Filling jobs with Australians goes into too-hard basket

Businesses that came to rely on temporary migrants as one of their principal sources of workers are those that are complaining loudly about worker shortages.

Last week there were three important pieces of news related to the Australian labour market.

One was the fall in the unemployment rate to 4.2 per cent, the lowest since before the global financial crisis and one of the lowest since monthly surveys were first conducted in 1978.

The second was the revelation that 200,000 people who took up welfare benefits during the height of the pandemic remained out of work, notwithstanding widespread labour shortages.

Finally, there was the decision by the federal government to open international borders to those who had been vaccinated, with visa fees temporarily waived for international students and working holiday-makers. The expectation is that there will be about 175,000 arrivals in the coming months. Note here also that work restrictions placed on international students (20 hours a week during semester time) have been lifted temporarily.

These developments tell us lot about what is happening in the labour market and the government’s approach to dealing with the issues. When it comes to the unemployment rate, the official figure still contains a lot of noise as a result of the pandemic and on-again, off-again lockdowns and other restrictions. Even without government-mandated restrictions, the private decisions of wary members of the public are affecting business conditions.

There is also the impact of Covid-related jobs – think PCR collectors, vaccine givers, contract tracers and the like – which is similar to having an ongoing census affecting the figures. (In the month in which the five-year census takes place, there is always a noticeable impact on employment, although the number of collectors now is much less with the census going largely online.)

The point is that the official unemployment rate still doesn’t give us a totally meaningful and comprehensive view of the labour market. But there is no doubt that conditions are relatively tight, particularly given the absence of temporary migrants in the past nearly two years.

What is clearer is that some industries and businesses had become highly dependent on migrants to fill certain jobs, particularly lower-paid ones in service industries and agriculture. When this source of workers dried up there were serious difficulties in securing other (Australian-born) workers to fill the positions. On the face of it, it would seem there are some jobs Australians just won’t take.

This is consistent with overseas research that shows local workers will vacate positions permanently when there are low-skilled migrants prepared to take them. Even when there are fewer migrants available to do these jobs – as has been the case with the pandemic – local workers show little propensity to resume their occupancy of these jobs, even if rates of pay are slightly increased.

Two or so decades ago, the Australian labour market was adequately serviced by local workers with relatively few international students, working holiday workers and temporary workers. Migrants overwhelmingly were permanent and undertook long-term job plans consistent with getting ahead and providing for their families.

More recently, the number of temporary migrants has swamped the number of permanent ones, which in turn reflects where migrants work and the aspirations of the workers involved. Many international students, for instance, must work to pay fees and living expenses. They tend to take low-skilled jobs in hospitality and retail and often will work in businesses with ethnic ties. It is not surprising that many instances of wage theft occur among these temporary working migrants lacking, as they do, knowledge of our industrial relations regulations and fearful of losing their jobs.

It is not surprising the businesses that came to rely on temporary migrants as one of their principal sources of workers are those that are complaining loudly about worker shortages. If they can convince the government to open up the international borders, it is easier to resume their old ways rather than offer higher wages and train locals to do the jobs.

While this course of action may take time, it shouldn’t be ruled out. That there are large numbers of people on JobSeeker – about 200,000 – who took up welfare payments during the pandemic but remain without employment suggests there is a potential source of labour that could be tapped.

For some people, the net advantages of not working (including the payment of a slightly higher JobSeeker and other top-ups) are greater than the net advantages of working. This creates a dilemma for the government because the employability of these welfare recipients declines the longer their duration of joblessness. But given the complications of the pandemic restrictions on ease of movement, it hasn’t been an optimal time to impose mutual obligations on welfare recipients.

This has led the government to take the easy route and simply bring in as many temporary workers as possible to take up these difficult-to-fill jobs. Mind you, this tactic is consistent with the government’s preference for large migrant intakes and high rates of population growth. (The Prime Minister’s time at the Property Council seems to have had a lasting effect given his ongoing refusal to countenance a future for Australia based on much more limited rates of immigration.)

There are downsides to this approach, not least the lack of electoral appeal in restarting large migrant intakes. The incipient wage pressures that have become apparent, consistent with worker shortages, are likely to be suppressed to a degree. And why bother training workers when it is possible simply to import them? (This is particularly the case in more skilled fields like engineering and IT.)

It is pleasing to note the federal opposition is taking a slightly different position when it comes to immigration. In particular, its view is that the number of temporary workers should be restricted to drive the incentives for locals to be employed and trained.

Having said this, it would seem unlikely a Labor federal government would limit the number of international students granted visas, given the close relationship between the higher education sector and the Labor Party. International students are the largest group of temporary workers by far.

Again, going back two or so decades, our educational sector managed well without such high proportions of international students. Indeed, it would seem many universities have managed very well during the pandemic without the steady stream of international students.

The reality is that the pre-pandemic situation worked for many key players in the economy and the government is being pressured to return to that situation as soon as possible. Without thinking through the forgone opportunity to reform and change things, it would seem the government is only too keen to oblige.