The labor and skills shortage in Australia
The Australian Bureau of Statistics reported nearly 500,000 unfilled vacancies in the country in mid-2022. This is despite how the unemployment rate is at a record low of 3.4%, the lowest in 50 years. There simply are not enough workers.
Countries like Australia, Canada and New Zealand have for long structurally relied on a constant inflow of immigrants to keep their economies running. Indeed, more than half of Australia's population was born overseas or has a parent who was born overseas.
With the abrupt and extended border closure at the height of the pandemic, in 2020 and 2021, foreign labor could no longer enter the country. Working-holidayers (short-term migrants) and international students (especially from China and India) could not enter either or left in large numbers. The result is that Australia and these other countries are now facing an acute shortage of both labor and skills.
Some professional sectors in Australia are more badly hit. These are tourism and hospitality, healthcare, agriculture and skilled trades. The National Skills Commission of Australia website has a Skills Priority List of various occupations currently in shortage and have “strong future demand.” The list includes pharmacists, optometrists, nurses, care workers, welders, electricians, locksmiths, butchers, engineers, IT professionals, auditors, agricultural scientists and consultants, mobile plant operators, and arborists, among others.
Nurses in New South Wales, the most populous Australian state (which has Sydney as its capital), have held four protests in 2022. They are protesting understaffing and overwork. They want a nurse-to-patient ratio of 4:1 in wards and 3:1 in emergency services to avoid burnout. They are also petitioning for a 2.5% wage increase after two and a half years of sacrifice during the pandemic. But it's hard to improve the nurse-to-patient ratio without the immigration of experienced nurses from abroad or new international graduates from Australian universities joining the field.
The labor shortage on farms and in packing businesses in rural Australia has affected the country's food supply chain. The Australian Fresh Produce Alliance says that the sector has experienced between 20-50% of staff shortages over different periods of 2022. This is causing logistical problems in getting fresh fruits, vegetables, dairy and meat from rural Australian farms to urban supermarkets. In 2021, tomatoes, pumpkins, leafy greens, chili, bananas, etc., rotted in the countryside in the absence of seasonal harvest workers from Pacific islands to pick them. This contributed to crop losses worth 38 million AUD in 2021.
In early 2022, Coles Supermarket even introduced customer product limits for meat and eggs. In August 2022, shoppers at Coles are still allowed to buy only two cartons of eggs per transaction as the country faces an agricultural crisis in egg supply. Farmers' reduction of their hen flocks during Covid, cold weather, and the labor shortage all engendered this crisis.
International competition for skilled labor
Other developed countries are currently trying to lure high-skilled labor to fill their own shortages. Canada has an even more acute crisis than Australia, and Germany, New Zealand, UK have also created new visa programs to attract foreign labor. Australia needs to remain competitive to not lose high-skilled labor to these other countries. The decision to increase the cap on permanent migration is part of this strategy.
At a Jobs and Skills Summit panel moderated by Australia National University (ANU) in September, the Home Affairs Minister Clare O'Neil has stressed the urgency of being a competitive destination: “For the first time in our history, Australia is not the destination of choice for many of our skilled migrants. Those best and brightest minds, who are on the move around the world, they are looking to live in countries like Canada, Germany and the UK, and those countries are rolling out a red carpet to welcome them in.” She has even called the current situation a “global war for talent.”
At the summit, Minister O'Neil also said that many of the vacancies in Australia require candidates with 10-15 years of experience, not fresh graduates. They can hence be filled only by highly-skilled migrants who have held mid-career or senior positions back in their home countries or elsewhere.
Between 2013 and 2019, the permanent immigration cap was 190,000. It was reduced by 15% a year before the pandemic (March 2019). The previous government, which had a less pro-migration stance than the current one, said that this reduction was to ease urban congestion. The new Labour government, which was elected in mid-2022, has brought back pro-migration policies. They have raised the cap again to a level slightly higher than the 2013-2019 cap (190,000 v/s 195,000). The new Prime Minister Anthony Albanese has stressed that “Migration is part of our [Australia's] story.”
Speeding up the granting of visas
One of the main reasons Australia is struggling in this global race for talent is its unduly long visa processing time and visa backlog. This deters potential migrants from applying or makes them take up other job offers while their Australian visas are still being processed. Some long-term work or study visas are even taking 2-3 years to get approved, even when the applicant meets all of the criteria and has an unblemished work and criminal record.
For instance, in ABC News, a 35-year-old Chinese engineer in the renewable energy industry, Zhang Wenjun, says that he has been waiting for his work visa since 2019. He is already in contact with Australian companies keen on hiring him, but their companies can't formalize anything until he gets the visa. He has over a decade's experience in China's advanced wind power and solar industries, which makes him a perfect candidate for permanent migration, but the visa system isn't working in his favor. He expresses his frustration at not having even been contacted by a case officer yet.
In response to this backlog problem, Immigration Minister Andrew Giles has promised to recruit over 500 new staff members at the Department of Home Affairs over the next nine months, as well as inject 36.1 million AUD into the department to speed up visa processing. However, some are worried that the increased cap will worsen the pre-existing visa backlog and effectively eliminate any efficiency that increased staff and funding could bring.
