Lack of skilled migration and its effects on the Australian economy

Skilled migration has profound positive effects on the Australian economy – so, what will happen now that the borders remain closed?

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There is a huge misconception that skilled migrants steal jobs from Australians and undermine the labour market. Rather, the opposite is true. CEDA, published a report that found that immigration has positive impacts on wages and participation of local workers. Skilled workers bring skills to Australian businesses, they spend in local communities, pay taxes and do not have access to government-provided services.

The fact that borders have closed imposes great challenges on the Australian economy and its businesses.

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Effects of the COVID-19 pandemic on the population and the economy

In 2018-2019 , 12.9% of all overseas migrant arrivals were skilled migrants on temporary or permanent visas. An additional 9.3% were on temporary working holiday visas.

The pandemic has halted overseas migration which undermines economic recovery due to a drop in population growth. Overseas migration into Australia usually accounts for almost two-thirds of population growth annually. In 2018-2019 , Australia’s population increased by 239,600 people due to net overseas migration. Now, because of the pandemic, net overseas migration levels are expected to be in the negatives until at least 2022-2023.

Treasurer Josh Frydenberg says consequences for the economy due to the drop in population growth include its negative impacts on the expected $213.7 billion budget deficit in the 2020-2021 financial year.

By the time migration is estimated to return to normal levels (past 2022), there will be 600,000 fewer people in the nation than if the pandemic had not existed.

The Federal government will focus on attracting skilled migrants only once international borders reopen. Until then, only citizens, permanent residents and their immediate family and people granted special exemption since 18 March will be allowed into Australia. Borders will begin to open when there is a population-wide COVID-19 vaccine in order which the government expects will arrive by the end of 2021.

Challenges for Australian businesses

Industries that will be most affected will be those whose market size is determined by population. In regard to skilled labour, the insurance industry has typically sourced employees from a talent pool that was largely made up of international skilled workers. The drop in skilled migrants will and has already established a skills shortage for Australian businesses.

The agriculture sector has already been affected by the skills shortage caused by the lack of migrants on working holiday vias. The sector relies heavily on backpacking tourists which usually make up approximately 80% of the harvesting workforce, due to their skills and low wages. The consequences included crops being left to die, wasted produce and an increase in prices for consumers due to shortages.

Out of all overseas migrants in 2018-2019, 32.2% were those on temporary visas as students or related to education and training sectors. International students have often chosen to study in Australia as a means to pursue work here during or after their studies. This becomes another indirect stream of talent that is reduced due to border closures.

What can we do in the meantime?

We’re finding that mid-tier workers are now being promoted to senior positions which may have otherwise been filled by international talent. This creates openings in junior and entry-level roles which need to be filled.

Fuse Recruitment have found graduates to be great candidates for such roles where it is difficult to source talent with a specific skill set. We talk about the benefits of hiring graduates here . In short, graduates offer their loyalty and great work-ethic to employers who invest in their learning and development.

We have built a reputation for hiring high-quality grads for our clients through our Future Insure Graduate Program . Our team have a keen eye for picking out graduates who possess desirable behavioural traits and the right cultural fit for our clients and their needs. The result is high performing, loyal graduates who may have otherwise not been considered for such roles.

While borders remain closed, businesses should consider investing in graduates and upskilling our local workforce to make up for the loss of skilled talent. While this is not a quick process, the long-term benefit is that we build the skills base in the Australian workforce.

If you’re looking to hire graduates for your business, fill out the form on this page and we’ll be in touch shortly.​