Last week, the Grattan Institute published “research”, thoroughly debunked by MB, claiming that the collapse in immigration has played minimal role in pushing Australia’s unemployment and underemployment rates to their lowest levels since 2008.
Hilariously, this “research” by Grattan argued that migrants spend more than Australians, therefore, they “might even create more jobs than they ‘take’”:
New arrivals consume goods and services, for a while at a greater rate than Australians who have been here longer. They save less or run down savings in order to do it.
By buying more, they add to the demand for goods and services, and for workers to produce them.
If migrants enter Australia to work, but then spend more than they are paid, they might even create more jobs than they ‘take’.
If Grattan’s claim was true, then immigration would cause skills shortages across the economy, since migrants would generate more demand for labour than they satisfy. It would also mean that higher levels of immigration means lower unemployment. So if Australia simply increased net overseas migration to, say, one million people a year, then policy makers could virtually eliminate unemployment in Australia.
Obviously the Grattan Institute’s argument is false and does not pass the laugh test. As shown by ABC business reporter, Gareth Hutchens, the high immigration experienced over the decade leading up to COVID meant that Australia’s labour supply (i.e. working aged population) grew strongly at a rate that far exceeded employment growth. The result was higher unemployment:
But once the pandemic hit, and immigration turned negative, the growth in labour supply collapsed. And this drove the sharp reduction in unemployment, despite the rate of employment growth actually slowing slightly over the pandemic.
The Grattan Institute’s claim also contradicts the business lobby, which continually argues to lift immigration to alleviate “skills shortages”. Why would business groups furiously lobby to boost immigration if it made skills shortages worse? And how could skills shortages have become so acute during the pandemic when immigration turned negative if it was true that migrants “consume goods and services… at a greater rate than Australians” and “create more jobs than they ‘take’”?
Finally, Grattan has conveniently ignored the fact that migrants sent a net $US6 billion in remittances out of Australia to their home countries in 2019. This necessarily reduces their spending in Australia:
In short, the Grattan Institute’s arguments surrounding immigration are not only contradicted by the data but also illogical. It needs to start examining the evidence rationally rather than bending it to meet a pre-conceived ‘Big Australia’ agenda.
