Skilled migration

3 P's Framework

A framework comprising Population, Participation, and Productivity to analyze labor market dynamics.

Population

Measured by the amount of working age population who are employed.

Participation

Measured by average hours worked per working person aged over 15.

Productivity

Measured by average output per unit of input.

Expected population growth decline (2020-2060)

From 1.3% per annum average to 0.8% per annum average due to falling fertility rate and border closure during COVID.

Ageing population in Australia by 2060

65+ age group expected to make up 23% of the population (8.9 million people).

Impact of slowing population growth and ageing

Increased labor costs, decreased productivity, skills shortages, government financial pressure.

Factors influencing population

Fertility rate, life expectancy, and net overseas migration.

Decline in participation rates

Accelerates decline in economic growth and increases labor costs due to poor labor supply.

Lowered productivity rates

Due to declining competition, high regulatory burdens, and underinvestment in technology.

Target skilled migration impact

Improves labor market dynamics affecting Population, Participation, and Productivity.

Short term impact of higher population on AD

Can worsen capacity constraints but is offset by long-term efficiency gains.

Role of immigration on productive capacity

Improves productive capacity and aggregate supply (AS) by allowing firms to increase output.

International competitiveness enhancement

Lower production costs lead to improved international competitiveness.

Demand inflation

Short term increase in consumer demand leading to demand-pull inflation.

Cost inflation

Linked to higher labor availability and alleviated capacity constraints by new migrants.

Demand view on economic growth

Higher aggregate demand encourages national output and economic growth.

Supply view on economic growth

Skilled migration increases sustainable economic growth by meeting higher demands.

Full employment implications

Downward pressure on unemployment and skilled migrants do not take Australian jobs.

Benefits of skilled migration on living standards

Increased diversity, economic growth, and improvement in global standing.

Costs of skilled migration

Strain on resources, potential shortages, and pressure on social cohesion.