The critical role of migration to Australia’s prosperity

Australia’s migration program is a population and skills-focused program that underpins the nation’s economic prosperity.

In recent years, overseas net migration to Australia has been the largest contributor to population growth. The recent closure of our national border and associated quarantine arrangements led to the first net overseas migration loss for Australia since World War II, with the country’s population growth falling to 0.1 per cent from March 2020 to March 2021.

Australia’s demographics also reflect an ageing population that is expected to increase significantly by 2037. The Labour Mobility Partnerships report titled Expanding Opportunity with a Globally Mobile Workforce noted that by “2050, OECD countries will see more people retiring than people entering the workforce. Preparing for the demographic reality in 2050 requires an additional 15 million workers annually between 2020 and 2050 or 400+ million in total over the same timeframe, to balance the increase in the gap between the working age and elderly population”.

What’s being done to address skill shortages?

With unemployment at 3.5 per cent, the lowest in 50 years, and productivity the lowest in 60 years, in December 2022, the Hon. Brendan O’Connor MP, Minister for Skills and Training said that “widespread skill shortages in almost every industry sector pose one of our greatest economic challenges in decades. Wherever you look, there are skill gaps”. He went on to state that “skilled migration will always be part of the labour force equation and is essential for a successful economy in a globalised world”.

Following the Jobs and Skills Summit in September 2022, the Government announced the proposed establishment of Jobs and Skills Australia, replacing the National Skills Council, to ensure the country prioritises and plans for the skills needed now and in the future.

Against this backdrop, in December 2022, the Minister of Home Affairs, Clare O’Neil, announced that Dr Martin Parkinson, Dr Joanna Howe, and Mr John Azarius would lead a review named A Migration System for Australia’s Future, with a view to helping deliver a more simple and efficient system.

These initiatives are needed now more than ever before because Australia competes with all high-income countries for skills at all levels and, in many industries, roles are proving more and more challenging to fill.

The skills shortage challenge

There is no question that skill and labour shortages are key challenges that many countries, including Australia, are grappling with post the COVID-19 pandemic. Combined with workforce expectations about flexible working and reports from Labour Mobility Partnerships that by 2050 more people will retire than enter the workforce in OECD countries, it is clearly time for action.

Australian leaders are acknowledging this, with labour shortages reported as a top business concern amongst directors responding to the AICD's Directors Sentiment Index Survey in the second half of 2022. Further, research from numerous industry organisations, reflects that most high priority sectors are amongst those at substantial risk of labour shortage impacts.

Research of note includes:

  • CEDA’s Australia’s Future Migration System 2022 report suggests Australia will need an additional 100,000 direct care workers in the aged-care sector within a decade and more than 400,000 additional workers by 2050 to reach the ‘minimum standard of care’. It also highlights that the public infrastructure pipeline announced by governments during recent years has been progressively delayed with a forecast shortfall of more than 100,000 workers
  • The Tech Council of Australia’s publication, Getting to 1.2 million – Our roadmap to create a thriving Australian tech workforce, outlines a need to realise 1.2 million tech jobs by 2030, with tech being “equivalent to Australia’s seventh largest employer” and needing “an extra 653,000 people to join the tech workforce in the next eight years”
  • The Aviation industry critically requires maintenance technicians given the talent pipeline challenges resulting from large numbers of experienced technicians approaching retirement age
  • The Food Supply Chain Alliance, an organisation representing businesses with a combined revenue of more than $200 billion, warned in August 2022 of a shortfall of at least 172,000 workers. At the same time, the Restaurant and Catering Industry Association indicated that country was looking at a shortfall of 100,000 hospitality jobs across Australia
  • AUSVEG, the country’s peak industry body for the vegetable and potato industries, industry has called for an expanded Visa solutions to meet “major labour shortages”.

Clearly, Australia has both labour and skilled labour shortages that must be addressed if the country is to thrive in the post-pandemic world.

Opportunities for change

To date, Australia has been slow to respond to increased global competition for skilled workers. Japan, Hong Kong, the United Kingdom, New Zealand, Germany, Canada, the USA and other OECD countries have taken action and are changing migration policy to include measures to support skilled migration.

At this critical time of skilled workforce and labour shortages, Australia must act with a focus on the country’s economic recovery.

Australians need better access to tertiary and vocational qualifications and lifelong learning to skill, upskill and reskill throughout their careers.

In addition, Australia needs a well-designed and streamlined temporary and permanent entry employer-sponsored system to meet the nation’s labour and skills needs. The approach must be demand driven while protecting Australian jobs where there are Australian workers able to do the job.

There is a need for more middle and lower skilled workers who provide valuable contributions to our economy and community because of the variety of skills they possess. Yet, securing such workers is a challenge given the varying definitions of ‘skilled’ between countries and that Australia is competing with all high-income countries for these workers. For example, a middle-skilled worker in one country could be categorised as a low-skilled worker in another, regardless of the training and certifications they hold.

The cost of such inconsistencies is significant. CEDA’s 2022 Skills Recognition publication noted that skills mismatch and the migration program, which was strongly focused on skills recognition between 2013 and 2018, is estimated to have “cost $1.25 billion in forgone wages”.

Australia’s migration system must enable businesses to hire at all skill levels because many occupations deemed lower-skilled are essential to our economy and cannot be automated or offshored. Adding to the challenge is that many of these jobs, such as truck drivers/logistics workers, meat and slaughterhouse workers, and child and aged-care workers, are less attractive to Australian workers but remain critical to our economy and community.

While some provisions exist within the current migration system, labour agreements under the subclass 482 Visa Program are too cumbersome and unwieldy to allow for concessional arrangements for some lower skilled occupations. The system must be simplified and streamlined to meet critical workforce needs.

Building a better future for all

Labour and skill shortages are here to stay, so a migration system for now and into the future requires a new approach.

As a small nation on a vast continent, with an ageing population and a small workforce, Australia simply does not have the workforce it needs to remain competitive in these dynamic times.

The challenges the country faces in today’s trade environment are numerous, with debt burdens on public budgets continuing to be stretched after the pandemic, and skill and labour shortages undermining economic recovery.

Addressing workforce and skills shortages in aged care, healthcare, mining, information and communication technologies, cyber security, education, engineering, agriculture, hospitality, infrastructure and construction and other key sectors are all critical to Australia’s economic prosperity.

In reimagining the migration system to meet Australia’s current and future needs, the regulatory framework must fundamentally change. Tinkering at the edges and adding even more complexity to a labyrinth of rules and policies that reflect a period which is long past will not do.

BDO’s Migration Services team has made 33 recommendations to the review panel on A Migration System for Australia’s Future. Read our submission to learn more.

BDO Migration Services is an incorporated law firm that provides end-to-end, specialist migration services focused on corporate immigration as part of BDO’s seamless global mobility services. If you require assistance with any of your immigration requirements, please contact Maria Jockel or Rebecca Thomson.

Disclaimer: This information is provided as a guide only and it has been written in general terms and should be seen as a broad guidance only. This information cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information without obtaining specific professional advice. ©April 2023 BDO Migration Services. All rights reserved.