Addressing migrant skills mismatch could bring $70 billion boost over 10 years

For years, we’ve known that the underutilisation of skills and qualifications is a serious issue preventing migrants and refugees from participating fully in the workforce. Addressing this mismatch could help solve critical skills shortages. 

Now, an Australian-first research has quantified this missed opportunity, revealing that $70 billion could be added to the national economy over the next decade if permanent migrants were able to work in jobs that matched their skills at the same rate as Australian-born workers.

Last month, non-profit SSI launched Billion Dollar Benefit: The economic impact of unlocking the skills potential of migrants in Australia in collaboration with Allianz Australia, LinkedIn, Business NSW and Business Western Sydney. 

The study revealed that approximately 44 per cent of migrants and refugees in Australia are employed in roles below their skill level, despite the majority holding higher qualifications than their Australian-born counterparts. This equates to more than 620,000 skilled migrant workers who are not fully utilising their skills and qualifications. 

Time and time again, skilled and experienced doctors, engineers, nurses and other professionals arrive in Australia with years of work experience hoping to continue their careers, only to find themselves struggling to land entry-level positions. 

Since arriving in Australia in 2023, Syrian refugee and experienced automation engineer Alaa Daher has faced significant challenges finding employment in his field, despite extensive efforts.

Since starting his life in Sydney, he developed his English language skills, obtained his driver's licence, got his degree recognised and completed work-readiness workshops. However, Alaa has encountered the same rejection response to more than 70 job applications: you have a lack of Australian work experience. 

The challenges Alaa faces are a perfect example of the all-too-common experience I frequently hear from newly arrived migrants and refugees. 

Meanwhile, Australia is facing a deepening engineering skills crisis, with an independent report commissioned by Professionals Australia projecting a shortage of 200,000 engineers by 2040. 

All of this suggests Australia does have the skilled workers needed to fill jobs, but these workers are being overlooked and underutilised.

 At a time when industries across the country are struggling with skills shortages, it is more important than ever that we harness the workforce and economic power of those already on our shores. 

Industries that would see the greatest increase in employment from better harnessing the skills of migrants are professional services (e.g. engineering, IT, legal), public administration (e.g. pathologists, police officers), and education.

But other industries that are key to our future prosperity – construction, communications, trade and financial services – would also benefit from productivity increases. For example, the modelling found housing supply would increase due to a more productive and better-resourced construction industry. 

So how do we rectify this missed opportunity for the benefit of individuals, businesses and the country as a whole? 

The research found that unlocking opportunities for thousands of skilled migrants and refugees would be possible by addressing five systemic barriers, including fixing the overseas skills and qualification recognition system, tackling labour market discrimination, and reforming English language requirements so they are fit-for-purpose. 

For too many skilled migrants, their excitement to live and work in Australia is quickly replaced by the stress of navigating a complex overseas qualifications-recognition system of more than 34 authorities spanning 450 occupations. Policy changes and targeted initiatives to improve this system would go a long way towards addressing underutilisation.

Importantly, discrimination within the labour market is another key barrier that needs to be addressed. Many employers place a narrow and unnecessary focus on local experience and unconsciously engage in biased recruitment, promotion and retention practices. 

Industries and employers must examine their hiring policies, practices and unconscious bias to reduce barriers and ensure that overseas experience is sufficiently valued. This issue is exacerbated for women, who are 1.2 times more likely than men to be underutilised.

Furthermore, English language proficiency is fundamental to succeed in employment. Programs targeted at the individual level to improve the English proficiency of newly arrived professionals will help reduce underutilisation across the board, especially if that training is focused on employment and occupational contexts.

Addressing these barriers would deliver a significant economic benefit, but the real win is to individuals and communities. It would mean more skilled migrants and refugees could realise their full economic potential and help fill critical skills gaps experienced by broader communities.

Closing the migrant skills mismatch is a shared responsibility, and shared opportunity, that requires a collaborative effort across government, industries and employers, unions, social services and affected communities. We all have a role to play.