Are migrants more productive than locals?

By Leith van Onselen

One of the arguments used to support mass immigration and a ‘Big Australia’ is the notion that migrants are more productive than the Australian born population and, therefore, boost overall productivity.

Yesterday, the Australian Bureau of Statistics (ABS) released its Personal Income of Migrants, Australia, 2013-14, which on face value seemed to support this notion, with permanent migrants reporting higher average incomes ($48,400) than the median employee income for all Australian taxpayers ($45,700):

The median Employee income of migrant taxpayers in 2013-14 was $48,400. This represented a 1.0% increase in real terms on median Employee income in 2012-13.

The median Employee income of migrant taxpayers was higher than the median Employee income for all Australian taxpayers ($45,700).

No doubt, this release will get the immigration boosters chomping at the bit saying “I told you so”. But before they get too carried away, there are several important ‘flies in the ointment’ that must not get overlooked.

First and most importantly, the “median Employee income for all Australian taxpayers ($45,700)” includes every employee in the country – such as young uni students working at Coles, Kmart or Maccas, mums working part-time, etc – which obviously pulls the national median income down.

It’s fair to assume that most migrants are not granted permanent residency so that they can pack shelves at Coles or work at 7Eleven. Rather, those in the ‘skilled’ stream at least, which makes up the overwhelming majority of permanent migrants, are expected to be working at high capacity. In this regard, I am surprised that their average earnings were only $52,892 in 2013-14, which seems pathetically low.

A fairer ‘like-for-like’ comparison of the productivity of migrants requires them to be compared against local workers of similar composition.

While data is somewhat sketchy, research in 2013 by Bob Birrell and Ernest Healy found that while 69.3% of Australian graduates aged 25-34 had managerial or professional work in 2011 and only 9.5% were not employed, only 30.9% of non-English-speaking-background [NESB] migrants who were graduates of the same age, who had arrived between 2006 and 2011 had managerial or professional work. And a full 31.1% were not employed. Most of this group of graduate arrivals (79%) were of NESB background:

Thus, very few held the professional or managerial jobs for which they were nominally qualified, and for which they had gained their visas.

Second, the Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants report, released last month, also revealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%):

Clearly, the claim that migrants are more productive than locals is highly debatable. Anyone looking to this for justification for maintaining Australia’s 200,000 strong permanent migration program should seek a more robust line of argument.

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