So Grattan, immigration now causes skills shortages?

Last week, the Grattan Institute published “research”, thoroughly debunked by MB, claiming that the collapse in immigration has played minimal role in pushing Australia’s unemployment and underemployment rates to their lowest levels since 2008.

Hilariously, this “research” by Grattan argued that migrants spend more than Australians, therefore, they “might even create more jobs than they ‘take’”:

New arrivals consume goods and services, for a while at a greater rate than Australians who have been here longer. They save less or run down savings in order to do it.

By buying more, they add to the demand for goods and services, and for workers to produce them.

If migrants enter Australia to work, but then spend more than they are paid, they might even create more jobs than they ‘take’.

If Grattan’s claim was true, then immigration would cause skills shortages across the economy, since migrants would generate more demand for labour than they satisfy. It would also mean that higher levels of immigration means lower unemployment. So if Australia simply increased net overseas migration to, say, one million people a year, then policy makers could virtually eliminate unemployment in Australia.

Obviously the Grattan Institute’s argument is false and does not pass the laugh test. As shown by ABC business reporter, Gareth Hutchens, the high immigration experienced over the decade leading up to COVID meant that Australia’s labour supply (i.e. working aged population) grew strongly at a rate that far exceeded employment growth. The result was higher unemployment:

But once the pandemic hit, and immigration turned negative, the growth in labour supply collapsed. And this drove the sharp reduction in unemployment, despite the rate of employment growth actually slowing slightly over the pandemic.

The Grattan Institute’s claim also contradicts the business lobby, which continually argues to lift immigration to alleviate “skills shortages”. Why would business groups furiously lobby to boost immigration if it made skills shortages worse? And how could skills shortages have become so acute during the pandemic when immigration turned negative if it was true that migrants “consume goods and services… at a greater rate than Australians” and “create more jobs than they ‘take’”?

Finally, Grattan has conveniently ignored the fact that migrants sent a net $US6 billion in remittances out of Australia to their home countries in 2019. This necessarily reduces their spending in Australia:

In short, the Grattan Institute’s arguments surrounding immigration are not only contradicted by the data but also illogical. It needs to start examining the evidence rationally rather than bending it to meet a pre-conceived ‘Big Australia’ agenda.

Unconventional Economist

Comments

  1. I don’t know if this applies to all migrants but for sure international students (making a migration play) often do not spend more than they earn.

    Students from Korea often come here specifically to work and send money home, registered at some dodgy education provider (they rarely attend) as cover. I think this is the tenor of most of this human trade and Australian migration. Pay some hurdle monies to get in, then get exploited at 711 or other ‘off the books’ type employment arrangement.

    Australia is gross with this exploitation, as the US deploys illegals similarly, both are now a major and embedded part of our economic activity.

    UE is correct, only where there is a bone-fide skills shortage and minimum salary thresholds should be set and actually enforced.

    How Grattan can write such drivel when each, and all of them, would interact directly with an exploited migrant/s getting their daily goods and services is extra gross. They are only a polite question or two away from crashing their delusional ideas zeppelin into some well grounded reality!

    • Sample size of one, but when I was doing my Master’s at UWA a Chinese group member had recently arrived and needed to find a cheap family car before his wife and kid got here. I suggested heading to a Government auction for a good deal. When I asked what his budget was he said “only 70-80k.”

  2. This is being discussed on ABC Nightlife talkback right now! Any of you who are awake should call in.

      • There wasn’t much said about immigration. It was mostly random stuff about what TAFE used to be like in the 1970’s, etc. I’m a bit confused because the discussion was sparked by remarks from Federal Shadow Minister Richard Marles, but, isn’t TAFE more of a State issue?

          • Jumping jack flash

            VET was invented to try and curb the numbers of long-term unemployed high-school graduates. It was a good idea and probably worked. It makes sense that the Feds would fund it.

            The main effect was that at the time the existing TAFE courses were given to the universities (IT, nursing, teaching, horticulture, etc) and TAFEs were essentially repurposed for VET. Curiously, hairdressing didn’t make it to a university degree. Maybe someday.

  3. If Grattan’s claim was true, then

    Japan would have mass immigration.

    Japan’s current government has openly stated that it rejects immigration and is preparing to accept a reduction of about 1/3rd of the population over the next 30 years.

    • Japanese are sane. They have exoskeleton devices to allow oldies to still do heavy lifting and such, keep work open to anyone retired for short periods each week, and will nicely use robotics and smart management instead of bring in hordes of foreignors to break the culture. In Aus our culture and identity are gone.

  4. Mr SquiggleMEMBER

    Is there any data available on remittances to home countries by migrant workers?

    Seems it could be quite useful in responding to gratton

  5. Display NameMEMBER

    I wonder how this junk gets generated by Grattan. Clearly it is not research so what instigates the production of BS™ of the sort we are currently reading with respect to mass migration and the effect on wages and employment. Is it a discreet call from one or two backers to board members that then filters down into informal discussions.

    Or do maybe some of the economists just turn up one morning and decide to write fiction for a change?

    • I love the use of the ‘might even’ turn of phrase!

      might even create more jobs than they ‘take

      That right there fills me with certain certitudes!

    • Even StevenMEMBER

      “Immigration is good for us” (business owners/operators) becomes with a little fancy footwork “immigration is good for Australia”.

      Grattan knows who butters their toast.

      Doubt it’s anything so crass as a phone call. More likely just an ‘understanding’.

    • Ghost of Stewie Griffin

      They’ve been intellectually captured by the globalist cultural war against local social cohesion.

      Firstly Grattan employees are all highly educated professional class. In an earlier era they would have been referred to as ‘Rootless Cosmopolitans’. They are the elite knowledge workers who share more in common with workers of equivalent status in foreign countries like Britain, Canada, the US, or even France, Germany or Russia, than they do with working class Australians.

      Secondly, they are all the typical product of a heavily propagandasized education system:

      “The primary and secondary educational system has been completely remade since 1970s to emphasize the contributions of racial minorities and the dangers of racism. The students receive instruction about the evils of prejudice and bigotry from K-12, while positive education about minorities is heavily emphasized. For the American student today, anti-racism and minority history months are as much a part of his primary and secondary education as instruction in mathematics, government, or physical education.”

      – The Strategic Consequences of Chinese Racism: A Strategic Asymmetry for the United States’

      Quite simply they have been brainwashed from an early age into believing that diversity, is supposedly a boon to societies ala“Diversity makes us stronger and more united”, as opposed to a drag on their efficiency ala“The Tower of Babel”.

      Most of this is due to the way the original diversity study by McKinsley has been subsequently reframed, where the benefits of diversity of thinking in respect of the big five OCEAN personality traits, was instead repointed to the few superficial diversity traits that we are suppose to acknowledge, skin type and culture. Of course diversity differences of population groups that extend beyond these superficial traits, like IQ or proclivity to violence, are to their mind legacy social constructs that exist or a result of white racsim.

      Finally, as I quoted from Upton Sinclair yesterday: “Never argue with a man whose job depends on not being convinced.” Although they may be highly paid propagandists masquerading as knowledge workers, the fact is they are PAID. They depend on the good will of their sponsors.

      All of this has gone on now for so long, and our decision making superstructure around our social narrative is now so embedded with these type of Globalists over Localists, that for a young and up and coming economist wanting to secure a dependable career path, the safest way to do so is to signal to their prospective future sponsors that they are onboard with the Globalist agenda; hate your history, disown your culture and people, accept mass migration and dissolution of your society and culture as atonement for your collective guilt, etc…. and so they do.

    • Absolute BeachMEMBER

      “maybe some of the economists just turn up one morning and decide to write fiction for a change?” ROFL. Seems like the economists stock-in-trade is fiction.
      I re-listened to Richard Werner talking about ignoring banks and money in economic theory – sums this point up nicely. Ignoring money. Money creation. In Economics? Jeeeeeez.

    • Supply-siders have spent decades completely taking over the economic narrative. Basically any analysis has to work from the position that it must be assumed truth.

    • Might look at the members of the think tank if you wish to identify their identification and agenda. Not us not ours.

  6. I dunno why Grattan has to tell such big fibs. In two years, LibLab will have totally restored mass immigration, and the COVID migration freeze simply never happened.

  7. So with all the people going to university these days we still have a “skilled slave” shortage.

  8. Imagine for one moment that we realize we’re viewing this immigration debate through the optics of Absurdism.
    Which decisions would we vote for and which decision would we veto?
    Remember that in Australia “Skills” shouldn’t be understood to mean some globally marketable Stem capability, but rather some accreditation or approval stamp that entitles the holder to receive a little extra in their pay packet.
    How much is a BS job worth? to the broader Aussie economy it’s value must negative, yet to the occupier of such a job it’s gold, absolute gold (high pay for no work, can’t beat it with a stick). Given the social / economic cost of BS jobs one would assume that our economy (society) is very reluctant to create (and fund) BS jobs. Yet we all know that this is not true, BS jobs are one of the highest growth sectors in our economy.
    Think about that fact for a moment. jobs that have negative value (a cost) are growing way faster than jobs which earn the economy money, that it wouldn’t otherwise have. WHY?
    At this point we need loop back to the beginning and make sure our Absurdist optics are clean. How would the Absurdist view such conflicting decisions?
    Logically it would belong in the existential angst column, things we do because we just can’t help ourselves. Collectively we’re standing at the edge of an economic abyss and while we’re naturally fearful of falling, we know that falling has a certainty to it that’s lacking from all the other decisions we could make. Falling is freedom.
    Il n’y a qu’un problème philosophique vraiment sérieux : c’est le suicide

    • Is it as absurd as paying people in money that is created out of thin air? Methinks there may be some kind of link here with a whole host of distortions and inequalities.

      Large and entrenched Australian businesses face little to zero real competition. They influence political parties to maintain and improve their status quo. Tacit agreement is made to pay employees a small (and shrinking %) of this easy money. The more easy money the more BS jobs.

      The whole thing floats on selling dirt and taking a cut, and printing money and creating debt in housing to paper over any cracks.

      If we bring migrants in and exploit them whilst also reducing pay rise pressures on people actually doing real work then mores the better.

      This modern economy is not about valuing production, it is about careful distribution of indulgences to those based on connection to the real power brokers without doing anything so obviously aristocratic that it reveals the total lack of merit and upsets the social order causing dramatic shifts in prices (inflation/deflation).

      • What you describe is neo-Feudalism, free workers are in effect themselves voting to lower their status to indentured serfs.
        Why? Why would anyone do this?
        Personally I believe that the Financialization of everything is mealy the mechanism by which this transition takes place. The debt (the Indenture) must be created and accepted by all parties as just and moral. That this debt was created out of thin air, plays no role in the social morality associated with honoring this debt. And suddenly we have this aristocratic divide. Those that create debt take their rightful position at the leadership table, while those forced to consume debt assume the accepted position (and ready themselves to be F’ed senseless) .
        It’s a fun game…for some

  9. Settling in a new country does cost a lot (tens of thousands, in my multiple experiences, on a vehicle, furniture, appliances,…).
    But the effect is short lived. And all of those goods are now imports, so only the consumption of local services might be stimulated.

    • But the effect is short lived

      it keeps the lights on until the next persons spends tens of thousands of dollars.

  10. The economists probably included inflows from the gold ticket immigrants who can buy permanent residency by investing in Australia. The source of that investment money is not clear. That investor stream is now significantly tightened.

  11. Jumping jack flash

    “Hilariously, this “research” by Grattan argued that migrants spend more than Australians, therefore, they “might even create more jobs than they ‘take’”:”

    It could be so, if these migrant workers were actually paid enough so they could take on the amounts of debt required to spend and provide a meaningful contribution to consumption and demand. At the moment though they are not, and do not.

    At the moment migrant workers only have one main purpose and that is to suppress inflation. And wouldn’t you know, as soon as they’re gone, along comes inflation (helped by a modicum of stimulus spending).

    The effect of this inflation suppression through migrant workers is to give business owners a few more dollars in their pockets, but as we experienced in 2019 these few extra dollars in business owners’ pockets are simply not enough on their own to generate enough demand for new debt (and enough debt-fueled demand) to prevent the debt bubble collapse, and unfortunately the bulk of the economy rests on top of this debt bubble.