Economic growth needed to employ immigrants?

From the October 2008 SPA Newsletter:

Economic growth needed to employ immigrants

For some time now we have been told that we need immigrants to this country to fill the enormous number of job vacancies left unfilled. However, it seems we have been fed ‘spin’ by the business leaders and economic consultants.

The story line goes that the gowth in immigration from 171,000 in 2007-08 to a forecast 203,000 in 2008-09 is required to support the economy. The benefits to the country have been modelled and mount into the billions of dollars over 20 years. [Note: these "benefits" are dubious as they do not factor in infrastructure and environmental costs incurred by immigration. Even if one ignores these costs, the "benefits" of immigration are trivial in per capita terms.]

Imagine my surprise when listening to an interview by Fran Kelly (FK) with Shane Oliver [chief economist at AMP Capital Investors] the other day, discussing the economy and in particular the impact of the latest interest rate cut by the Reserve Bank and the expected slowdown in the ABS GDP figures for the April-June quarter on employment. Here we have Shane Oliver telling us that now we have to maintain a high level of economic growth (3.5%) to enable the country to provide jobs to employ the large number of immigrants we have coming into the country. Its the ‘smartest’ about face I think I have ever seen.

FK: If growth has slowed further, if we find that out in the National Accounts today, what will that mean for unemployment?

SO: Well, the bottom line is that Australia needs to have (GDP) growth of between 3 to 31/2% each year to absorb the new entrants to the labour force and those new entrants are coming from natural growth in the population and pretty high immigration levels. So if we’ve got (GDP) growth running way below that and through the first half of this year average growth will be something of the order of about 2% if you average the March and June quarters, then that suggests that unemployment will start to rise and in a year’s time I think we’ll see unemployment well above 5%, maybe 51/2% and even though the labour force figures don’t yet show that, all the labour force figures show is a slowdown in employment growth. There is a lot of anecdotal evidence out there with a whole range of companies over the last couple of months announcing layoffs including Holden, Ford, IAG, Qantas, National Australia Bank, and the list goes on, so I think we will see rising unemployment.

(ABC Radio National “Breakfast” with Fran Kelly (FK), 3rd September 2008)

Read full interview

This blind commitment to maintaining high immigration levels irrespective of labour market conditions simply demonstrates how Australia's immigration program has become divorced from serving the needs of Australia and its existing population. It is an example of immigration for immigration's sake.

As Geoffrey Blainey put it, "an immigration system set up originally to serve the nation has been undermined. Now it is the nation that exists to serve the immigrant."