The labour market and the downturn

New OLO article: http://www.onlineopinion.com.au/view.asp?article=8630

The labour market

The geographic unevenness of job losses is one of many worrying developments in the labour market. The overall unemployment rate is forecast to rise above 7 per cent in the coming year, but the impacts will be much more severe for particular groups. Not only will some suburbs and regions suffer badly, but so will many part-time casual workers, unskilled workers, indigenous Australians and migrants with poor English skills. Particular occupations and industries, especially those that have been doing it tough for some time, will be hit much harder than others. Underemployment will rise markedly and the number of "hidden unemployed"--people whom remain outside the workforce because they have given up on finding a job or do not enter the workforce in the first place--will rise much faster than the number who are counted as unemployed.

The challenges for the government are large. More needs to be done to assist those who will be hit hardest to get by, and to help them up-skill, retrain and then find suitable work once the economy is growing again.

Don't turn migrants away

The government's decision to cut the immigration intake by 14 per cent is disappointing. This looks like a populist measure that will generate very few benefits. The impacts of immigration on the Australian labour market have been extensively studied and, contrary to popular opinion, there is no firm evidence to suggest that skilled migrants either steal jobs from locals or reduce wages.

Yet in the name of this populism--and to kowtow to the unions--the government wants to remove part of the boost that migrants give to aggregate demand. Many highly skilled migrants with good ideas and entrepreneurial drive will be turned away, hurting Australia in the long-run. Migration benefits both the migrants, whose lives and opportunities can improve markedly in Australia, and the economy as a whole, helping to make it stronger, more diverse, and more productive.