Covid and Immigration in Australia – How have previous recessions affected migration

This short paper outlines the key issues for migration policy in the context of Australia’s labour market including:
• The labour market outcomes of migrants, including the occupations in which temporary migrants and Australian workers are engaged;
• Historical evidence of the positive impacts that migrants have had on the Australian economy, citing CEDA studies and other research;
• The impact of recessions on migration;
• The inadequacy of financial support for temporary migrants to date compared to other groups of workers and the support provided in other advanced economies;
• The opportunities that have arisen for Australia in light of global trends towards more restrictive migration policy in the longer term.

How have previous recessions affected migration?

After 29 years of uninterrupted economic growth, the COVID-19 pandemic will see Australia enter a recession this year with a substantial deterioration in labour market conditions already underway.

Acting Minister for Immigration, Citizenship, and Migrant Services, Alan Tudge, recently noted that temporary migration is a demand driven system – that migrants will come as long as there are employers who will employ them. Migration is a pro-cyclical phenomenon, meaning that migration is high during periods of strong economic growth in the destination country. When there’s an economic downturn, demand for overseas skills is expected to fall. In its Shaping the Nation report, Treasury noted that Australia takes in a higher number of migrants when the economy is doing well, and fewer migrants when the economy is weak. Economic growth preceded periods of higher migration growth.

Research demonstrates that migrants generally return to their home country in periods of economic downturn. This crisis is different, as many countries have shut down their borders in response to the crisis and are still yet to allow even citizens to return.
Migrants are more likely to lose their employment in a crisis due to a number of factors including that they:
• Disproportionately work in occupations that are vulnerable to job losses in economic downturns;
• Are more likely to work in cyclical industries and occupations;
• Are more disadvantaged by last-in first-out firing approaches;
• Are more likely to work in insecure employment (labour hire contracts, or day labour arrangements).

Recent evidence on the impacts of migration during economic downturns in Australia is limited given our long unbroken record of economic growth. Temporary migration has also grown in importance since the late 1990s, well after Australia’s most recent recessions in the 80s and 90s. Evidence on migration during previous economic downturns in the United Kingdom and Europe suggests that migration falls when unemployment rises but only for a limited period and it tends to pick up before employment recovers.

While less relevant today, there is also research on the economic impact of people movement during the Great Depression. Between 1929 and 1934, during the Great Depression, the US repatriated almost 400,000 Mexican migrants because of concerns about the employment of US workers. A study that investigated this program found that it reduced the employment opportunities of US workers and led to compositional change in the various labour markets.

Chosen excerpts by Job Market Monitor. Read the whole story @ Immigration and COVID-19