Economic illiteracy

by Justin on Feb 24, 2009

Almost on a daily basis these days so called 'experts' expose themselves as economic illiterates, the latest being Professor Birrell at Monash University in an article entitled 457 visas 'may cost local-born jobs' in the Australian,

AUSTRALIA'S record intake of temporary skilled migrants during the economic downturn could boost the number of Australian-born unemployed, as research suggests it is being used as a "back door" to permanent entry by low-wage workers.

The claim comes from Monash University population expert Bob Birrell, who said more of Australia's permanent skilled migrants were being sourced from the 457 visa program, which was drawing on workers from low-wage countries in increasing numbers. The visas are widely used in the ICT industry.

"People at the lower end of the spectrum are becoming permanent residents," Professor Birrell said. "They're vulnerable to exploitation because the employer knows they're not going to quibble with what he's offering them because they're desperate to get the permanent resident nomination."

As the global recession worsens, Professor Birrell said it was time for the Rudd Government to rethink its record high migration intake.

He said the tough economic climate would give employers added incentives to employ or retain cheap overseas labour in the place of local workers.

This thinking is completely misguided and assumes that there is only so much work to be done in Australia and that if immigrants do more of it, then there won't be anything left for Australians! This is economic illiteracy at its best, for if it were true, wouldn't any and every technological advance we've ever had be a dire threat to our economy? Machines can do the work of thousands of people, should we ban the use of forklifts because they take away valuable lifting jobs? While we're at it, why not ban shovels too -- we could employ several people to dig holes with their hands instead! Ridding ourselves of these technological advances to improve our economy and reduce unemployment is a joke. Likewise, artificially stopping labour from entering -- skilled labour at that -- will do nothing to ease unemployment.

Either Professor Birrell knows very little about the economics which he preaches -- or he knows it very well and is on the payroll of certain special interest groups.

Site Comments

  • Justin's avatar
  • Justin
  • Tue Feb 24, 2009
  • 06.18 am

Update on this:

http://www.abc.net.au/news/stories/2009/02/23/2498686.htm?section=business

The Federal Government says it is not considering following the United Kingdom’s lead in tightening restrictions for skilled migrants because of the global financial crisis.

The UK Government has announced that from April non-EU workers entering Britain without a job must have a masters degree and a previous salary of at least $44,000.

Immigration Minister Chris Evans says Australia is not considering similar restrictions.

“We’ve been very successful in attracting high quality migrants to this country,” he said.

“We’ll continue to need to do so because our demographic trend is such that our workforce will decline from 2010 onwards, and we’ll continue to have a need for migrant labour.

“But we’ve been focused very much at the high-skilled end over the years and we’ll continue to be focused on the skills we need.”

Senator Evans says the Government is continually reviewing skills shortages to make sure the skilled migration program is not damaging the economy.

The Construction Union is lobbying the Government to take some trades off the list over concerns about rising unemployment.

Senator Evans says some industries will always require skilled migrants, but the intake is expected to be lower this year.

And he says everything on the critical skills list is capable of being reviewed.

“We’ll probably have a formal look at that in the next few weeks.

“I also note today that there’s a call from the Master Builders Association in South Australia to increase the number of construction workers to meet the demand for infrastructure, so again it’s regional and it’ll vary across trades.”

 

  • SamC's avatar
  • SamC
  • Sun Mar 1, 2009
  • 08.41 am

If people want work they could always head off to the remote countryside and be self sufficient. That’ll give ‘em work from 5am until God knows when in the evening. It cannot be true that the wants and desires of all Australians are completely satisfied, ipso facto there is work that will be rewarded for those that can find a way to satisfy the unsatisfied - if only capitalism was let alone the unique wage vector that clears the labour market could be reached.

In any case the idea that it is best having foreigners doing high skill / high pay jobs and locals doing low skill jobs is bizarre, prejudiced and mistaken. Even if you are an economic nationalist it is bizarre to think that jobs in factories producing Bonds clothing are the ones that really need saving; should we not be trying to get people to educate themselves in high skill areas and leave low pay factory worker jobs for foreigners? There are many, many government programmes that allow people to accumulate debt while they receive an education. For most the government offers help to being without help.

Secondly those migrants “stealing incomes” also spend these incomes, this spending is on goods and services which require more people to be employed to produce. Immigration increases demand for domestic goods and services, this in turn increases the number of employed. Now if you believe most economists the increase in jobs should be more than one due to the aggregate income multiplier. Even if you don’t believe in the multiplier effect it is hard to see how the number of jobs could decrease; those on low incomes spend almost all of their income in order to survive and so demand led job creation must move pari passu with immigration.

Thirdly, the argument is barbaric. Why should I prefer to see an Australian, who is entitled to unemployment benefits, receive a job, rather than see some desperately poor individual that happens to live beyond some arbitrary line on the map receive a wage from an Australian employer. That immigrants are prepared to work for less than local Australians likely indicates that their alternatives to employment in Australia are much worse than the alternatives facing an Australian.

Finally, on another non-economic note, it’s worth remembering that these claims are not new and neither is the mode of discontent.  Perhaps what the government should be giving out at Centrelink isn’t more money but copies of Thoreau’s Walden. When writing Walden over 150 years ago Thoreau was offering advice to both those “who have accumulated dross” and to “the mass of men who are discontented, and idly complaining of the hardness of their lot or of the times, when they might improve them.” Actions of the ambitious and not complaints of the inconsolable are what is needed to move us back to more prosperous times.

 

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