Australia | Lower migration puts a drag on the economy

The lost migration as a result of the pandemic will have lasting and uneven impacts across the economy. Reduced labour market capacity from migrant workers will weigh on employment as well as productive capacity. Industries with high demand for seasonal workers, such as agriculture, are most exposed to shortages in the near term, which will contribute to some fruit and vegetable price inflation next year.

In this research briefing we'll explore in more details the following points and more:

  • Industries relying on temporary migrant workers are exposed to labour shortages: Labour shortages vary across industries and this is directly related to the reliance on
    migrant workers
  • Migrants pay more in taxes than the value of government services they draw: With government finances already feeling the pinch from a sharp increase in stimulus and
    the dampened outlook on tax revenues, the lower level of net overseas migration will also weigh on the government’s budget position in the long run.
  • Migrants have a relatively young age profile: The vast majority of recent migrants and temporary residents are younger than 45 years old. This means that most are net payers of tax and the recent slowdown in migration will weigh on
    government finances.

Topics: Australia, Migration

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