations and record job creation is BS.
    The current tight labour market is simply the result of fewer workers in the population.
    The population collapse is a function of border closures, which means we’ll back to our pre-COVID nirvana when migration resumes.
    Which is why all this talk from Westpac et al about inflation and wage growth is also BS.

    • Strange EconomicsMEMBER

      “These reforms form part of the Morrison Government’s plan..” – exactly – to lower wages, remove inflation, and lower the interest rates for the next 6 months. Thus keeping house prices up and happy house owning aspirational voters and their kids who are in line for the house profits.

      (Low wage voters are probably Labor already so definitely not the target market)

      Also cheaper restaurant meals, and cheaper renovations (from lots of students working 40 hours a week)..
      The wealthy house owners are shocked by the price of renovation labour now their are no “students”.

      How does any real student study with a 4 hour week.

    • Moot point is ‘3. We are seeing the impact of flat population growth coming up against growing demand for workers and that is the reason the unemployment rate has fallen so quickly. It is good for workers but that won’t last long because the government is already trying to lure foreign workers to fill so-called labour shortages…’

      Short term, long term trends are the same or even worse due to below replacement fertility in most places i.e. declining proportion of working age in the population, increasing dependency ratios i.e. more retirees/pensioners vs. children, youth, and working age, hence, more pressure on budget i.e cut outgoings/services or increase PAYE taxes (while retirees are ‘koala bears’ i.e. protected species).

      Long term demographics show Australia is like any of its peers whether developed and/or EU nations, China, soon India plus the less developed world, have all passed the ‘demographic sweet spot’ but any analysis in Oz is short term for headlines….. assumes the rest of the world is breeding like rabbits, not true.

      See OECD working eg population data which is more informative than shouting at our ‘virtual Trumpian data wall’ via the NOM and/or ‘immigration’. https://data.oecd.org/pop/working-age-population.htm

  2. Spud’s ABC interview by Leigh last night was hilarious in a sickening sort of way. In one breath he was claiming credit for the low unemployment rate (ie LNP superior economic managers) & in the next promoting rebate of immigration costs & how hundreds of thousands of already approved immigrants will now come to Australia.

  3. in first world nation why do we need migrants at all? anyone
    pls don’t say they were great in past. not concerned about past, concerned about future

    • They are good now for the same reasons they were good in the past.

      Problems today are quantity (too many) and quality (low skill, low value add, low wage).

      • thanks for the answer. no disrespect but you not say exactly why with exact reasons except to say they were good in past so good in future. lets assume the counter factual. NIL migrants come for the next say 50 years. I don’t think we will miss them at all. we are a first world nation, surely we can stand on our own 2 feet now. can’t see exactly what extra living standards they will add per capita to existing population by coming here. in fact think that if they don’t come our living standards per capita will improve.

        • shame on me. that you HnH. I fell for this trap a while ago and thought you were third party. forgot you use this alter ego so again thought replying to third party. lol
          should have trusted my instincts when I said don’t say good in past so good in future and then you straight up say that and I think did that person not read my question
          anything to add lol

        • lets assume the counter factual.

          No.

          The burden of proof is to support your extremist position. It can’t just be assumed.

          From a purely practical standpoint, Australia isn’t a world leader in anything that matters, therefore there are clearly skills and capabilities we do not have locally, that can and should leverage foreign knowledge to build up as quickly as possible.

          You asked for reasons why immigration is good. The reasons are the same today as they were in the past. Knowledge, skills, experience, diversity of all those things. Not becoming a bunch of rigid, insular xenophobes.

          These are the principles upon which successful and prosperous civilisation has been built for millennia.

          shame on me. that you HnH. I fell for this trap a while ago and thought you were third party. forgot you use this alter ego so again thought replying to third party. lol

          U wot m8 ?

          • Ad hominin attack hey. Neither extremist nor xenophobe. You will just have to take my word for it

            Knowledge is fungible. Humans are great at copying. Best ideas are copied so quickly it is amazing. Don’t need ppl migrating here to copy ideas. Look at the Chinese they made an art form of it

            So we don’t need ppl here to have the knowledge when it is so fungible and copied so quickly

            diversity. We are most multi cultural in world all ready. How much do you need LOL

            You say we need to build skills up asap. For what exactly. Don’t we already do things effectively and efficiently. If so what further gains do you expect. I have worked with some of the best and brightest from all over the world in my field and related fields. And while I admired their intelligence I never thought wow that person is so good we need another 100,00 of them because of the enormous outsized gains they made to the organizations I worked in compared to my pre-existing colleagues. knowledge in most fields is settled and ppl already doing things effectively and efficiently

            The enormous inventions and productivity gains seem to be over. Electricity, converting hydrocarbons into energy to power cars and boats and planes, using forces of nature such as airwaves etc re wifi, tv, radio, phone. Homes have pretty much all the major things they need to reduce labor ie washing machine, oven, etc. and if new productivity invention is made every country will copy asap

            I respect the north Korean for building nucleur bombs and there ingenuity to do so when sanctioned by the world. But it is probably a handful of really smart chemist and physics and engineers. Probably the same intelligence as other ppl of this class all over the world. Knowledge is fungible, both at copying pre-existing inventions and also doing work/processes in most effective and efficient manner

            So what exact ppl do we need from overseas. What productivity gains will they make. As I said I have worked with some of the best and brightest from overseas in many different companies and even their extra intelligence did not make any real difference to the gains made by the organizations I worked in vs exisiting cohort

            I think you are probably thinking man is most productive when labour and capital etc can move freely to contribute to mans progress. But tell me exactly what skills in what fields we need that we don’t already have. Seriously

            Or look at it another way. If 100,000 of our ppl suddenly exited overseas proportionally spread across all fields what difference in per capita gains would it make, even if they were all really smart. Probably not much hey

            From a purely practical standpoint, Australia isn’t a world leader in anything that matters
            Probably but what exactky matters. Why do we need to be world leader in anything. As long as we are effective and efficient in producutivity isn’t that all that matters and that we are not at say 100 of 200 countries but say within top 20-30. Don’t think other countries are more effective and effcieiont in doing processes. From what I have seen (my anecdotes) we are all fairly similar. don’t we just need to be good at copying

            Seriously what exactly skills are we missing that we need best and brightest migrant. Pls be exactly specific re occupation.

          • Ad hominin attack hey. Neither extremist nor xenophobe.

            1. Stopping all immigration is, by definition, an extremist position.
            2. I didn’t call you a xenophobe.

            Knowledge is fungible. Humans are great at copying. Best ideas are copied so quickly it is amazing. Don’t need ppl migrating here to copy ideas. Look at the Chinese they made an art form of it

            Collaboration and learning work far better in person. And that’s just talking about the stuff you’re explicitly working on.

            diversity. We are most multi cultural in world all ready. How much do you need LOL

            The straight run to “multicultural” shows you have no understanding of what “diversity” means.

            You say we need to build skills up asap. For what exactly. Don’t we already do things effectively and efficiently. If so what further gains do you expect. I have worked with some of the best and brightest from all over the world in my field and related fields. And while I admired their intelligence I never thought wow that person is so good we need another 100,00 of them because of the enormous outsized gains they made to the organizations I worked in compared to my pre-existing colleagues. knowledge in most fields is settled and ppl already doing things effectively and efficiently

            Nobody said 100,000. Indeed, I explicitly stated in my first post that a problem with current immigration policy is the number of people.

            The enormous inventions and productivity gains seem to be over. Electricity, converting hydrocarbons into energy to power cars and boats and planes, using forces of nature such as airwaves etc re wifi, tv, radio, phone. Homes have pretty much all the major things they need to reduce labor ie washing machine, oven, etc. and if new productivity invention is made every country will copy asap

            After decades of mismanagement, this country is almost entirely bereft of advanced science, technology and manufacturing capabilities, theoretically, practically and culturally. It’s not something that can just be read about in a book and kicked off. It will take literally decades to fix and sure as sh!t won’t be “copied asap”.

            I respect the north Korean for building nucleur bombs and there ingenuity to do so when sanctioned by the world.

            Maybe you should think more about how long it took them.

            I think you are probably thinking […]

            You should stop.

            Or look at it another way. If 100,000 of our ppl suddenly exited overseas proportionally spread across all fields what difference in per capita gains would it make, even if they were all really smart. Probably not much hey

            It’s a terrible comparison.

            As long as we are effective and efficient in producutivity […]

            We’re not. As is outlined on this website every day, we are a country whose economy basically consists of mining, farming, swapping houses with each other, and cafes. We have an economic complexity rating that could most generously be described as poor (and getting worse every year), and we are utterly reliant on imports (funded by mining and other primary produce, because we sure as sh!t aren’t selling much that value-adds) for nearly every essential product.

            This country cannot feed itself, clothe itself, transport itself, protect itself, heck, probably not even entertain itself, without relying on imported goods and services.

            Seriously what exactly skills are we missing that we need best and brightest migrant. Pls be exactly specific re occupation.

            No. Yours is the extremist position. The burden of proof is on you to explain why all immigration should stop and why doing so would have no negative consequences.

          • think we are talking at cross purposes

            my initial position is we are second highest land prices in world. thus these living costs flow into everything (ie embedded cost of g&s) and we become worlds most expensive at producing goods and services. thus no exports as who worldwide would pay top dollar when they can get same g&S in there local market or other countries. thus we are hollowed out and unless land price corrects dramatically and cost of living comes down we will always be stuffed. thus all we can do is do things effectively and effcieintly for what little things we can do. this is what I am talking about. so why do we need extra migrants to do what we can already do. get land price right and you can have economy that is complex because we can make greater range of g&s and export them. . alas the land price makes us very basic economy. also economic rent abounds everywhere with rentiers stifling innovation. so thus we don’t need skills for jobs that would make our economy complex because land price and rentiers have screwed us up. fix the land and eco rent and then bring in the migrants with the skills for these more complex jobs (although still not sure what jobs they are exactly as I think we have the knowledge in Australia but it goes un-utilised rather than us not having it unless of course you are talking about higher end chemistry and physics). no need to bring in more ppl who are doing exactly the jobs we are already doing as no efficiency gains there. and if that is case no increase in per capita income so why bother bringing in more ppl

            I think your position is if we make more complex stuff there will be an increase in per capita income and that is why we need higher skills migrants to help us with knowledge not readily available in Australia (I think it is probably here but un-utilised). but until land gets cheap and rentiers are castrated and embedded cost in g&s gets cheaper then complete waste of time bringing in migrants cause no one will buy our exports. migrants are no more efficient than the rest of us at doing what we already do, to suggest otherwise is ridiculous

          • Crikey dude, can you buy some paragraphs please ?

            so why do we need extra migrants to do what we can already do.

            Because… we can’t do a lot of things ? (Indeed, it would seem we are deliberately trying to make ourselves less capable of doing things.)

            Because they can do it better that we could ?

            Because they can do it quicker than we could ?

            Your whole argument here is based on premise that anything Australia wants to do that it doesn’t already know how to do, it can do just by getting a bunch of people to read some books, and it’s just not true.

            You can’t get experience from a book, and experience is what is required to do complex things efficiently and effectively. Hardly anyone gets close to the top of their game without experience (and even fewer deserve to be). So, for example, we could spend decades figuring out how to build nuclear reactors ourselves (probably with a few f*ckups along the way), or we could invite a bunch of people who already know and they could simultaenously help us build some, while passing on their knowledge and experience, in much less time (political obstruction notwithstanding).

            Not that I’m going to defend the Australian property bubble, but it’s a whole different (and irrelevant) discussion to the one you started above. This is the first time you’ve mentioned land prices, and you shouldn’t need to spend too much time looking around the world to find places that offering high-quality, complex, substantially value-added goods and services alongside sky-high land prices (Switzerland, Taiwan, Silicon Valley, Japan, Singapore, heck, f*cking Canada is twice as far up the list as Australia).

            In addition to that, there’s nothing inherently wrong, bad, or negative about immigration so long as it’s properly managed. Migration has been a part of human society since time immemorial, and you’d struggle to find many successful civilisations without it. If your argument is the that migration should be stopped, you need to explain why.

          • land price flows into everything. if you think otherwise call karl at propser Australia. ie henry George and debate him. or have lvo do it as he has direct access

            counter factual. land is not enclosed. govt owns it and leases it to everyone at minimum price. bet if that land price aint embedded in overall costs of production re g&s we could export them by bucketload. we could gear our economy up to make complex stuff as costs of prodn would be way down as ppl would want our exports

            what does Switzerland make apart from watches and fungible banking services that we already do or could easily copy. that is not complex. serious question

            Taiwan makes cars and semi conductors. we don’t do cars anymore but could. cant comment on semi conductor process

            japan has cars and nucleur. we don’t do nucleur but how many physicists, engineers, chemists, specialised building construction do you need to import to build nucleur plant. not being smart a$s, but say few thousand to 10,000 over say 20 years. and then piggy back off use or uk knowledge

            silicon valley. bunch of economic rent seekers. sure they know how to code software but I have done this also. no big deal. its fungible. we did not have ppl here to come up with idea. I respect the ingenuity of bill gates and those that created software from basic languages, almost like those who discovered telephone. but now it aint that innovative, it just collects the rent. internet was somewhat innovative but really just harnessing software languages in another format to create something different. agree innovative but it came out of unis of the world rather than from usa and private market

            anyway if we are going to keep creating same g&s we don’t need more migrants, they aint more productive or smarter or capable than me and others Australians that I have worked with. if we do low value stuff then why do we need more ppl doing low value stuff lol.

            lets just copy LOL rather than collaborate. the Chinese communists did it and beat us at capita;lism

            btw what does Singapore and Canada do that is ground breaking. pls don’t say something that is fungible g&s

          • FMD. Your argument is basically ‘well I can hit a tennis ball as well, sure I could compete at Wimbledon’.

          • ok David. lets get to the heart this way. I need an answer from you pls, simple yes or no. leave obfuscation and misdirection and other distractions aside

            If we assume (1) that we cannot go up value chain and we are permamenently stuck in place (2) new migrants are no more or less productive than current population ie exact same effectiveness and efficiency (3) new migrants do not add / subtract any per capita increase in income, well being, wealth, benefits costs advantages disadvantages etc to existing population then question is do you support more migrants coming here. Simple yes / no please. (oh if yes please give number ie say 100,00 etc)

            in other words if I am selfish (Adam smith says we all self interested remember) and there is nothing in it for me and the rest of exisiting population then why would we want more of the same. don’t answer this as rhetorical. just gives yes/no to above

          • 1. I’m not David.
            2. Your assumptions are bad (and comically self-serving).
            3. You still haven’t supported your position.

          • you say your are not David so would be easy to assume this means you are not HnH. I know you won’t inform me either way. I still think you are DLS but anyway, whatever….actually perhaps you are another MB shill (apparatchik)…nah, you are DLS….as think you are DLS I suggested coming down to princes pier for roller skates or roller blades to discuss this face to face as imagine your body language would be fascinating to see while you speak. I could have even pointed the different varieties of fish in the sea so we could discuss just how slippery somme are compared to others

            you spent more words saying blahblah blah rather than saying. yes/ no (and if yes then provide an annual number)…..I know you don’t much like politicians but I think you have a gift for it LOL….I am serious

            yes / no. if yes provide annual number based on my question above

  4. Australia is no longer a first world nation. We are not a nation rather an economic zone to be exploited by the elites.

    How can we be classed as first world when
    a) our internet is on par with Kazakhstan
    b) our economic complexity is on par with Pakistan
    c) corruption is out of control at municipal, state and federal levels
    d) complicit mainstream media
    e) our resources sold with little benefit to ordinary people

      • you got me there. did not consider that. you are right we are no longer first world nation. let me rephrase question.
        “we were” a first world nation why do we need migrants at all? anyone
        pls don’t say they were great in past “when we were a first world nation”. not concerned about past, concerned about future” in a non first world country”
        we seem to be on path to third world quickly. perhaps it not matter anymore

    • Strange EconomicsMEMBER

      52% of the wealth of Kazakhastan is controlled by the family and friends of the former ruler. The rest have to live on 1000 $ a year.
      360 million pounds in London (money laundered) real estate (according to Chatham House).
      This is more like a goal for the wealthy ruling class in Australia if they can lobby enough.

  5. Record low unemployment with high youth employment is racist and un-Australian, and before you know it, it can turn into wages growth. The Morrison-Albanese Government cannot begin to express its horror at this prospect, and assures voters that 2022 will be all stops out, to restore the familiar deluge of low-skill migrants on non-permanent visas. COVID or no COVID.

  6. Albo tweeted this week something about rationalising the number of temporary visa workers. incredible. must have been nuclear – clear polling.

  7. “These reforms form part of a bi-partisan plan to import at least 200,000 migrant workers to arrive in Australia by July 2022:”

    There you go, fixed the statement for you.