Closed borders good for unemployed

Employment rising faster than working age population

I’ve been criticised for being too negative about the ABS unemployment figures. But people are actually getting jobs and unemployment is falling.

This story is an edited version of Gareth Hutchens’ story at the ABC. He’s killing it so far as explaining what’s happening to employment and under employment.

Employers have been forced to draw down on the pool of unemployed people to sustain jobs growth. So the number unemployed people falls.

Over the last 18 years, there have only been four occasions in which employment has grown faster than the working-age population. Each time, employers have been forced to draw on the pool of unemployed people to fuel the extra growth in jobs.

We’re living in one of those times now.

The same happened during the mining boom. Employment was increasing faster than the working-age population. When Australia was hit by the global financial crisis, employment growth dropped and unemployment jumped.

In 2002, the Howard Coalition government released the first intergenerational report which raised concerns about Australia’s dwindling birth rate and ageing population. We saw a sharp increase in the immigration intake. That contributed to the higher rate of growth in the working-age population, which stayed at elevated levels after the GFC, and it remained there until borders were closed in March 2020.

When we closed our borders it prevented people from coming to Australia to work and it saw thousands of migrants having to leave Australia, contributing to job vacancies jumping to record highs. With closed borders, employers had little choice but to draw on the local pool of unemployed people to fill job vacancies. This pushed the unemployment rate down hard. It also means Australia’s economy will grow more slowly in coming years.

That’s why some people have called for an aggressive surge in immigration when borders reopen, to get the population’s growth rate back to its pre-COVID path.

The dynamics will change when borders reopen.

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