Australia’s immigration policy has failed to address the nation’s critical workforce shortages, despite a large intake of skilled migrants. According to Dr Martin Parkinson, former Treasury Secretary and leader of the federal government’s 2023 Migration Review, the country’s mass immigration program has contributed to poor productivity growth and a mismatch of skills in the workforce.
In a recent report, Dr Parkinson highlighted that one in three occupations in Australia suffers from skill shortages, yet many permanent migrants are working in jobs beneath their qualifications. This situation is exacerbating labour productivity issues and hindering the full potential of skilled migrants.
Labour Shortages Persist Despite an Overabundance of Job Applications
While Australia faces widespread labour shortages, the number of job applications has surged by 47% in 2024, according to JobAdder’s latest report. Despite this increase, employers are struggling to find suitably qualified candidates, particularly for high-skilled positions.
JobAdder’s findings align with the latest data from SEEK, which also reported a rise in the number of applications per job advertisement.
The underlying issue, however, lies in the mismatch between the qualifications of jobseekers and the demands of the labour market. Many skilled migrants are overqualified for the positions they occupy, with some working in industries such as retail and hospitality—far removed from their areas of expertise.
According to Dr Parkinson, this discrepancy is limiting Australia’s economic potential, as skilled migrants are not being deployed in roles where their expertise is most needed.
The Migration System’s Contribution to Australia’s Productivity Crisis
The Committee for Economic Development of Australia (CEDA) recently pointed to underemployment among skilled migrants as a significant factor behind the country’s productivity issues. A CEDA analysis revealed that many skilled migrants are underpaid and work in jobs below their qualifications.
These findings are supported by Deloitte Access Economics, which found that 44% of permanent migrants in Australia were working in roles that did not match their skill level.
Despite Australia’s migration system being designed to address skill shortages, a significant proportion of skilled migrants are either underemployed or working in low-productivity sectors.
Deloitte’s projections suggest that over 620,000 permanent migrants are currently working below their qualifications. This trend is contributing to Australia’s ongoing productivity slump, as migrant workers are not being utilized to their full potential.
Australia’s migration system, initially designed to address labour shortages and boost economic productivity, is instead exacerbating the issue by failing to match migrants with appropriate job opportunities.
As Dr Parkinson noted, it is not the size of the migration program that matters but the ability to ensure that incoming workers can contribute to their full potential. Until these systemic issues are addressed, Australia will continue to struggle with both labour shortages and poor productivity growth.
