Optimising skilled migration to drive the COVID-19 recovery

Permanent migration has been a central feature of Australia’s economic development over the last century.

Australia’s points-based system of permanent skilled migration, in particular, has become the envy of advanced economies around the world, with other nations such as the United Kingdom seeking to replicate it.

The system has served us well, but there are important areas where it can and must be improved.  

CEDA analysis has found nearly one in four permanent skilled migrants – or around 23 per cent – in Australia are working in a job beneath their skill level.

Based on our exclusive analysis of Department of Home Affairs survey data, the report, A good match: Optimising Australia's permanent skilled migration, finds this skills mismatch cost at least $1.25 billion in foregone wages between 2013 and 2018.

As we emerge from the COVID-19 pandemic, we need a skilled migration system that is nimble and responsive to the needs of the economy.

But our report also shows the system is slow to respond to rapidly emerging skills needs, such as those related to data and digital.  

This is where we can least afford to lag in the competition for talent. A system that does not enable access to critical skills in a timely fashion means we will be unable to keep up with global competition.

A good skills match occurs when a person has a job that uses their skills and qualifications.

Skills mismatch occurs when a person works in a job beneath their skill level. For example, a postgraduate physics degree holder working as a barista or an engineer working as an Uber driver.  

As we emerge from the COVID-19 pandemic we must use our relative economic strength and take advantage of the rapid gains made in digitisation over the past year.

Accessing the right skills at the right time, and getting the right people into the right jobs, are critical to enabling future investment and job opportunities, and to Australia’s economic dynamism more broadly.

The Federal Government has recognised this and made some changes, such as Global Talent visas. But these are band-aid measures and continue Australia’s revolving-door approach to migration policy that CEDA has previously criticised.  

What is required is structural and sustainable change, and the development of a system that can evolve as skills needs change.

CEDA is calling for the Federal Government to establish a new government-regulated online skills-matching jobs platform. This would allow permanent skilled migrants to register their skills, and let accredited employers hire migrants from within the platform. It would initially apply to a small proportion of the permanent skilled migrant intake.

Over time, as more employers and prospective migrants register for the platform and it matures, it would operate like any other job site, using algorithms that would nudge people to apply for jobs that meet their skillset, or alert employers to new workers who might have skills they need or have looked for in the past.

The Australian Bureau of Statistics (ABS) should also comprehensively update the Australian and New Zealand Standard Classification of Occupations (ANZSCO) codes to ensure that migrants with vital and cutting-edge skills can migrate to Australia and contribute to the maturing of our labour market. These codes have not been updated since 2013.

To retain community confidence in skilled migration during the economic recovery, when unemployment is still elevated, the Federal Government should be more transparent about how it assesses which occupations are in-demand and included on skilled occupation lists.

Australia is facing its first period of negative net migration since World War II due to COVID-19. This will be a drag on economic growth – in particular for emerging sources of growth – and exacerbate the long-term challenges of an ageing population. Across our member forums, skills shortages have quickly emerged as a growing issue and concern.

Australia’s permanent skilled migration system is not broken, but it is not realising its full economic potential at a time when we must reimagine our economic future.

The changes CEDA is recommending would help ensure the system is satisfying the skills needs of the economy.

Over time, these changes will do more than just reduce the level of skills mismatch among permanent skilled migrants.

They will help make the entire migration system more efficient and effective, generating better and more up-to-date matches between migrants and the skills Australia needs to power its economic recovery. 

Learn more about CEDA's research into permanent migration and download the full report here.