Modern Australia is a migrant nation. With nearly one-in-four residents born overseas, and half of people having an overseas-born parent, migration plays a huge role in shaping our society, culture and economy.
Australia’s largest source of permanent migrants is skilled migration. Each year, the Commonwealth allocates ‘skill stream’ places within the Migration Program, aimed at attracting migrants who will make a significant economic contribution and/or fill skills shortage gaps in the workforce.
Of the 3 million permanent migrants who have arrived in Australia since 2000, 59% - or 1.76 million people - came via the skilled stream. Nearly all skilled migrants are working age.
How do these skilled migrants land once they arrive in Australia and join the labour force? New data released this month by the Australian Bureau of Statistics (ABS) illuminates the significant contribution of permanent skilled migrants to the Australian economy.
Ai Group Research & Economics have crunched the numbers for 2021. Our analysis has found that Australia’s permanent skilled migrants are highly educated, employed, healthy and fiscally valuable – indeed, more so than the rest of the Australian population.
Overall, migrants have very strong labour market participation, better than the broader Australian population. 81.2 % of permanent skilled migrants over the age of 15 are employed, significantly higher than 61.5% for the Australian population. The share of skilled migrants not in the labour force is also much lower (15.1% vs 35.2%).
The unemployment rate is slightly higher among permanent skilled migrants than the rest of Australian population (3.8% vs 3.3%). Several factors likely contribute to migrant’s slightly higher unemployment rate, including skills recognition for overseas qualifications and relevant work experience.
Strong labour market participation reflects skilled migrants extremely high educational levels.
71.6% of skilled migrants over 15 years hold a diploma or higher qualification, compared to only 35.6% of the same Australian population. Skilled migrants are almost twice as likely to hold a diploma or bachelor degree, and three times more likely to hold a postgraduate degree.
This reflects the structure of the skills stream program, which places a premium on higher educational qualifications. It also reveals that skilled migrants provide a very strong infusion of education into the Australian workforce, especially at the higher end of the spectrum.
While skilled migrants are slightly more likely to be unemployed, they are also less likely to rely on unemployment benefits.
7.0% of recent skilled migrants received unemployment benefits during 2021, with the rate rising only marginally to 7.6% for migrants with ten years since arrival. These figures compare very favourably to a rate of 12.5% for the broader Australian population.
Lower utilisation of unemployment benefits – which typically occurs only during longer periods of unemployment – is an indicator of the ability to skilled migrants to re-engage with the labour market after job loss.
These figures are likely elevated above normal for both migrant and non-migrant groups, due to higher unemployment occurring with the pandemic disruptions of 2021.
An individual’s health status can be measured in a large variety of ways. Therefore, a useful proxy indicator of health status is utilisation rates for Medicare and PBS (both of which are available to permanent migrants).
The data shows that permanent skilled migrants are likely of better health status than the Australian population, with lower usage annual of both Medicare and PBS benefits – even for migrants ten years since arrival.
This likely reflects the younger age and higher educational level of permanent skilled migrants, both of which are correlates of good health. It also contributes to their strong employment outcomes, with fewer health burdens constraining labour market participation.
With permanent migrants having above-average employment, education and health, it is unsurprisingly they make a strong contribution to the fiscal position of Australian governments.
Modelling by Commonwealth Treasury shows that permanent skilled migrants add $198,000 per person to the fiscal position of Australian governments over their lifetime, with benefits for both the Commonwealth and states. By contrast, the Australian population reduces the fiscal position by $85,000 per person, with the costs borne by the Commonwealth.
This reflects the fact skilled migrants make strong tax contributions through their workforce participation but claim relatively fewer transfer payments. Skilled migrants thus play a very critical role in contributing to Australian fiscal sustainability, particularly at the federal level.
Dr Jeffrey Wilson is Ai Group's Director of Research and Economics. He leads our economics team, and provides strategic direction in developing the research program to support our advocacy, service delivery and policy activities. He specialises in international economic policy, with a focus on how trade and investment shape the Australian business environment.