Scarce jobs: migrants or locals at the end of the queue?

Employment Cities and towns Population Immigration Australia

This report argues that young Australian job seekers are losing out in the competition for scarce jobs.

Executive summary

During the 2013 election campaign, the major parties professed to be concerned about employment opportunity. The mantra was jobs, jobs, jobs.

This is appropriate in a context where growth in the number of employed persons has fallen sharply, from 259,000 in the year to May 2011, to 171,000 in the year to May 2012 and 126,900 in the year to May 2013. According to Treasury forecasts, it will fall to around 110,000 in 2013-14, followed by a modest rise to around 150,000 in 2014-15.

Yet, the Australian government’s permanent-entry migration program was set at the record high level of 214,000 in 2012-13 and it is encouraging temporary migrants to work in Australia in unprecedented numbers. There are almost no caps on the numberof visas issued in these temporary visa subclasses. However, the desperation of people in job scarce countries to access Australia’s labour market is enormous. One key illustration of the outcome is that the number of WHM visas issued has grown from 185,480 in 2010-11 to 249,231 in 2012-13.

As of March 2013, there were 1.1 million temporary visa holders (not counting New Zealanders) in Australia, most of whom held work rights. This stock is growing rapidly, in part because of the ease with which temporary residents are permitted to switch to another temporary or permanent visa.

The incompatibility of this migration policy stance with the stated concern about jobs for locals is jarring. This is because recently-arrived migrants (defined as those arriving in Australia since the beginning of 2011) are dominating the growth in the number of employed persons in Australia.

The key statistics are as follows. In the year to May 2013, there was an increase of 168,000 recently-arrived overseas born migrants aged 15 plus in Australia. Of these, 108,200 were employed. This is almost as large as the 126,000 increase in employment in that year.

The migration surge would not be an issue if the local working age population was stable or shrinking as some commentators assert. But it is not. Their numbers are growing strongly.

It is young local workers who are the main losers in the competition for employment. This is especially the case for those without post-school education, who are seeking less skilled, entry-level jobs.

They encounter a weak labour market where a growing share of local workers in the 55 plus age category is staying in the workforce. For example, the share of those aged 60-64 in the workforce increased from 39 per cent in May 2003 to 54 per cent in May 2013. Young people also have to compete for less skilled entry level work with an increasing number of job hungry temporary migrants looking for the same work.

Currently, around 250,000 young people leave school and enter the workforce each year. This is about the same number of Working Holiday Maker (WHM) visas issued in 2012-13. All these WHMs are aged 30 or less. They include a new breed of WHM, primarily looking for work rather than a holiday supplemented by work. They include large numbers from Taiwan, Ireland and Italy, all leaving economies where employment is difficult to find.

The consequence is seriously high unemployment amongst locals aged 15-24 (14.5 per cent for 15-19 year olds and 9.5 per cent for 20-24 year olds). In addition, there has been a persistent decline in the labour market participation rates of these cohorts since 2007 (from 59.4 per cent in May 2007 to 54.1 per cent in May 2013 for 15-19 year olds and from 81.3 per cent to 78.1 per cent over the same period for 20-24 year olds). While a good thing if they obtain valued skills, many are seeking refuge in low-level training courses because of lack of employment opportunities.

Not a word is being heard about these issues from the major political parties. The Coalition, at least, is not responsible, since it does not have its hands on the policy levers. But, it is proposing to make the situation much worse by extending work rights to overseas students who complete vocational training courses.

While this study focusses on the plight of young locals, it also contains a technical analysis of the way the official Labour Force Survey (LFS) reports on the Australian labour market. This is relevant to the points made above because the LFS coverage does not include many of the recently-arrived migrant groups under discussion (including the majority of the WHMs). The LFS only includes migrants if they stay in Australia or are estimated to stay in Australia for 12 months of the 16 months after first arrival in Australia.

As a consequence, it misses at least 500,000 recently-arrived migrants, of whom some 250,000 are likely to be employed. This finding does not significantly affect the conclusions of our inquiry regarding who is losing in the competition for employment. However, it does means that policy elites and commentators alike, tend to underestimate the scale of the recent migrant challenge for local youth who are seeking employment.

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