Australia boosts migration cap to 195,000 to ease skills crisis

Migration has yet to return to pre-pandemic levels, compounding a labour crunch as job vacancies hover near record highs. PHOTO: UNSPLASH

CANBERRA - Australia raised its ceiling on permanent migration in a move that will allow as many as 35,000 more workers to enter the country this financial year as part of an effort to ease worsening labour shortages.

Home Affairs Minister Clare O'Neil announced the raising of migration caps during a speech to the government's Jobs and Skills Summit on Friday, saying it could mean thousands more nurses, engineers and agricultural workers for struggling Australian businesses.

"Our focus is always Australian jobs first," she said. "But the impact of Covid-19 has been so severe that even if we exhaust every other possibility, we will still be many thousands of workers short, at least in the short term."

The changes come into place for the 2022-23 financial year, raising the previous cap of 160,000 permanent migrants from the previous period.

The increase aims to alleviate Australian firms' difficulties in securing employees in a red-hot economy where the jobs market is the tightest in almost half a century.

Unemployment is 3.4 per cent and expected to fall further even as the central bank keeps raising interest rates to cool demand and slow inflation.

Prior to the Covid-19 lockdown in 2020, almost 400,000 international students and 250,000 working holiday-makers were employed each year in Australia, many in hotels and restaurants.

That supply evaporated when the country closed its borders in response to the pandemic and asked temporary residents to leave. Skilled migration similarly suffered.

Open borders

Australia finally reopened its international borders in February. But migration has yet to return to pre-pandemic levels, compounding a labour crunch as job vacancies hover near record highs.

"Despite well-known labour shortages there has not been a significant shift higher in skilled migration," said Belinda Allen, a senior economist at Commonwealth Bank of Australia, the nation's largest lender.

"Other countries including the UK and Canada have also changed visa pathways to permanent residency in order to attract skilled labour and maintained open borders during the pandemic."

The government had previously announced changes to the 2022-23 migration cap with the skilled component rising to the pre-pandemic level of 109,900 from 79,600. From 2022-23, there will also be no ceiling to the number of partner visas granted.

Business leaders at the government's summit have largely supported the move to raise migration levels. Chief executive of the Australian Chamber of Commerce and Industry Andrew McKellar said it was a "significant step forward", while Qantas Airways CEO Alan Joyce told journalists on Friday there was a clear need for skilled migration in Australia.

"We've had two years of not having the skilled migration coming into the country and there's certain areas where we're clearly short of people," he said. BLOOMBERG

Join ST's Telegram channel and get the latest breaking news delivered to you.