Australia’s ‘skilled’ migrants chronically underemployed

A new report from the Committee for Economic Development of Australia (CEDA) shows that nearly one quarter of Australia’s ‘skilled’ migrants are working in jobs below their qualification level, with migrant accountants, civil engineers and chefs among those least likely to find work in their nominated occupation. Anecdotally, this has led to many ‘skilled’ migrants driving taxis and Ubers.

A lack of English-language proficiency was one of the factors cited by CEDA that prevents ‘skilled’ migrants from attaining skilled jobs:

Our research highlights that nearly a quarter – or about 23 per cent – of permanent skilled migrants in Australia are working in a job beneath their skill level…

We found the permanent skilled migration scheme that had the broadest lists of eligible occupations and lacked employer involvement had the highest rates of skills mismatch. For example, more than 32 per cent of state-sponsored migrants were working at a lower skills level than their nominated field. In contrast, employer-sponsored migrants experienced the best outcomes – only 13 per cent were working at a lower skills level than their nominated field…

However, the CEDA report erroneously claims that permanent migrants tend to be paid more than Australians:

Since the late 1990s, most of the permanent migrants arriving in Australia have been skilled migrants. And the system has mostly worked well, with migrants having higher rates of employment, participation and wages than local-born Australians.

The latest Continuous Survey of Australia’s Migrants from the Department of Home Affairs shows, unambiguously, that recent permanent migrants experience higher rates of unemployment and are paid less than the general population:

Permanent migrants are paid less than the general Australian population and experience higher rates of unemployment.

Of particular note:

1. Median annual full-time earnings of migrants was $13,900 (18%) below the general population in 2018;
2. Median annual earnings of migrants was $3,300 (6%) below the general population in 2018; and
3. The unemployment rate of surveyed migrants (13.1%) was nearly triple the general population (5.0%) in 2018.

The outcomes are also poor when we compare the skilled stream against the general population. As shown below, the median full-time earnings of ‘skilled’ migrants ($73,000) was lower than the general population ($76,000) in 2018:

The median full-time earnings of ‘skilled’ permanent migrants is less than the general Australian population.

In a similar vein, these ‘skilled’ permanent migrants also experienced higher unemployment (6.2%) than the general population (5.0%) in 2018:

Skilled permanent migrants suffer higher rates of unemployment than the general Australian population.

Remember, the general population includes unskilled workers, which necessarily drags the median earnings figure down and the unemployment rate up. So, for ‘skilled’ permanent migrants to paid less and suffer higher unemployment than the general population is a damning indictment on Australia’s immigration system.

This ‘skilled’ visa system is actually undercutting local workers and adding to Australia’s unemployment queue.

The rational solution is to ensure that ‘skilled’ migrants are genuinely skilled. This can be best achieved by requiring all skilled visas to be employer-sponsored and paid above the 75th percentile of weekly earnings ($85,852 p.a. in 2019 – see below table).

The 75th percentile of weekly earnings was $1,651 per week ($85,852 p.a.) in 2019, according to the ABS.

Implementing these reforms would ensure that Australian businesses only hire migrant workers to fill highly skilled professions experiencing genuine labour shortages, rather than being used as a tool by employers to undercut Australian workers and abrogate their responsibility for providing training.