Op-Ed: Protectionism or self defence? Australia cuts work visas

Let’s hope this isn’t the start of a global shutout of foreign workers. In what might be a massive own goal, or a job saving sidestep, Australia has decided to cut annual skilled migrant intake by 14%. That’s 18,500 people.

The trouble is that the country has a severe skills shortage, and some of those jobs are critically important. There’s no doubt that the move is popular, in a country where the ravens are now saying 10% unemployment is a possibility. People are scared, and the big drop in global trade hasn’t done a lot of good for an export driven nation. The problem is that the glass isn’t half full or half empty. It’s not even a glass. Australia has a regular floating population of workers on visas. It’s more like a plumbing pipe. People sail through and take up the spare spaces. Foreign workers are a large but unrecognized component of the workforce. Australia also has 10% of its own workforce, about a million people, working overseas, at any given moment. So we’re pretty reliant on our own expatriate workforce maintaining the status quo. If they all came back, they’d double unemployment overnight. Meaning we might not want to be looking too protectionist, even if we’re being protectionist. It could backfire, if things get really bad. Visa arrangements are reciprocal, after all. The Daily Telegraph explains how this cutback works:

That means no further visas this year for bricklayers, plumbers, welders, carpenters and metal fitters in the construction and manufacturing industries.

Those to be still allowed in will be professionals in IT, health, medicine and engineering where there is still strong employer demand.

Employers will not be pleased when the measures are announced today, and will warn that the decision could make it harder to get skilled workers when the economy improves.

The trades jobs cutbacks are targeted. The housing industry has had a minor boom thanks to government incentives, so this is domestic tidiness rather than any particular problem with foreign workers. The manufacturing industry is comatose as usual, so nobody’s going to care much what happens there. Thanks to lousy costing, they’re more likely to be looking for coffins than employees. The economy will improve when the global economy improves. It’s a bit early to start whinging about difficulties that don’t yet exist. What’s surprising is that they aren’t considered likely to complain about losing existing workers. Ah well, nobody expects any sort of systemic approach to current facts, do they? Actually, this is really about granting visas. The Australian visa system does allow for employee sponsorship, so there are probably a few holes in this arrangement. The existing guys will probably stay, it’s getting new people that’s likely to be tough. The real problem is likely to be a feedback loop, globally, if countries start setting up barriers like this. If Europe and North America started shutting down work visas, the effects could be serious. If retaliatory trade protectionism takes hold, this could turn into another crash of epic dimensions. Remember, Australia’s in pretty good condition, compared to the rest of the world. If this is a working option for us, what about everyone else? Don’t come out of the fallout shelters just yet.