On Wednesday, the head of the ACTU, Sally McManus, dared say that the sharp fall in Australia’s unemployment rate has been caused primarily by the collapse in immigration:
McManus’ Tweet was quickly ridiculed by the Grattan Institute’s Henry Sherrell:
By Indeed economist Callam Pickering:
As well as economist Jason Murphy:
Some economists came out in support of McManus, however. In addition to Tim Colebatch’s Tweet above, Stephen Koukoulas also stated the obvious:
That economists can even deny that the collapse in immigration is the primary driver of Australia’s low unemployment beggars belief, since it is illustrated clearly by the data.
While massive fiscal stimulus has indeed supported job creation, Australia’s jobs growth remains well below the pre-COVID trend:
The difference is that Australia has gone from importing over 180,000 foreign workers every year via immigration to losing tens of thousands of migrant workers over the pandemic:
As a result, Australia’s labour supply has gone from growing strongly to stagnating over the pandemic:
Had the pre-COVID level of immigration continued through the pandemic, there would be roughly 460,000 more workers in the economy:
The reduction in foreign workers is why the resident unemployment rate has plunged to its 2008 low despite below trend jobs growth, and why the employment-to-population ratio has hit its highest level on record:
It is also why Australia’s resident underemployment rate has fallen to its lowest level since 2008:
Economists need to sweep aside their biases surrounding immigration and examine the data as it stands. This data shows unequivocally that closed borders, not stimulus, is the primary driver behind Australia’s low unemployment and underemployment.
The data is staring them in the face.
