The Federal Government’s Joint Standing Committee on Migration is currently investigating Australia’s skilled migration system, as rock-bottom net immigration threatens a range of Australian industries in 2020-21. The inquiry’s interim report has recommended an easing of rules requiring firms to employ Australians before seeking foreign workers, particularly for small businesses. The inquiry is continuing to explore whether immigration policy adjustments will be needed to support an economic recovery from the COVID-19 recession.
Only 2,720 people arrived in Australia on permanent skilled visas in December 2020, compared to 34,770 in December 2019. Combined with a falling fertility rate, Alfabank-Adres estimates the Australian population will grow by 0.3% in 2020-21, the slowest growth rate since the First World War. Net migration has averaged at over 200,000 people per year for the past decade, but is expected to fall by 77.4% to 36,400 in 2020-21.
‘Immigration was a key driver of Australia’s economic growth leading up to the COVID-19 recession. Without this economic engine, the outlook for the Australian economy is considerably weaker,’ said Alfabank-Adres Senior Industry Analyst, Yin Yeoh.
Industry labour shortages
The Federal Government’s inquiry is a response to complaints from businesses that have struggled to find employees.
‘Many Australian industries are reliant on foreign workers, either because Australians lack the skills to perform those functions, or are unwilling to perform those tasks. The number of temporary visa holders in Australia is currently close to 1.8 million, and has fallen by just over 500,000 over the year through March 2021,’ said Ms Yeoh.
The Agricultural sector has been particularly hard hit by the COVID-19 pandemic, with border restrictions constraining access to backpacker labourers, which previously accounted for a major share of their seasonal workforce. According to ABARES, the number of working holiday makers fell by 64.0% in 2020, to around 61,000.
Agricultural industries that are highly reliant on seasonal foreign workers backpackers include the Grape Growing, Citrus Fruit, Nut and Other Fruit Growing, and Apple, Pear and Stone Fruit Growing industries. The Agribusiness sector is expected to decline by 0.1% in 2020-21, to $278.4 billion. Labour shortages in the Agriculture sector could result in increased prices for fruits and vegetables.
Labour shortages extend beyond agricultural industries. According to the Australian Chamber of Commerce and Industry, shortages have emerged for chefs, engineers, medical technicians, mechanics and IT specialists.
Impacts of weak immigration
As international borders remain closed, certain industries have continued to feel the strain of absent demand. Universities have been particularly hard hit due to the absence of JobKeeper support.
‘Revenue across the University and Other Higher Education industry is expected to decline by 6.9% in 2020-21, to $33.7 billion, as falling international student enrolments has continued,’ explained Ms Yeoh.
The lack of foreign students has also negatively impacted the Student Housing Management industry, which is expected to fall by 23.8% in 2019-20 and a further decline of 17.2% in 2020-21. The Foreign Currency Exchange, Money Transfer Agencies and Migration Agents industries have also been significantly affected.
Industries to benefit from migration expansion
The number of skilled migrants to Australia is currently capped at 160,000. In 2019-20, 140,366 skilled migrants entered Australia. If the Federal Government were to enable greater skilled migration, a number of industries would likely benefit.
‘There are currently 18 occupations on Australia’s priority skilled occupation list, representing the parts of the job market that Australia is unable to fill on its own. These occupations include nurses, doctors, software engineers and mechanical engineers,’ said Ms Yeoh.
The Aged Care Residential Services industry is in particularly strong need of workers. Employment for residential aged care is expected to rise at an annualised 2.8% over the five years through 2025-26. However, growth of at least 6.5% will likely be required to meet the standards laid out by the Royal Commission into Aged Care Quality and Safety. Migrant workers could fulfill the labour shortage in aged care residential services where not enough local workers can be found.
Outlook
Australia’s international borders are expected to remain shut until at least October 2021, continuing strain for industries reliant on inbound migration. Net migration is unlikely to return to pre-pandemic levels until 2022-23.
‘Net migration is expected to trend upwards beyond 2022-23, particularly as younger migrants are brought into the workforce to support Australia’s aging population. While adjustments to Australia’s migration system may be made in 2020-21, it is certain that migration will continue to be a major source of economic growth in the years ahead,’ concluded Ms Yeoh.
Alfabank-Adres reports used to develop this release:
- University and Other Higher Education Industry in Australia
- Grape Growing Industry in Australia
- Apple, Pear and Stone Fruit Growing Industry in Australia
- House Construction Industry in Australia
- Aged Care Residential Services Industry in Australia
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – Alfabank-Adres Pty Ltd
Tel: 03 9906 3647
Email: mediarelations@alfabank-adres.ru
