Migrants Don't Steal Jobs

In the past two decades, the way people migrate to Australia has undergone a profound shift. We now have an immigration program that sits firmly within the boundaries of economic, as opposed to social, policy.

One of the world’s leading academics on immigration, Harvard’s George Borjas, argues that the most important questions about immigration policy are: "what do nations want to accomplish and whose well-being should be maximised".

In Australia, immigration used to focus firstly on increasing Australia’s population and then on family reunion. However, since the early 1990s, successive governments have viewed immigration as an instrument of economic policy — with the wellbeing of individual Australians to be maximised. This has been achieved by allowing temporary migration to engage in the labour market.

This policy shift did not happen by accident. The economic focus grew out of a recognition that globalisation was changing the interaction of labour markets and growth. While Australian production predominantly relied on low and semi-skilled labour right throughout the Cold War period, skilled labour has become the policy to achieve higher productivity and economic growth in a more globalised world. Underlying this policy has been the dramatic growth in temporary labour migration to Australia since the 1990s.

In September 2012, it is likely that close to 10 per cent of the entire Australian labour market held a temporary visa with work rights. The table below outlines different types of temporary migrants with work rights:

(Sources: Temporary migrant statistics; Australian labour market statistics. Note: The total number of New Zealand citizens in Australia was 644,710, but 21 per cent of these migrants are temporary visitors assumed not to be in the labour market.)

Of course, some of these migrants will not work. This group includes children who accompany adult migrants, spouses who choose not to work, international students who do not participate in the labour market and working holiday makers who are holidaying rather than working. It is also true that there were New Zealand citizens working in Australia well before the 1990s. However the number has grown significantly since that time.

As the vast majority of these temporary migrant visa categories are demand-driven, the government can do little to control overall numbers. In the past, governments would set the number of migrants. This would fluctuate with good and bad economic periods but was always established by government. While this still occurs for permanent migrants, it is temporary migration that drives Australian migration. For example, in 2011-12, there were 184,998 permanent visas granted under the permanent migration program, relatively few compared to the number of temporary migrants in Australia.

Demographer and Australian National University Professor Peter McDonald says this demand-driven temporary migration means, "overseas migration … must be regarded as endogenous in relation to the economic cycle". Basically, when the economy is growing, more people will arrive. Conversely when the economy slows or contracts, while overseas migration will still occur, it will be slower and less pronounced. The endogenous nature of migration means, like interest rates, governments have very little capacity to control the flow of people in and out of Australia.

While some may consider this a travesty, the shift to temporary migration should be recognised for what it is: positive, long-term and largely bipartisan public policy reform. Migrants bring immediate gains for broader society, in the form of taxes and increased consumption, not to mention the associated social and cultural links. They become our next generation of permanent migrants.

There is an unspoken understanding in Australia that migration is critical to sustain long-term fiscal balance and maintain a sustainable labour market. It may be, however, that not speaking about immigration and its benefits has led to some broad misunderstandings.

The latest Scanlon Foundation survey points to murky social attitudes towards immigration. For the first time, Professor Andrew Markus has released local attitudes to social cohesion, complementing and contrasting with national attitudes. For example the Scanlon surveys find that 10.3 per cent of third generation Australians nationally believe the impact of immigration on daily life in their local area has been somewhat or very negative. However this rises to 33.4 per cent of local respondents in Bankstown, Fairfield, Dandenong and Hume — areas of Sydney and Melbourne that have the highest immigrant concentration and relatively high economic disadvantage.

These results highlight a public mistrust of immigration at a local neighbourhood level. Indeed, the fallacy that migrants steal jobs is entrenched in the suburban mortgage belt that elects Australian governments. This disconnect between social attitudes to immigration and the economic realities is a time bomb. Flashpoints, such as the debate in relation to the Government’s Enterprise Migration Agreements program foreshadow future serious social distrust.

Australian public leaders owe the Australian people a conversation about the future direction of immigration.