Business lobby admits mass immigration suppresses wages

The business lobby has dished up another serving of ‘skills shortage we need more migrants’ tripe at Fairfax, while explicitly admitting that mass immigration is used to suppress wage costs:

Senior Australian business leaders have urged the next federal government to address the nation’s labour crisis by boosting migration to fill jobs, warning a failure to do so risks causing a slump in economic growth…

Tony Shepherd, a former president of the Business Council of Australia [said]… “we’ve got a crisis. We need workers. It’s constraining industry and business generally”…

The tight labour market has seen Australia’s unemployment rate fall to 4 per cent, its lowest levels since the mid-1970s…

Peter Shergold, who was the head of prime minister and cabinet in the Howard government, also says the nation has to increase migration in the short term. “Australia still depends for its economic growth and development on large-scale recruitment of labour from overseas”…

Shergold says it’s the first time in three generations that Australia has not had mass migration…

A tight labour market has pushed up wages… Shepherd says the inability to fill jobs will lead to higher costs, in areas such as wages… Australia’s growing wage pressures come after a decade of low wage growth, where real wages have declined…

The business lobby made exactly the same skills shortage arguments in 2002 to a Senate Inquiry, whereby they bemoaned “serious skill shortages and skill gaps” and warned that unless Australia did something about it – i.e. import a lot of workers – the economy would end up going backwards.

As a result, Australians got two decades of record immigration, where millions of migrant workers were imported into the country, and the nation’s wage growth plummeted to record lows.

Despite the mammoth immigration flows, the ‘skills problem’ always remained with the business lobby forever complaining of shortages and singing exactly the same tune as it did two decades ago: Australia must quickly import hundreds of thousands of workers or risk going backwards.

The fact of the matter is that if the business lobby genuinely needs skilled workers, they should vote for a government that will invest in education and training. Or invest in it themselves.

The bolded text above explains the true motivations of the business lobby: they want immigration rebooted to undercut Australian workers and suppress wage growth.

It’s funny how labour supply and demand works in the eyes of the business lobby. When supply is high, businesses tell workers they need to accept the discipline of the market. But when labour supply is low, we’re told we need more immigration. Anything except pay a fair wage.

As I argued yesterday, we should let Australian businesses import all the migrant workers they want, provided they are paid well above the median full-time salary (currently $83,000).

Setting the migrant wage floor well above the median full time salary would ensure that Australian businesses only hire migrant workers to fill highly skilled professions, while also eliminating the need for labour market testing or maintaining dubious skilled occupation lists.

By raising the quality bar, these reforms would also reduce immigration flows, which is what Australians want, while maximising benefits to the economy and federal budget.

But we all know the business lobby would never support such a wage floor as it would undermine its goal of suppressing wages to maximise profits.

The business lobby instead wants an expansion of the pre-COVID mass immigration model, which Alan Kohler explained was “largely an industrial strategy designed to suppress wages and to protect the project they had to crush unions”.

In short, the business lobby wants the immigration equivalent of WorkChoices 2.0.

Unconventional Economist

Comments

  1. Grand Funk RailroadMEMBER

    ‘We’ve got a crisis. We need workers’: Big business urges election winner to boost migration

    By Anne Hyland

    May 17, 2022 — 5.00am

    Senior Australian business leaders have urged the next federal government to address the nation’s labour crisis by boosting migration to fill jobs, warning a failure to do so risks causing a slump in economic growth.

    That might just as easily read Senior Australian Parasite Managers of an inward facing bubble economy have urged the next Federal government to renew the population Ponzi which swamped incomes, added to the housing shortage, and is there every morning on roads and trains, in lieu of pursuing a competitive exposed economy enabling people to add value to their lives through meaningful application of economic endeavour

    Diane Smith-Gander, who chairs the Committee for Economic Development of Australia, and is a director of energy company AGL and chair of buy now, pay later group Zip, believes the top three priorities for the incoming federal government should be: increasing the participation of women in the workforce, addressing the skills shortage that has reached a crisis point for the country, and ​decarbonisation of the economy.

    Diane is a quintessential scion of the complete NeoLiberal era. A McKinsey consulting career, a spell heading a load of Quangos, involving tourism, WA grain handling and the NBN now ensconced in the university scene. Never been in a business worrying about economic competitiveness where money was an issue, direct beneficiary of population ponzi.

    Tony Shepherd, a former president of the Business Council of Australia, director of Snowy Hydro, EnviroPacific, and chair of Venues NSW, agrees that the top priorities of the next government have to be addressing the skills shortage and the productivity of the nation. “We’ve got a crisis. We need workers. It’s constraining industry and business generally,” he says.

    Tony doesn’t come across as having much experience with the salt of the earth either. Started as a public servant, slipped across to infrastructure builds – including Moomba pipeline and Sydney tunnels – as a private public partnership type for Transfield, Chair of the GWS football franchise. A career made out of enabling the population Ponzi, mainly from government funded roles.

    The tight labour market has seen Australia’s unemployment rate fall to 4 per cent, its lowest levels since the mid-1970s. In the Reserve Bank of Australia’s May Statement on Monetary Policy, it forecast the unemployment rate would fall to 3.5 per cent by next year – the lowest level in 50 years.

    Isn’t it good. Nothing to complain about there, people are now starting to anticipate income increases, or thinking about switching gigs.

    Companies from BHP to small café owners are being hampered by labour shortages. Roles from train drivers to waiters to miners remain unfilled. Cafés in some cases are operating on reduced hours, while BHP was forced to downgrade its production forecasts for its nickel and copper divisions because of staff shortages.

    And the reason they aren’t training up more or offering more for people to come and join them is?…..

    A lack of workers in Australia is partly because of the decline in immigration over the past two years when the government shut the international border. However, there has also been a fall in the number of skilled visas being issued since 2017, according to data from the Home Affairs website.

    Is there a ‘lack’? Can we assume there is a ‘lack’ simply because of an unsubstantiated reference to BHP downgraded nickel production forecasts or waiters? OK train drivers require a fair bit of training, but the waiters done, most of the nickel producers don’t either.

    Overall permanent migration visas have also declined from around 180,000 to 160,000 currently.

    Well even at 160 thousand that’s more than double the average Net Overseas Migration intake Australia averaged over 30 years between 1975 and 2005

    Shepherd says Australia’s inability to fulfil skilled roles means the next government has to prioritise a review into the education system at the high school and tertiary level, and target areas where Australia is weak, such as in science and engineering graduates. He says there also needs to be an examination of the TAFE system to produce more workers in trades.

    Tony is 100 correct there. If the ideological underpinning of the NeoLiberal era hadn’t been the trashing of education through privatisation and using ‘education’ to become the ticket clip du jour of the population Ponzi there would probably be far more of whatever skills he thinks we are missing. Even Tony would presumably be aware that there are lots of engineers and science types currently employed in situations that don’t go anywhere near using their skills.

    The Sydney Morning Herald and The Age contacted dozens of business leaders, most of whom declined to stick their heads above the parapet to argue for what they believe should be the priorities of the next federal government. During a federal election, company chief executives, chairmen and women, and business groups usually steer clear of politics. As the Nobel Prize winning economist Milton Friedman said: “The business of business is business.”

    But this piece dug up two…..

    A number of Australian companies even go as far as having a rule of not commenting on election promises and policies during the election campaign. Companies are cautious knowing that showing partisan support for one party is a gamble, especially if that party doesn’t end up winning office. Another reason is that companies don’t want to alienate customers, staff, or shareholders by entering the political fray, except on issues where there has been widespread community support, such as same-sex marriage, climate change or wages growth.

    Nothing much to quibble with there…..Why would businesses risk offending either the punters or their politicians with a stand on an issue which may not be popular?

    Higher Costs

    Peter Shergold, who was the head of prime minister and cabinet in the Howard government, also says the nation has to increase migration in the short term. “Australia still depends for its economic growth and development on large-scale recruitment of labour from overseas. We need to think: what is the appropriate balance that we need between permanent and temporary migration? And how can we do it in a way that is not perceived as a short circuit to investing as we should in our own education and skills training?”

    Shergold says it’s the first time in three generations that Australia has not had mass migration. He wants to see a greater opportunity for temporary migrants to progress to become permanent residents, and also for the university and TAFE sectors to become integrated. While Australia needs more science graduates, Shergold says it also needs more people willing to work in aged care and childcare.

    They rustle up Peter Shergold in lieu of business types. Peter is a former head of the public service, noted for being a right wing gargoyle. He states Australia still depends for its economic growth and development on large-scale recruitment of labour from overseas’ .

    Peter brings us to the question ‘do we want growth for growths sake or do we want sustainable economic growth which delivers quality of life growth for Australians?’ and from there the question of ‘does demand for migrants drive migration or does migration drive demand for the loudest parts of Australia’s economy?’

    Those two questions bring us back to the fact that currently Australia has an economy which revolves around a small number of resources extraction operations or agriculture operations selling off the national bequest to enable the promulgation of debt to the benefit of various economic interests, but not to the quality of life of everyday Australians. That dynamic has been largely obscured by trebling the net overseas migration volume between 2005 and 2019 and exhorting to Australians that this is ‘economic growth’ when effectively it delivers flat per capita income growth and declining living standards for those Australians.

    A tight labour market has pushed up wages, which has taken centre stage in the federal election campaign alongside the cost of living and interest rate rises.

    In the RBA’s May Statement on Monetary Policy, it revealed that more than half of the companies surveyed expected to pay wage increases above 3 per cent over the year ahead because of the tight labour market. Companies such as Woolworths have supported an increase in retail workers’ wages in line with underlying inflation. The Australian Council of Trade Unions has called for a minimum wage increase of 5 per cent.

    Straight piece of reportage there……

    CommSec’s chief economist Craig James says without an upsurge in migration it will be hard to fill job vacancies, and expects businesses will either start looking at working existing employees harder or restructuring to prioritise what work they can and can’t do. “If you’re paying 3.5 per cent wage increases, and you want inflation at 2.5 per cent, the difference between those two has got to be productivity. Otherwise, companies will go backwards, they’re not getting the return. They’re paying out 3.5 per cent growth on wages, and getting 2.5 per cent on price.”

    James is quite right and that outcome is precisely what Australia needs. Productivity delivering economic substance. It is precisely that outcome which has been held at bay by flooding the country with the population Ponzi which has enabled employers to treat employees as chattels and suppress incomes growth for more than a decade.

    Shepherd says the inability to fill jobs will lead to higher costs, in areas such as wages, and Australia’s competitiveness declining. Both sides of politics have promised to review the migration levels.

    Tony needs to read some of Craig James work. Businesses need to prioritise activities and restructure for productivity. Tony could also acknowledge that inability to fill jobs (to the extent it does exist) will lead to income growth too.

    Australia’s growing wage pressures come after a decade of low wage growth, where real wages have declined. Across the world’s richest countries, there is a trend of wages growth and rising prices for goods. This has added to inflationary pressures in the global economy already caused by a disruption to factory production and supply chains from COVID-19 restrictions in countries such as China, and a spike in oil prices triggered by Russia’s invasion of Ukraine.

    So the whole world is looking at increasing wages and costs – all the more reason to embark on some productivity growth in Australia.

    Central banks around the world have been lifting interest rates in an effort to curb inflation, which could dampen spending and investment by business. Still, some business leaders such as Macquarie Group chief executive Shemara Wikramanayake remain optimistic. She believes the economy will remain resilient despite the threat of rising interest rates and inflation, saying the trends of decarbonisation and digitisation will drive strong business investment.

    Both are also strong productivity drivers.

    Lunatic Fringe

    Diane Smith Gander, a director of Australia’s largest emitter of greenhouse gases AGL, also wants the next federal government to prioritise securing a unified national approach to decarbonise the economy, arguing there has already been a lost decade on federal public policy in this area.

    “Everyone agrees with climate change science now, apart from a small group, which you might describe as the lunatic fringe,” says Smith-Gander. “We need to find a way to step towards a swifter decarbonisation of the economy, and support to ensure that it’s done in a just way and an orderly way, which maintains energy affordability for Australian households so that Australians continue to support the push to decarbonisation.”

    All plausibly good stuff, just not about any need for immigration to be refired up.

    AGL is the subject of an activist investor campaign by billionaire Mike Cannon-Brookes, who opposes a plan to split the company, and has criticised its failure to move towards decarbonisation more quickly.

    Smith-Gander believes whichever side of politics wins on May 21 will have a strong mandate to act on decarbonising the economy. CommSec’s chief economist Craig James agrees: “Any government coming in at ground zero, whether Labor or the existing government, this is the time when you can do things. You have to take the opportunity from early on in your term and provide leadership.”

    It’s a view also shared by Shepherd. “It comes down to leadership and policy. Business is pragmatic. They will work with anybody.”

    More good stuff but makes the piece feel like a half baked each way bet on population Ponzi and decarbonisation…..Nobody anywhere has made a case for immigration needing to be returned to levels Australia has experienced for the last 15 years prior to Covid.. Nobody has articulated any identifiable skills shortage and the obe inforned comment in the piece points to exactly what we do need – productivity based reforn – as being triggered by any labour shortage we can get, with the antidote to a decades worth of incomes flatlining coming as a side bonus.

    • Great annalysis. If only they would run aticles with an opposing view and not just this constant mass migration push.

  2. DogbertMEMBER

    Looking at the comments section of The Age article, no one is buying it, they just don’t have a party to vote for who agrees with them.

    • They do — Sustainable Australia, not that the media will give it any publicity.

  3. elasticMEMBER

    Was in an Uber on the weekend and the driver took a call from his mate recently arrived who had just started working at a service station. Apparently he didn’t receive a payslip and was wondering how much he should be paid.
    Uber driver also works at BP and said he will give his mate a job once he gets some work experience under his belt. Reckons that not many newly arrived here atm able to be exploited because those who have been here through the pandemic know the labour rules.

  4. Four days out from the election, the discipline remains ironclad. Not one LibLab politician has strayed from the Big Australia script. Not one journalist has asked a single embarrassing question.

    Just imagine if they could bring that kind of fervour, to working for the Australian people, not against them.

    • It’s extraordinary isn’t it. And two of Labor’s planned announcements haven’t happened, so we can only guess whatever’s planned, won’t be appealing to Australians.

  5. Paul TuckerMEMBER

    So where the hell are the unions in all this?
    And why aren’t they pressuring the ALP to cut our intake? Are they really so cowed at the prospect of being labelled as racists that they’re comfortable traducing their members?
    Blowed if I get it.

    • Yes, for white people being called racist is the worst thing that you can do to them. In Europe cops would rather be beaten up by African teenagers than defend themselves and be called Racist.

  6. We need Big business groups to tell us where these migrants will all be housed. Two commentators on the morning show this morning, were all for it, with no thought whatsoever for where these people will live, etc. Apparently they will fix all the shortages but not create any new ones.

    • Strange EconomicsMEMBER

      They will live like in the centre of Sydney and Melbourne – 5 in a 2 bedroom flat at 200 a week.
      Keeps the rents above 1000 a week for poky apartments., instead of 600 for 2 locals.
      Which yield keeps the prices above $ 1 million, instead of 600K.
      After the COVID Pause, these exploited workers are desperately needed to save the apartment market prices.