Morrison’s 1.3 million jobs promise depends on net migration

Prime Minister Scott Morrison has announced he will create 1.3 million jobs over five years — but how would that be delivered?

He refers to ‘the Coalition’s record of creating 1.9 million new jobs since it was elected’ and his ‘proven plans to deliver these new 1.3 million jobs’.

But nowhere in his press release does Morrison refer to the level of net migration since the Coalition was elected – well over 1.5 million – or to the boom in people doing two or more jobs. With negative or low wage growth, for many people, one job is not enough to get by.

For example, in 2018-19 there were 14.1 million people (including owner-managers) who held a job at any time during the year. They had 20.1 million job relationships. Since 2014-15, this had increased from 13.1 million employed people holding 18.4 million jobs.

In other words, the number of employed people over those four years increased by around 1 million while the number of jobs increased by 1.5 million.

Of the 14.1 million people who held a job during 2018-19, 1.7 million held two concurrent jobs; 0.46 million held three concurrent jobs; and 0.2 million held four or more concurrent jobs.

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Note that the monthly labour force statistics for February 2022 indicate only 13.72 million people were employed and 0.563 million people were unemployed. The lower number of employed people in the monthly labour force series appears to be due to some people only being employed in some months and not other months.

I have not been able to establish which of these series of data the Government is using to get to its target of creating 1.3 million jobs over the next five years but in order to get as big a number as possible, the Government is likely to be using the total number of job relationships in each year. That is 20.1 million in 2018-19.

Over the next five years, the Budget forecast is for total employment to increase by 1.5% in 2022-23 and then 1% per annum after that. That is likely to relate to the monthly labour force series.

The unemployment rate is forecast in the Budget to fall to 3.75% until 2024-25 and then return to 4% — despite Morrison’s jobs bluster, no improvement on the current rate.

The participation rate is forecast to remain at 66.5% — significantly below that of NZ, for example, which has a participation rate of 71%.

That means the number of people who are unemployed is actually forecast to increase despite the forecast creation of 1.3 million jobs.

It should be noted that over the next five years, the number of baby boomers retiring will accelerate further as more reach the retirement age of 67 or the superannuation pension age of 60 when a retiree can receive a superannuation pension tax-free.

Since 2008-09, the increase in the number of retirees in the population had already been accelerating to almost 90,000 per annum (see Chart 1).

That figure is, of course, net of the number of retirees who die each year.

The total net number of retirees in the population will grow faster over the next five years.

So if the number of unemployed people is forecast to go up, the participation rate is flat and the number of retirees will grow even faster (and almost as fast as the number of new entrants to the labour market from natural increase), where will the people come from to create Morrison’s 1.3 million jobs?

There are only two ways this can happen.

The Government may be assuming even more people will take up two or more jobs either concurrently or at any time during the year. Morrison’s ‘proven plan’ does not indicate how many more people are forecast to take up two or more jobs at any time during the year.

But the bulk of the additional jobs will likely be taken up by a higher level of net migration.

In this regard, the Government does provide a little more detail.

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The 2022 Budget forecasts net migration in 2022-23 rising to 180,000; 213,000 in 2023-24 and 235,000 per annum thereafter.

That means total net migration over the next five years of 1.1 million.

There is nothing wrong with using net migration to slow the rate of ageing and grow the economy and the labour force against the background of most developed nations with much older and soon to be shrinking populations.

The key will be the type of jobs the new migrants will be taking up.

The problems arise if the Government intends to continue its intensifying focus on low skill, low pay “guest workers” such as the Pacific Island Worker Visa and the new Agriculture Visa, as well as encouraging students to work multiple jobs rather than study and working holidaymakers to work rather than holiday.

That would increase competition for unsecure, casual, gig, low skill jobs on low pay — not a problem in the current strong labour market but what of the future?

The low skill, low pay approach the Government has adopted is the exact reverse of Australia’s long-standing strategy of high skill migration.