Australia immigration is diluting Australia's skills base

[Guest The Pom Queen]

Sustainable Australia president, William Bourke, penned a thought-provoking letter in The AFR arguing that Australia’s permanent skilled migration program is actually diluting Australia’s skills base:

 

Australia’s record permanent immigration program of around 200,000 that’s diluting our skills base. Although the so-called “skilled” category is two-thirds of the annual program, the government hides the unskilled families of the skilled migrant inside that category.

This means that in truth, only around 50,000 (25 per cent) are bringing in designated skills – that is, if you have faith in the skills list – and worse still, many of those primary skilled migrants are not even working in their area of expertise.

An overwhelming 75 per cent or more of permanent migrants are not bringing designated skills, and so create a massive annual net skills deficit. This dilutes our skills base. The 457 Band-Aid won’t help either, as it includes just as many dependants as primary visa holders.

The only way to secure an economically sustainable Australia with lower skills shortages is to lower immigration back to the long-term average cap of 70,000 per year – and seriously invest in local education and training.

Bourke’s letter got me thinking and promoted me to do some investigation of my own.

First, the below chart shows that so-called “skilled” migrants made up around 129,000 of Australia’s 200,000 strong permanent migrant intake in 2016:

Curiously, the number of skilled permanent migrants, and indeed the overall number of permanent migrants, was higher in 2016 than it was during the height of the mining boom when skills shortages were common.

The Productivity Commission’s (PC) recent Migrant Intake Australia report explicitly stated:

…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…

There are strong grounds to give much greater weight to a primary applicant if the associated adult secondary applicant has skills or other desirable characteristics likely to improve their own labour market prospects. At the very least, for the sake of transparency and future policy development, Australian Government publications should report primary and secondary skill stream immigrants separately and provide more detailed information about the skills and other traits of adult secondary applicants.

The PC also showed that while primary skilled migrants have slightly better labour market outcomes than the Australian born population in terms of median incomes, labour force participation, and unemployment rates, secondary skilled visas, and indeed all other forms of migrants, have much worse outcomes:

Thus, it would appear that William Bourke’s claim that Australia’s mass immigration program is diluting Australia’s skills base is true.

Another point that needs to be recognised is that the most popular categories of skilled migrants – accountants, engineers and IT professionals:

Are also the categories with the biggest surplus of workers:

Thus, the skilled migration system is destroying career prospects for local graduates in these (and other) areas.

In short, it does appear that Australia’s mass immigration system is diluting Australia’s skills base, in addition to placing greater pressure on infrastructure, housing and the environment.

So why are we persisting with such a program? Why not lower the immigration intake back to the long-run norm of 70,000 people a year?

unconventionaleconomist@hotmail.com

[newjez]

I didn't think you got these problems with controlled immigration. Not according to rallyman on another thread anyway. They all say it's different in Australia. Maybe it's not. Maybe controlled immigration is a myth, and it's the markets which controls immigration.

[VERYSTORMY]

Yep. It is what happens when you import too many people. You end up with a large pool of unskilled. It also encourages employers to not bother training and bringing through young people and many of the so called skilled are actually not net tax contributors. 

 

[Guest263228]

7 hours ago, The Pom Queen said:

Sustainable Australia president, William Bourke, penned a thought-provoking letter in The AFR arguing that Australia’s permanent skilled migration program is actually diluting Australia’s skills base:

 

Australia’s record permanent immigration program of around 200,000 that’s diluting our skills base. Although the so-called “skilled” category is two-thirds of the annual program, the government hides the unskilled families of the skilled migrant inside that category.

This means that in truth, only around 50,000 (25 per cent) are bringing in designated skills – that is, if you have faith in the skills list – and worse still, many of those primary skilled migrants are not even working in their area of expertise.

An overwhelming 75 per cent or more of permanent migrants are not bringing designated skills, and so create a massive annual net skills deficit. This dilutes our skills base. The 457 Band-Aid won’t help either, as it includes just as many dependants as primary visa holders.

The only way to secure an economically sustainable Australia with lower skills shortages is to lower immigration back to the long-term average cap of 70,000 per year – and seriously invest in local education and training.

Bourke’s letter got me thinking and promoted me to do some investigation of my own.

First, the below chart shows that so-called “skilled” migrants made up around 129,000 of Australia’s 200,000 strong permanent migrant intake in 2016:

Curiously, the number of skilled permanent migrants, and indeed the overall number of permanent migrants, was higher in 2016 than it was during the height of the mining boom when skills shortages were common.

The Productivity Commission’s (PC) recent Migrant Intake Australia report explicitly stated:

…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…

There are strong grounds to give much greater weight to a primary applicant if the associated adult secondary applicant has skills or other desirable characteristics likely to improve their own labour market prospects. At the very least, for the sake of transparency and future policy development, Australian Government publications should report primary and secondary skill stream immigrants separately and provide more detailed information about the skills and other traits of adult secondary applicants.

The PC also showed that while primary skilled migrants have slightly better labour market outcomes than the Australian born population in terms of median incomes, labour force participation, and unemployment rates, secondary skilled visas, and indeed all other forms of migrants, have much worse outcomes:

Thus, it would appear that William Bourke’s claim that Australia’s mass immigration program is diluting Australia’s skills base is true.

Another point that needs to be recognised is that the most popular categories of skilled migrants – accountants, engineers and IT professionals:

Are also the categories with the biggest surplus of workers:

Thus, the skilled migration system is destroying career prospects for local graduates in these (and other) areas.

In short, it does appear that Australia’s mass immigration system is diluting Australia’s skills base, in addition to placing greater pressure on infrastructure, housing and the environment.

So why are we persisting with such a program? Why not lower the immigration intake back to the long-run norm of 70,000 people a year?

unconventionaleconomist@hotmail.com

The party to vote for being the only one at the blocks with the remotest interest in Australia's well being as a policy. It has been well documented the impact excessive immigration is having on Australia's cities.

The reason governments persist with such a policy is that high immigration will largely disguise the true shape of the economy. It certainly maintains GDP. Just think about the demand of people coming and going in big numbers. Immigration is expensive business.

Obviously partners of principle applicants do take lesser skilled positions, depriving locals of entry positions. In times of more 'normal' migration numbers this could be  acceptable. In times of high migration and poorer onshore prospects, this is totally not.

[Guest263228]

5 hours ago, newjez said:

I didn't think you got these problems with controlled immigration. Not according to rallyman on another thread anyway. They all say it's different in Australia. Maybe it's not. Maybe controlled immigration is a myth, and it's the markets which controls immigration.

Maybe. Although it is more recent times that business has dictated so overtly to government. Not only that but all appear on board. Liberal, Labor, worse of all The Greens. 

[starlight7]

Good spot of research there,pq!  if only the infrastructure would keep pace with migration levels we would be a lot more comfortable. Seems crazy the way people are pouring into Melbourne when we can barely sustain the current population.

[newjez]

52 minutes ago, starlight7 said:

Good spot of research there,pq!  if only the infrastructure would keep pace with migration levels we would be a lot more comfortable. Seems crazy the way people are pouring into Melbourne when we can barely sustain the current population.

Infrastructure is an interesting subject. People always talk of undersupply of infrastructure. But you also can have problems if you build infrastructure and then the migration suddenly stops or reverses. This is quite common in 'gold rush' scenarios. What tends to happen then is not a gentle easing back of services in a lifo manner. Governments tend to cut infrastructure in a way that is most profitable to themselves, leaving large gaps in the services provided.

[newjez]

My son's local high school is an interesting point. They built a new ICT lab about a year ago. Lovely new single storey building. They have now decided they need more buildings, so they have knocked down the new ICT lab, and are building a multi storey building on it. Pure madness and a criminal waste of money in what is a cash strapped school. There doesn't seem to be any planning or strategy.

[newjez]

On 28/04/2017 at 8:49 PM, VERYSTORMY said:

Yep. It is what happens when you import too many people. You end up with a large pool of unskilled. It also encourages employers to not bother training and bringing through young people and many of the so called skilled are actually not net tax contributors. 

 

You always seem to miss the irony of a person who has spent most of their life immigrating in one form or another who has a real problem with immigration.

[benj1980]

I believe the mass immigration policy is to boost the economy as others have suggested it hides the state of the economy well. There are an awful lot of Australians who aren't skilled or are not in a position to be trained and this is an ongoing problem stemming from their youth development into adulthood. More has to be done to make people employable and for it to be seen as a positive earlier. 

[Guest263228]

On ‎29‎/‎04‎/‎2017 at 10:16 AM, newjez said:

Infrastructure is an interesting subject. People always talk of undersupply of infrastructure. But you also can have problems if you build infrastructure and then the migration suddenly stops or reverses. This is quite common in 'gold rush' scenarios. What tends to happen then is not a gentle easing back of services in a lifo manner. Governments tend to cut infrastructure in a way that is most profitable to themselves, leaving large gaps in the services provided.

Yes certainly can. Schools come to mind. But things like Public Transport is something that would remain in place and have long standing benefits, bringing  ongoing advantage to citizens regardless of migration levels. I know too socialist for Conservatives, who detest

[Guest263228]

While mass immigration certainly disguises the true nature of the economy, I don't see much benefit in having the largest population growth in the developed world.

To replenish an ageing population through migration, purely kicks the can a little further down the road. Meaning in thirty years time, a greater number will need to be recruited  to replace present day incomers, whom will be 'old' themselves within that time frame.

Anyone else notice a connection between high immigration and stagnate wages (or falling) but increasing prices?

Anyone point towards another nation with high population growth and higher standards of living? Most the richer nations, have smaller populations and good social systems in place.

[benj1980]

"Happiest places to live" tend to be smaller European countries if I remember correctly. Infrastructure and economy is manageable!

[robfromdublin]

On 4/29/2017 at 11:21 AM, starlight7 said:

Good spot of research there,pq!  if only the infrastructure would keep pace with migration levels we would be a lot more comfortable. Seems crazy the way people are pouring into Melbourne when we can barely sustain the current population.

I don't think TPQ did that research.  She often pastes interesting articles from elsewhere without attribution.  Even though she has clearly advocated that immigration hurts Australia in her post, I would imagine that the owner of this website is most likely pro-immigration!  Is that fair TPQ?  Not hvaing a go, just making it clearer.

Interesting research but I think the conclusions are very flawed. The graphs compare the family of skilled migrants against the general population to reach the author's conclusion that immigration hurts Oz.  What they should have done is compare the family of primary breadwinners in the general population against the family of skilled migrants.  This would make the assumption that the visa applicant is the primary breadwinner (usually a fair assumption), but would be a much fairer comparison than comparing secondary applicants against the general population. Consider this, which is based on my thinking of averages and won't apply to everyone I know:

• migrants are usually young(ish)
• therefore, migrants with secondary applicants usually have young kids (or are about to)
• families with young kids often have one parent working part-time or not at all
• care-giving parents would therefore have lower incomes
• to make a reasonable comparison, they should compare secondary applicants to their equivalent demographic in the general population

[Rossmoyne]

On 01/05/2017 at 7:16 AM, benj1980 said:

I believe the mass immigration policy is to boost the economy as others have suggested it hides the state of the economy well. There are an awful lot of Australians who aren't skilled or are not in a position to be trained and this is an ongoing problem stemming from their youth development into adulthood. More has to be done to make people employable and for it to be seen as a positive earlier. 

Yes I totally agree with your comment.  

Not enough is being done in schools to support the students who are not academic and who want to work with their hands.... and then to find them apprenticeships in whatever they want to do.    For some insane reason the apprenticeship programmes here in Australia are totally underfunded, hence we have a major shortfall of skilled manual workers of all persuasions.  Without skilled mechanics, bricklayers, electricians, plumbers, builders, painters, hairdressers, butchers, etc etc, the country wouldn't function.  

[Rallyman]

2 hours ago, Rossmoyne said:

Yes I totally agree with your comment.  

Not enough is being done in schools to support the students who are not academic and who want to work with their hands.... and then to find them apprenticeships in whatever they want to do.    For some insane reason the apprenticeship programmes here in Australia are totally underfunded, hence we have a major shortfall of skilled manual workers of all persuasions.  Without skilled mechanics, bricklayers, electricians, plumbers, builders, painters, hairdressers, butchers, etc etc, the country wouldn't function.  

I see more adverts for apprenticeships here in oz than i ever did in uk, I recently completed a course at Taffe down in sydney at the construction school their notice board was full of adverts wanting apprentices,not tarring all youngsters with same brush but alot dont want hard work, when I was a project manager at a recent company i worked for we had 4, not one of them lasted 12 months, I asked one what tools he had bought with the grant he had recived his reply " I didnt i got my sleeve done with a tatoo "  he was sacked by the owner after finding him asleep under some stairs one day, the others just gave up,

I can remember when i left school writing letters to companies looking for an appreticship even enclosing a stamped address envolope , I sent around 35  , still waiting for replys this was 1980 in the uk