A warning to Britain on Australia’s immigration system

The Economist reports that the UK Boris Johnson Government is desperately seeking to emulate Australia’s ‘skilled’ immigration system:

As Britain and Australia begin negotiations on a trade deal, the Tories are in the grip of Ozophilia. Boris Johnson, who picked up a pair of skimpy shorts and a widened vocabulary on his gap year at Geelong grammar school, holds Australia up as a model of prosperity outside the European Union. The government is creating an “Australian-style” immigration system, which will discriminate by skills and qualifications. The prime minister has even attempted to rebrand an ugly no-deal exit from the eu as an “Australian” deal…

Australia’s modern points-based immigration system is a hit with British focus groups partly because so many participants have relatives who moved there, says Jill Rutter of British Future, a think-tank specialising in migration. “Wanted Down Under”, a popular daytime television show, features would-be emigrants exploring the Australian labour market. A recent tourism ad featuring Kylie Minogue was described as “a little bit of escapism” for Brexit-weary Brits.

Wow, it’s amazing how wonderful things can look in the hazy distance. Here’s the truth of it.

Let’s first consider the Australia’s permanent migrant system, which is currently set at 160,000 non-humanitarian places and around 16,000 humanitarian places; although neither of these targets will be hit given COVID-19:

Within this 176,000 strong permanent target are 109,000 places under the ‘skilled stream’, which is where the superficial claim that Australia’s immigration program is skills-based comes from.

Digging deeper into these figures reveals a permanent migrant program that is, in fact, mostly unskilled.

First, as noted in the Productivity Commission’s 2016 Migrant Intake into Australia report, half of the skilled stream comprises the family members of the primary skilled migrants:

…within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…

Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…

Second, the median pay of Australia’s permanent migrants is actually well below the population average, whereas unemployment is higher, according to the Department of Home Affairs’ Continuous Survey of Migrants:

As shown above:

• The median annual full-time earnings of migrants was $16,500 (22%) below the general population in 2017;
• The median annual earnings of migrants was $5,900 (10.2%) below the general population in 2017; and
• The unemployment rate of surveyed migrants (12.6%) was more than double the general population (5.5%) in 2017.

Even if we focus on the skilled stream only, both median earnings and unemployment is far worse than the general population:

According to the ABS’ Characteristics of Recent Migrants, November 2019 survey, migrant unemployment is also far higher than the Australian born population:

As shown above, 6.6% of recent migrants were unemployed as at November 2019, versus only 4.7% of Australian born persons.

The story is no better for Temporary Skills Shortage (TSS) visas. The Temporary Skilled Migration Income Threshold (TSMIT) has been frozen at the ludicrously low level of $53,900 since 2013-14. This is $3,300 (6%) below the median income of all Australians ($57,200), which includes unskilled workers, according to the ABS:

Thus, the TSMIT has also incentivised employers to hire cheap migrants instead of local workers, as well as abrogated the need to provide training.

These are shocking results. Skilled migrants are purported to be highly qualified and brought into Australia to overcome ‘skills shortages’.

These ‘skilled’ migrants should, therefore, be paid well above the general population, which comprises both skilled and unskilled workers, as well as have very low unemployment.

The fact that ‘skilled’ migrants are paid less, and suffer higher unemployment, is a damning indictment of Australia’s purported ‘skilled’ immigration system, and is bonafide proof that it is undercutting local workers.

Australia is not running a skilled migration system, but a defacto low-skilled system that is depressing wages, crush-loading cities, and eroding overall amenity for existing residents.

Australia’s immigration system needs fundamental reform, not lauding and emulation from uninformed overseas observers like the Johnson Government.

Before COVID-19 hit, the UK economy was enjoying a long period of strong wage growth, brought about in part by lower immigration arising from Brexit:

Copying Australia’s faux ‘skilled’ immigration system, and importing large numbers of low-paid foreign workers to compete against locals, would only erode UK workers’ bargaining power and suppress wages.