Skilled workers are in high demand, so what can Australia do to lure them to our shores?

If you’re a skilled worker, the world really is your oyster right now.

The global pandemic has caused widespread labour shortages, and demand for skilled staff is at its peak.

In fact, according to the NAB quarterly survey, a record 85% of Australia’s businesses report staff shortages, which are holding back their ability to operate at full capacity.

Further, a recent survey by Australia’s Information Industry Association found that 75% of technology companies are concerned skills shortages will be a barrier to expand their businesses.

The workforce shortage means skilled employees are in hot demand and Australia needs to remain highly competitive if we are to fill the gaps so crucial to the prosperity of the nation.

And, the skills we need are wide and diverse.

From aged care workers to locksmiths, electricians to aviation engineers, pharmacists to ICT project managers, the National Skills Commission’s most recent priority skills list is rich with career diversity.

Consequently, plugging Australia’s skill supply gap isn’t a simple fix.

Government measures including the targeting of apprenticeship incentives and training funding go some way, but these levers can take years to come to fruition.

Skilled migration can be used as a rapid lever to plug holes when there is a shortfall in the local talent pool, but Australia needs good policies to remain an attractive and competitive global player.

Using Switzerland as a case study, new research from the Monash Business School found that economic opportunities shape the location choices of the highly skilled more than anything else.

Still, policy settings are crucial to accommodate the immigrants’ sorting.

Exploiting the recent advent of ICT investment starting in the 80s and 90s, we found that regions exposed to automation and computerisation attracted much more highly skilled immigrants than otherwise similar regions. In these regions, their skills are in greatest demand and incomes are highest.

When Switzerland was required by the European Union to lift all immigration restrictions, we found that, although opening the borders and making arrival easier increased the total inflow of immigrants from EU countries (relative to those from other countries), it did not affect the relative size of different education groups at the national level.

Contrary to fears expressed in the public debate, the opening of borders in Switzerland did not lead to a massive influx of lower-educated immigrants, nor did it lower the response of immigrants.

If anything, it allowed regions with strong ICT-induced demand for skills to attract even larger numbers of highly educated foreign workers. In other words, the market works and little government intervention is required when people who come with the right skills move to the areas where they are needed most.

In light of these findings, recent attempts of the Australian government to encourage people to move to rural or declining areas through the use of visas linked to the location, might not be enough to encourage highly skilled migrants.

The Australian skilled migration system actually creates a lot of barriers to migration; Australian policies are highly regulated, visas are given by skills and constrain the regions immigrants can work in.

As our evidence from Switzerland shows, this might in fact deter and even reject people with skills that are in great need in a highly competitive global market.

Our research suggests that we can fill more skilled demand if the market solves the allocation, rather than the government.

People with the skills know their value in the market, and they are looking to exploit them, to make hay while the sun shines.

Surprisingly in this current election campaign, there has been little if any discussion from any political party that offers a real solution to plug the gaps in our leaking workforce. Whoever forms thegGovernment must make addressing labour shortages a priority.