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Opinion article

Migration must play a role in Australia's post-COVID economic recovery

CEDA Chief Executive, Melinda Cilento, argues that smart, evidence-based migration policy can support Australia's post-COVID economic recovery.

 

This article was originally published in The Age on 28 September.

Immigration has long been an important foundation for Australia’s economic development and prosperity, but the COVID-19 pandemic has caused a dramatic slowing of overseas arrivals.

The Morrison Government has flagged that a “reset” of the migration program will feature in the upcoming Federal Budget, now less than two weeks away. Now is the time to take stock of the current system and recalibrate for the future, to help Australia come back better.  

Historically, migration trends have followed economic conditions, and we should not expect this crisis to be any different. Policy decisions taken now will have a major impact on Australia’s ability to attract the best and brightest as we start to emerge from the pandemic, as countries such as the United States introduce new restrictions on migration. These considerations must be evidence-based and nuanced.

Providing more information and transparency on skills shortages will be critical to bolster confidence in both our skills and migration systems, at a time when we will see both historically high and rising unemployment, as well as pockets of skills shortages. These circumstances will be challenging for the community to reconcile.

With unemployment rising sharply, many have already been questioning how bringing more workers into the country remains in the nation’s best interests.

But previous CEDA modelling has shown that recent waves of migrants have not had a negative impact on the wages or participation rates of Australian-born workers.

In fact, the results suggest that at certain levels of qualification and experience, an increasing proportion of migrants can help boost wages and employment. The results are consistent with previous modelling for the Productivity Commission by ANU researchers, who found no evidence that the entry of migrants had a negative effect on the labour market outcomes of local workers.

Ensuring we are doing our best to fill critical skill gaps that cannot be met in the short term within Australia will help to ensure that migration supports our economic recovery. On this front, there is room for improvement. 
To begin with, changes to migration programs have been made so frequently that it is hard to determine which aspects of the programs are effective in meeting skill needs.   

There are also legitimate questions about the nature of skills gaps and the extent to which some gaps reflect difficult working conditions and the desirability of some occupations. More work must be done in this area, and CEDA is looking further at Australia’s skills mismatch in an upcoming report due in late November.

Australia must get serious about better identifying skills gaps and ensuring that temporary skilled migration is working in tandem with a responsive education and training system. A starting point would be to introduce contemporary skills classifications. Ours are well out of date.

Previous CEDA research has also pointed to the benefits of better targeting funds from the Skilling Australians Fund Levy, a charge paid by businesses that want to sponsor temporary migrants, to address training in identified areas of shortage.

Developing talent

Temporary skilled migration has achieved more than simply plugging short-term skills gaps. It has also played an important role in developing global talent and importing unique overseas experience into Australian workforces.

Medical device manufacturer Cochlear, as one example, used temporary skilled migration for a decade when it faced a lack of engineering skills in advanced manufacturing. Those engineers built up Cochlear’s skill base, and it now has a stable Australian workforce.

In cases such as these, where business seeks to fill unique and very senior roles, or where they are a local subsidiary of a large multinational corporation, there is less resistance to the use of temporary migration. 

Few dispute the value to our economy of such roles, as they both fill an immediate skills gap and provide important transfer of skills to colleagues, but the system does not always support these needs.

The revolving door of policy changes, the retention of processes such as labour market testing for highly specific roles and recruits, and recent changes that limit pathways to citizenship, do little to build confidence among employers, potential candidates or the broader community that the system is reliably serving their interests.  

In this vein, the closure of Australia’s national borders is already front of mind for CEDA members around the country, given the impact it is having on their ability to access skilled labour. It is crucial that skills shortages do not emerge as a barrier to business recovery and growth from this crisis.

The COVID-19 recession has sharpened the focus on the role of training to help prevent labour market scarring for a generation of young Australians. We need an equal focus on improving our immigration systems to ensure migration plays its part in our economic recovery.

In the meantime, we hope the government will take the long view on migration, recognising its role in building past prosperity, and the potential for similar benefits in a world where the competition for skills and talent will only intensify.
About the authors
MC

Melinda Cilento

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Melinda Cilento is Chief Executive of CEDA, a company director, economist and experienced senior executive. She is a non-executive director of Australian Unity and Co-Chair of Reconciliation Australia. Melinda is also a member of the Parliamentary Budget Office panel of expert advisors.

Melinda was previously a Non-Executive Director with Woodside Petroleum, Commissioner with the Productivity Commission and Deputy CEO and Chief Economist with the Business Council of Australia. Melinda has also previously held senior roles with the Federal Department of Treasury, Invesco and the International Monetary Fund.

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