26 January 2010

Migration stimulated the Australian economy says demographer

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The arrival of almost 300,000 migrants and temporary workers to Australia last year is considered one contributor to the country’s superior economic performance.

Australian immigration

The Australian economy gained from the influx of temporary workers and migrants, new research shows.

The spending by these new arrivals stimulated the Australian economy by at least as much as the Rudd government's first cash rebate to individuals, and that migrants created increased demand for houses, cars, health services and finance, and therefore helped keep the economy moving.

The temporary migrant labour force also holds about 7.5 per cent of all jobs in Australia, a flexibility that was crucial to help the Australian economy negotiate the global recession with only a small rise in unemployment to 5.8 per cent.

While Australian Immigration wound back the skilled migration program, reducing the number of visas from 133,000 to 108,000, the net flow of migrants still registered a 33 per cent jump to 285,700 people. This result was mainly because of the increase in overseas nationals coming to study in Australia.

New research by Bruce Chapman at Australian National University shows that migrants create more jobs during a downturn in an economy than during a boom.

Past research has shown that although migrants compete for existing jobs, their demand for goods and services create job vacancies in other areas. These two effects even out over time, with the jobs created equalling the jobs taken.

But Chapman says his research shows the rise in vacancies generates more new employment during a recession than during a boom, when labour is in short supply.

Australian National University demographer Peter McDonald says migrant’s most important contribution during a downturn is the flexibility they provide to the labour force.

Mr McDonald estimates that temporary migrants now make up 70 per cent of total migration to Australia, with about 830,000 temporary migrants in the labour force, including 300,000 New Zealanders and 250,000 full-time overseas students.

He says that temporary migrants move in and out of the work force more readily than permanent migrants or the resident population, providing a “buffer” that absorbs the impact of short-term changes to labour demand.

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