Do we fill job vacancies with pensioners or migrants?

Article by Cian Hussey. 19 August 2022.

Article by Cian Hussey courtesy of the Spectator Australia.

The Albanese government is demonstrating a truism in Australian politics: no matter what party you vote for, you’ll get rapid population growth underpinned by migration.

It was only in December last year that Albanese indicated that Labor would not support a return to high levels of net overseas migration in the wake of the pandemic. He refused to back the Coalition’s plans to ramp migration up to 160,000 people per year, saying that ‘migration has always played an important role in the economy and will continue to in the recovery, but it’s important we take this opportunity to get the mix right’.

It doesn’t sound like much, but for a mainstream Australian politician to even appear to engage in the migration debate was significant.

According to reports this week, Albanese now wants to increase the migration intake to between 180,000 and 200,000 per year.

Migration is not a panacea. The healthcare and social assistance industry is currently facing the largest job vacancies, with about 70,000 across the country. But according to figures provided to The Australian Financial Review, only 438 of the 60,000 permanent visa applications the government is fast-tracking belong to health professionals.

A tiny 32 are registered aged care nurses at a time when age care providers are reporting that one in four shifts are going unfilled.

Additionally, there will likely be some push back to higher migration from unions, with ACTU Secretary Sally McManus reportedly saying that unions will resist a return to the ‘open-ended’ skilled visa system of the past.

While Australia is facing the highest number of job vacancies on record, at close to 500,000, and with unemployment at a 50-year low, something has to give. According to the ABS, a quarter of businesses are struggling with worker shortages, constraining their productive capacity.

The September Jobs and Skills Summit presents an opportunity to address this worker crisis. An optimist might hope that a policy other than increased migration would come of the two-day gathering.

One of the most obvious policies that will undoubtably be discussed is the push to allow pensioners and veterans with limited savings to earn more work income without their pension being affected. The Coalition, after the election, announced a policy of increasing the Work Bonus which would allow for $790 per fortnight of earned income before the pension starts to be withdrawn at 50c in the dollar, up from the current threshold of $490.

Data from the Department of Social Services shows that only 3 per cent of pensioners choose to work at the moment, no doubt due to the punishing system of a 50 per cent withdrawal rate combined with income tax for those who choose to work more than one day per week.

In New Zealand, where pensioners simply pay income tax on all their income like anyone else, the participation rate among pensioners is around 25 per cent.

A recent survey from National Seniors Australia found that 20 per cent of pensioners would consider re-entering paid work, in addition to the 16 per cent who already have. This implies that an additional 510,000 pensioners could join the workforce if the onerous tax and paperwork requirements were eliminated.

Politicians are well aware of the desire of many pensioners to continue working and the experience and hard work they can offer. In the lead-up to the federal election in May, politicians gladly accepted countless hours of volunteer work from pensioners.

Businesses in every state and territory would welcome these additional workers who are justifiably unwilling to work if they’re being punished to do so.

Cian Hussey is an Adjunct Fellow at the Institute of Public Affairs.