Population and Australia's future labour force

5 Feb 2008

In the next 20 years, the only potential sources of increases in labour supply are increased labour force participation rates and immigration. While the Australian government is attempting to increase participation, the impacts of this policy, highly desirable as they are where they are the result of improved work choices, are likely to be small compared to labour requirements. Also, those currently projected to be out of the labour force in the future, but who might be induced into the labour force, will not necessarily provide a good match to the required skills.

The logical conclusion from the above discussion is that Australia’s future requirements for labour will drive increases in demand for sustained and growing immigration. Australia has already embarked on this pathway. Preliminary net overseas migration for the year ended 30 June 2007 was 177,600 persons, the highest annual level ever recorded. In recent years, employers have reacted to labour shortages in their industries by calling for increased levels of immigration and the government has responded by increasing the official settler program intake and increasing opportunities for temporary entry for employment purposes. To maintain labour force growth at one per cent per annum, net migration would have to rise to 227,000 by 2021.

Three particular questions arise from the likelihood of an increased demand for immigrant workers:

• What measures need to be taken to ensure that Australian social and economic institutions can adapt to larger numbers of immigrants?

• What skill levels and skill types will be required to meet future labour requirements?

• Are current immigration policies adequate for the recruitment of larger numbers of immigrants?

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