Australia Oversupplied with Low-Skilled Workers Amid Record Migration

Australia is facing an oversupply of low-skilled workers despite record levels of migration, while shortages in highly skilled labour persist.

According to the Australian Bureau of Statistics (ABS), more than 1 million net permanent and long-term migrants have arrived in Australia since the Albanese government took office in June 2022.

However, figures from Jobs & Skills Australia, analysed by economist Justin Fabo, show that the influx has done little to ease the country’s shortage of highly skilled workers.

Instead, the labour market has been flooded with low-skilled workers, making it easier for employers to fill such positions while skilled roles remain vacant.

The majority of new migrants are international students, recent graduates, and working holidaymakers, many of whom work in unskilled jobs.

A 2023 Migration Review found that 51% of international university graduates with bachelor’s degrees ended up in unskilled professions three years after graduation.

Further analysis by Deloitte Access Economics showed that 44% of permanent migrants were employed below their skill level in 2023. Of these, 372,000 were migrants who entered Australia through the skilled migration stream.

The oversupply of low-skilled labour is contributing to poor productivity levels and stagnant wages, according to the Committee for Economic Development of Australia (CEDA).

CEDA’s analysis revealed that migrants are increasingly working in lower-productivity firms, limiting their potential contribution to the economy.

“Migrant labour is not being used as productively as it could be,” CEDA stated. “This decade, migrants have become increasingly likely to work in lower productivity firms.”

Economists warn that the current migration system is failing to deliver the skills Australia urgently needs, while worsening housing and infrastructure shortages.

They recommend raising the wage threshold for skilled visas to above the national median full-time salary, currently around $90,000, and making all skilled visas employer-sponsored to ensure qualified migrants work in their field of expertise.

Source: MACROBUSINESS