Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Sunday, 21 February 2016

Are foreigners taking our jobs?

"Foreigners are taking our jobs!"

Foreigners are taking our jobs!

A frequent lament of anti-immigration lobbyists, to be sure, and it was also a very common refrain where I grew up in Yorkshire, in direct reaction to high rates of West Indian and then Pakistani immigration (migration is still a hot topic in Europe today).

But is it actually true in Australia's case?

The government doesn't think so, and the numbers seem to back them up.

Henry Sherrell took an insightful look at this potentially thorny issue on the previously informative Australian Government migration blog, which alas no longer provides such useful content or engaging commentary. 

Note that this research was written by an immigration expert - Sherell being formerly employed by both the migration council and the Department of Immigration and Border Protection (DIBP) - rather than by anyone with an onbvious immigration agenda to push.

His first chart copied below shows the rate of 457 visa lodgements indexed against the ANZ job advertisement series (which I also take a look at on this blog monthly).

Source: Migration Blog

The figures clearly show that as job positions become available, businesses look to overseas hires to fill positions when there are not enough skilled Aussies to fill their vacancies.

Crucially, the opposite also holds true: when vacancies are falling, businesses recruit fewer overseas hires. 

Incidentally, the anomalous spike in the lodged index aboved was caused by nothing other than the introduction of a new English language requirement for the 457 visa program, but notably the data series soon corrected itself in time.

Sherell's second chart below shows the relationship between the unemployment rate and the rate of 457 visa lodgements, which also reveals that businesses quite rightly hire Aussies ahead of overseas workers where they can. 

Thus, when unemployment is low, businesses seek to hire from overseas, and vice-versa.

Source: Migration Blog

Of course, businesses are not driven by purely altruistic motives! They seldom are. The primary driver of behaviour is, of course, something more much simple: cost.

Real world experience

Harking back to my own experience in the Australian workforce certainly supports the above arguments. They ring true.

When the economy was humming along, professional practice firms were forced to look overseas in part due to a dearth of locally available talent (there were after all a great many Australians working in financial services firms in London and elsewhere back then).

Flying in foreign workers from Joburg or London certainly was not the first choice or port of call, since hiring staff locally is far easier, in terms of administrative effort, human resources time, and actual dollar cost (visa fees, relocation allowances, accommodation allowances etc. etc.).

Summarily, when the economy was firing, there was a high rate of recruitment on 457 visas. Conversely when the economy took a turn for the worse, those employed under 457 visa arrangements were the first to be coaxed towards the exit.

The system is arguably not perfect.

The Roy Hill project, where a small number foreign workers were approved to work in remote Western Australia, is seemingly forever to be cited as "evidence" of systemic failure, and whether we are training enough people locally to fill future skill requirements at an acceptably high level is an important argument for another day.

However, the figures show that foreigners are hardly taking our jobs in preference to locally trained employees.

Instead businesses look to promote local talent first, because it is much more straightforward and considerably cheaper for them to do so.

And indeed, immigration rates have slowed in sympathy with the sluggish economy over the past couple of years, which is exactly what should have happened.

The latest DIBP forecasts project a steady increase in forecast net immigration on 457 visas through to the end of the decade, but the growth will be comfortably overshadowed by the driver of the next demographic boom - international students - by a factor of four.


A huge week ahead, with capex, wages price index, detailed labour force, and construction work done data to look forward to!

Expecting to see wage price growth at around +2.3 per cent for the year, and another significant quarterly decline in capital expenditure.

Perhaps of most interest will be the result of surveys for expected capital expenditure for 2015/16 (Estimate 5; expecting to see $120 billion) and the first estimate for 2016/7 (Estimate 1; probably under $90 billion).

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