Australian Immigration Predicted To Decline In 2021

Australian Immigration Predicted To Decline In 2021

Like everywhere else, the COVID-19 pandemic has significantly impacted the Australian economy. Stay-at-home orders have shuttered shops, leading to widespread retail industry pain. Even in essential sectors, COVID infections (and the fear of COVID infection) has led to increased absenteeism.

And, thanks to the border closure, admittance of most immigrants have stayed. As of now, the government projects only 31,000 expats will arrive in Australia in 2021. This situation presents a massive issue for businesses.

For years, Australian firms have relied on immigration to fill skill gaps. In today’s blog, we’ll speculate on what this will mean for affected enterprises over the coming year.

Immigration Has Played A Major Role In Australia’s Economy

Australia is a nation primarily built by immigrants. Except for those descended from indigenous tribes, every Australian can trace their roots to settlers. As western civilisation took root Down Under, the need for people only increased.

In short, there was more demand for resource development, factories, and shops than there were people to fill them. And so, scores of settlers flocked to Australia to seek opportunity in a strange, faraway land.

Arrivals were robust, averaging 10,000 per year from 1861 through to 1900. Many settlers sought their fortune in the Australian Gold Rushes. Were it not for labourers flooding in from Europe, the UK, America, China, and India, this nation would not have risen to prominence in the 19th century.

We’re not going to sugarcoat the past. Over the years, our government has had its share of immigration controversies (like the “White Australia” policy). But, thanks to the people Australia has brought in, we have become one of the wealthiest nations on Earth.

In the modern era, it’s not just about gold mining (although it does remain a primary industry) anymore. Today, skilled migrants satisfy the need for in-demand skills. From programmers to multilingual translators, arrivals from abroad keep companies growing. They also keep costs reasonable – a key factor for startups minding every penny.

However, all of that has now changed. An invisible enemy now means that, for the foreseeable future, we’ll need to rely more heavily upon ourselves.

The COVID Crisis Turned Off The Overseas Labour Spigot

2020 has been rough from the very start. We started the year wondering if the countrywide bush fires would devour our entire nation. However, as we cowered under blood-red skies and struggled to breathe the air, another crisis was brewing.

For years, we’d grown used to hearing about the latest “killer flu” that would become the next pandemic. SARS came close in 2003, but health officials managed to stop that outbreak. Then, in 2010, the Swine Flu failed to live up to its deadly hype.

So, as rumours of a novel respiratory virus solidified into legit news reports early in 2020, most brushed it off. After all, we’d just survived the world’s worst wildfire. Then, in March, things went from 0 to 100. COVID-19 had found its way to Australia. If the authorities didn’t take decisive action – and fast – the virus would overwhelm the hospitals.

And so, by month’s end, our borders were locked up tight – Australians couldn’t even leave their own country without government permission. Since then, federal and state governments have acted to protect businesses and their employees. The JobKeeper Payment, which provides up to $1,500 per employee per fortnight, is one of the policies that has kept the economy intact.

However, the keyword is “intact”. Our economy is in suspended animation – it’s not exactly thriving at the moment. Against that backdrop, Canberra has drafted strict new regulations on in-migration. Primarily, this measure aims to minimise the importation of the virus. It also recognises the expected lack of demand for overseas talent amid current conditions.

For example, 2018-2019 saw 232,000 arrivals. Taking restrictions and economic forecasts into account, experts project that only 31,000 will arrive by 2021.

The Ongoing Border Closure Will Have Significant Economic Impacts

Many Australian businesses suffered from skill shortages before the pandemic hit. With the border sealed to all but workers deemed “essential,” these enterprises will struggle to move forward with their plans.

How? First and foremost, immigration allows companies to import expertise from overseas. Demand is surging in spaces like blockchain, artificial intelligence, and finance. When there isn’t enough local talent to fill positions, companies can offer work visas to international applicants.

With COVID restrictions in place, most industries won’t be able to bring these people in from abroad. Meanwhile, countries with less stringent immigration policies can snatch away the best people. In the long run, this hurts local firms and our nation as a whole.

Firms that fail to realise their full potential pay fewer taxes over their lifespan. As a result, our government will be unable to build/update as much infrastructure, and public services will suffer. If we borrow more to make up the difference, that means higher taxes for everyone.

Secondly, the labour supply for high-demand positions will tighten significantly. Consequently, this predicament will put upward pressure on salaries/wages. Whilst this is good for consumers, it can also put cash-starved startups in an even tighter bind.

Third, productivity will suffer. Many companies are unable to bring in new employees from abroad, but they also lack the funds to hire locally. So instead, they may choose to pile more work atop the desks of their current employees. Whilst this will increase short-term production, overworked talent will eventually produce less as hours of work increase. Economic uncertainty will keep most in their jobs, but as conditions improve, some may choose to jump ship. When they do, productivity gains will reverse quickly for affected firms.

Some Sectors Will Suffer More Than Others

Whilst closed borders are bad for nearly every industry, some will feel the effects more than others. Travel businesses, especially those in regions like Tropical Queensland, have been decimated. Additionally, the federal government had to bail out the airlines to the tune of $715 million.

However, we think our agriculture industries will most acutely feel the coronavirus Australian visa impact. Farms are heavily dependant on labour provided by temporary foreign workers. From young Canadian holidaymakers to seasonal workers from the Pacific Islands, most are now unavailable due to COVID-19. Most working-age Australians are unaccustomed to working in the bush. To attract then, wages will likely rise. Because of these pressures, marginal farms may go under, whilst survivors will probably pass on their added costs to consumers.

Even some finance niches will suffer over the coming year. With fewer migrant workers employed compared to last year, remittances will plummet. This development is terrible news for money transfer services. With drastically less volume going through these businesses, profits will tank. How bad will it get? Internationally, the World Bank is projecting an 110 billion USD drop in remittance flows in 2020. Even a fraction of that loss would be devastating for money transfer agents across Australia.

The Border Issue Needs To Be Resolved Soon

Don’t misunderstand us – the health and welfare of Australians should always be top priority. However, if a COVID vaccine doesn’t come soon, many businesses across Australia could fail. Others could lose out on opportunities to overseas competitors, thereby limiting their long-term economic potential.

We may have to rethink Canberra’s border clampdown soon. From entry quarantines to bubbling with responsible nations, there are ways to reopen our borders without jeopardising public health.