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Immigration does not harm wages outcomes for Australians: CEDA

CEDA Media Statement

Recent commentary from the Reserve Bank of Australia (RBA) perpetuates the myth that immigration harms the employment and wages prospects of local workers, when CEDA analysis of migration data shows otherwise, says CEDA Senior Economist Gabriela D’Souza.

In a speech this week titled The Labour Market and Monetary Policy, RBA Governor Philip Lowe said while Australia’s high levels of migration had helped to boost the economy, in some cases when firms hired overseas workers “to overcome bottlenecks and fill specific gaps” this “dilutes” wage pressures and “can also dilute the incentive for businesses to train workers.”

“It would be great if this question, which has plagued labour economists for decades, was resolved with such certainty, but there’s no evidence to suggest this is true,” Ms D’Souza said.

“The literature shows that the interaction between migration and the labour market is complex.

“Migrants supply labour, but they also consume goods and services, and in so doing they add to broader economic activity.

Research by myself and others has shown that immigration does not harm the employment prospects of local workers, and yet the myth persists.

“So much of Australia’s economy, including our ability to invest in capital and business’ confidence that projects can go ahead, depends on the know-how and skills of our often carefully-selected migrants.

“The existing body of research in this field has shown migration to have a small-to-negligible positive effect on aggregate wages in the economy.

“In addition to this, skilled primary migrants have a positive impact on the Budget. The Federal Government’s latest Intergenerational Report estimates that skilled primary migrants net the Federal Government $319,000 over their lifetime.

“They also add to activity in the economy to the tune of $4.2 million over the course of their lifetime (in net present value terms) through consumption of goods and services.

“In addition to effects like these we can measure, there are also likely to be other spillover benefits that we can’t yet measure.

“Economists know that the true underlying driver of real wage growth will be productivity.

“Governments and businesses need to consider what levers they can pull to increase productivity to fuel wage growth.

“Playing around with immigration targets won’t get us there. In fact, it could move us further away from this ultimate goal.”

About CEDA

CEDA – the Committee for Economic Development of Australia – is an independent, membership-based think tank.

CEDA’s purpose is to identify policy issues that matter for Australia’s future and pursue solutions that deliver better economic and social outcomes for the greater good.

CEDA has almost 700 members including leading Australian businesses, community organisations, government departments and academic institutions. Our cross-sector membership spans every state and territory.

CEDA was founded in 1960 by leading economist Sir Douglas Copland. His legacy of applying economic analysis to practical problems to aid the development of Australia continues to drive our work today.

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3 comments

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  1. Stuart anderson

    Rather than identifying strongly with a particular ideological viewpoint in the style of the Centre for Independent Studies, the Institute of Public Affairs or the Australia Institute, CEDA mostly offers conclusions that are near the centre of the policy spectrum. It tends to favour market-oriented or at least price-oriented solutions to issues such as water supply and infrastructure.
    In 1979, after a debate on CEDA’s involvement in lobbying, it established a ‘Business Roundtable’ as an independent entity which in 1983 was merged into the Business Council of Australia.

  2. Andrew J. Smith

    The linkage claimed between unemployment and immigration has never been supported by research anywhere but promoted by nativist media, conservative/libertarian ideologues and industry to stir up local employees; divide and rule.

  3. wam

    if it sounds good believe it and repeat it is the way of my rabbottians who do not hesitate to share right wing bullshit ‘truth’ from the big two monolingual white countries. Some of these anti-migrant lies even come from people in salsbury who should know the worth of migrants and most of the rest have personal knowledge of the social, cultural and economic value of migrants but that history and the evidence I share doesn’t help them understand the hypocrisy of their sharing and the factless fox fuckwits rule again.

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