A week after releasing its latest pro ‘Big Australia’ immigration propaganda report, the Grattan Institute has now released a report calling on policy makers to strive for full employment [my emphasis]:
This report shows why Australia should aim to lock in full employment – where everyone who wants a job can find a job. It demonstrates that all workers suffer when unemployment is high, but the most vulnerable suffer the most. And the costs of failing to reach full employment increase over time…
Low-wealth and low-wage workers are more than twice as likely to lose their jobs when unemployment rises. Younger, less-educated workers and those in routine manual jobs are also hit harder. Sustained low unemployment and under-employment are among the best ways to improve the lives of the most vulnerable workers.
There are 1806 words left in this subscriber-only article.
Get your first month for $1
But a weak labour market also hurts those who keep their jobs. A larger pool of unemployed workers reduces the bargaining power of all workers. High unemployment in the years leading into the COVID crisis accounts for at least one-third of the slowdown in wage growth in Australia since 2013…
Australia’s economy was sluggish in the years immediately before the COVID recession: inflation had been below its target for more than half a decade, unemployment and under-employment were persistently higher than they could have been, and many Australians had not had a decent pay rise in years.
But Australia has recovered much faster than after previous recessions. The unemployment rate is now at a near 50-year low of just 4 per cent, and the labour market is the strongest it has been for decades. This will benefit Australia’s most vulnerable workers the most. We should learn the policy lessons…
We should not lose sight of the prize of a tight labour market. Whoever wins the 2022 federal election should make sustaining full employment an ongoing national priority in the years ahead. This report shows why Australians should not settle for anything less.
Like many of the Grattan Institute’s policy papers, I wholeheartedly agree with the position they have taken. Australia’s policy makers should strive for full employment.
The problem I have is that co-author Brendan Coates continually promotes mass immigration, which unambiguously works against the goal of full employment by continuously flooding labour supply, causing unemployment to be higher than it otherwise would be and wage growth lower.
The empirical evidence over the pandemic is irrefutable.
Australia’s unemployment and underemployment rates have collapsed to a multi-generational lows:
Despite employment growth lagging the pre-COVID trend:
This has also occurred despite both the labour force participation rate and employment-to-population ratio hitting all-time highs, meaning a higher proportion of Australians are in jobs than ever before:
The reason why unemployment and underemployment have crashed despite sluggish jobs growth is obvious: Australia’s labour supply has stagnated on the back of negative immigration, meaning that jobs have gone to unemployed Australians rather than migrants.
As shown in the next chart, Australia’s civilian population aged over 16 has gone from growing strongly (circa 25,000 people a month pre-pandemic) to growing only slowly:
Had immigration continued at its manic pre-COVID level, Australia’s civilian population aged over 16 would be roughly 450,000 larger than it is currently. In turn, both unemployment and underemployment would be significantly higher and the employment to population ratio would be much lower (due to an increase in the denominator).
Don’t just take my word for it. Professor Bill Mitchell’s – Chair in Economics and Director of the Centre of Full Employment and Equity (CofFEE), an official research centre at the University of Newcastle – estimates that Australia’s unemployment rate would be 2.7% higher if immigration continued at its pre-COVID trend:
So yes, Grattan, “we should learn the policy lessons” and “not lose sight of the prize of a tight labour market”. This necessarily means abandoning the junk ‘Big Australia’ immigration policy that Grattan loves so dearly, but Australians hate.
Grattan’s love affair with ‘Big Australia’ immigration highlights its broader contradictions across a number of policy areas, including:
- Grattan laments Australia’s poor progress at meeting its ‘net zero’ emisions reduction goals, but contradictorily supports Australia growing its population by 50% over the next 40 years, which will necessarily drive up emissions and wreck the natural environment.
- Grattan continually bemoans Australia’s infrastructure waste, but ignores the extreme immigration driving the demand for expensive new infrastructure.
- Grattan continually laments Australia’s lack of housing supply and poor planning, but contradictorily supports the mass immigration driving the problems.
- Grattan laments the lack of social housing, but supports the mass immigration driven population growth driving this shortfall.
- Grattan wants a tight labour market and full employment, but supports flooding the labour with hundreds of thousands of migrant workers every year.
Grattan’s undying support for mass immigration directly contradicts its other policy goals.
Sadly, advocating lower immigration would aggravate Grattan’s big business financial backers, so it wouldn’t dare.
- Canada’s housing market braces for interest rate shock - May 17, 2022
- Mortgage repayments to double for half a million Aussies - May 17, 2022
- Walls close in on Australian first home buyers - May 17, 2022