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18 July 2011

Companies hire engineers not yet needed to avoid having to compete for skills later in the year, while a report argues that cutting migration will not hurt the resource industries.

According to a report in today’s Australian Financial Review, mining and energy companies are hiring workers (including geologist and engineers) they do not yet need to avoid having to compete for labour later in the year. Concern is that Australia which is already struggling to manage an economy running at two different speeds is becoming burdened with expensive but idle workers who are set to lower the country’s already poor productivity performance as they wait to work, pushing inflation higher as extra income washes through the economy but with no extra production. It will also hurt industries that will have to raise wages to compete with the resources sector, including the commercial construction industry which remains in a depressed state.

Meanwhile a report by Monash University’s Centre for Population argues that the migration intake should be halved and better targeted or the mining boom’s wealth will be “squandered” on building in Sydney and Melbourne. Apparently Urban Research found that if net overseas migration were cut to 90,000 people a year, the workforce would still expand, contrary to business advocates for rising migration. The report said government needs a “better-targeted” policy that directs workers to skills-short sectors such as mining rather than the status quo, which is mainly made up of a flow of casual workers into semi-skilled jobs in the health and welfare sectors in big cities. The demand for these services, the report says, is being fuelled by migration-linked population growth. The report argues that cutting migration will not hurt the resource industries because most migrants settle in the cities and are employed in health and other service industries. Rather funds saved through a reduced scale of city building could be used for “training and investing in knowledge intensive industries”, in a long-term wealth-building strategy it likened to the sovereign wealth fund started by the Norwegian government using funds generated by its North Sea oil assets.

Excerpts from the Australian Financial Review (www.afr.com) 18 July 2011