The Australian’s Patrick Commins has penned a ludicrous article claiming that Australia needs to quickly reboot its mass immigration program to ease “unprecedented” skills shortages and fuel the nation’s economic rebound.
The article is centred around claims from Liberal MP Julian Leeser that Australia is “facing a shortage of skilled labour almost unprecedented in our history, and we can solve this through skilled migration”. It also quotes a bunch of employers in the hospitality industry who claim they are unable to find trained staff or restaurant managers:
The chief executive of industry group Restaurant and Catering, Wes Lambert, said a lack of experienced chefs and restaurant managers was acting as an impediment to hospitality businesses reopening or expanding, and therefore hiring.
This was exacerbated by the exodus of about half a million temporary visa holders at the start of the pandemic…
The number of people starting food industry vocational training has plunged by 40 per cent between 2016 and 2020, according to the National Centre for Vocational Education Research.
The notion that Australia is experiencing “unprecedented” skills shortages is easily debunked by looking at wage growth, which has plummeted to around record low levels:
Australian wage growth has collapsed amid a vast oversupply of labour.
In any other market, a shortage raises prices:
- A shortage of bananas following Tropical Cyclone Yasi sent banana price rocketing.
- A shortage of waterfront homes makes these properties incredibly expensive.
- An oil supply shock sends petrol prices soaring.
So how can there simultaneously be a shortage of workers and record low wage growth, not to mention very high labour underutilsation? The whole argument is bullshit.
The huge increase in Australia’s immigration intake from the early 2000s, which saw Australia’s population swell by 35% in 20 years, was one of the key contributors to Australia’s wage stagnation last decade (see next chart).
Australia’s real per capita household disposable income stagnated over the past decade as immigration boomed.
In turn, low wage growth is now considered by many economists, including RBA governor Phil Lowe, as being one of the key barriers to the Australian economy’s post pandemic recovery.
Ramping up immigration when there is so much spare capacity across the labour market will only dampen wage growth even further by swelling labour supply and eroding workers’ bargaining power. It would completely undermine the RBA’s push for higher wages.
The solution to purported labour shortages is simple: let the ‘market’ work and allow wages to adjust upwards. This would have two positive impacts. First, it would encourage workers into the profession experiencing shortages, thus eliminating the problem. Second, it would encourage employers to stream-line their operations and/or automate to reduce labour costs (boosting productivity in the process).
If the Morrison Government had any integrity whatsoever, it would require all ‘skilled’ migrants (both temporary and permanent) to be paid at least at the 75th percentile of earnings:
Median Australian weekly earnings were 57,200 in 2019, according to the ABS. The 75th percentile of earnings was $85,852.
Lifting the salary floor for skilled migrants would ensure Australia’s visa system is used sparingly by employers to hire highly skilled migrants with specialised skills, not as a tool to undercut local workers and eliminate the need for provide training.
Sadly, visa integrity is not the purpose here. The Coalition wants a never-ending influx of “cheap” foreign labour to lower wage costs and boost profits for its business-owning mates.
