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Occupational targeting in Australia’s skilled migration program. Mark Cully Chief Economist Centre for the Economics of Education and Training Melbourne, 30 October 2009. Outline and Context. Migration involves a two-stage selection process

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slide1

Occupational targeting in Australia’s skilled migration program

Mark Cully

Chief Economist

Centre for the Economics of Education and Training

Melbourne, 30 October 2009

slide2

Outline and Context

  • Migration involves a two-stage selection process
    • prospective migrants choose to apply for entry to Australia
    • government sets choice rules for sponsors (employers and State governments) and choose independent applicants
  • Can test the effectiveness of government rules by comparing migration outcomes in several ways to control for rule differences
    • for example, sponsored vs independent vs free movement of labour
  • Purpose here is to test effectiveness of occupational targeting rules in selecting permanent skilled migrants. This work forms part of the Government’s review of the Migration Occupations in Demand List.
  • Effectiveness assessed by:
    • how are migrant skills deployed
    • migrant contribution to population, participation and productivity
slide3

SLIDE 1

This is Australia’s first recession where migrant inflows have risen

slide4

SLIDE 2

Migrant flows are dominated by temporary long-stay movements

and free movement

Net Overseas Migration, 2008-2009

OUTFLOW

INFLOW

slide5

SLIDE 3

Australia has four broad categories of skilled migration

Sponsored

Not Sponsored

Employer Nomination Scheme (employer)

Regional Sponsored Migration Scheme (Govt)

Business Skills (Self)

Not points tested

Capped (dependents count towards cap)

May be onshore or offshore

Priority processing

Skilled Independent

Points tested

Capped (dependents count towards cap)

May be onshore or offshore

Order of processing priority: CSL,

MODL and Remaining applicants

Permanent Residence

The broad categories of skilled migration in Australia

Skilled Graduate

Not points tested

Uncapped

Onshore only

Temporary long-stay business

Not points tested

Uncapped

May be onshore or offshore

Temporary Residence

slide6

SLIDE 4

Most skilled visa grants in 2008-09 went to temporary migrants. Almost half of visa grants went to people already in Australia.

Of the 4 broad categories of skilled migration, temporary sponsored was the largest in 2008-09

Among primary applicants, a majority were onshore in Australia when granted a visa.

Accompanying dependents count in total, and made up half of skilled visa grants in 2008-09. They have full working rights in Australia.

slide7

SLIDE 5

Australia’s points test places most weight on occupational targeting

Up to 115 points are available in the three threshold criteria.

The current pass mark for an independent skilled migrant is 120.

There are between 40 to 80 points for occupation.

Threshold

criteria

Bonus

factors

slide8

SLIDE 6

Australia uses three occupational lists to target independent skilled migrants with particular skills

Skilled Occupation List

(SOL)

Migration Occupations in Demand List

(MODL)

Critical Skills List

(CSL)

60 point occupations

50 point occupations

40 point occupations

slide9

SLIDE 7

The Migration Occupations in Demand List responds to the economic cycle, but with a lag

Decreasing unemployment

MODL identifies occupations in national skill shortage

The number of occupations on the MODL is inversely related (with a lag) with Australia’s unemployment rate.

Increasing number of occupations on the MODL

slide10

SLIDE 8

Applications for temporary skilled sponsored visas closely track advertised job vacancies

This spike is attributable to applicants lodging prior to the 1 July 2007 revision of the English language requirements

This migration flow is pro-cyclical, serves as an automatic stabiliser in times of labour market adjustment

slide11

SLIDE 9

In 2007-08, 2 out of 3 independent skilled visas were granted to applicants who nominated an occupation on the MODL

The proportion of applicants using the MODL has increased from 24 per cent in 2004-2005, to 63 per cent in 2007-2008.

However, MODL points may not be needed to pass points test. We estimate that around one in ten onshore applicants with MODL points did not require them to pass. For offshore applicants, the proportion is much lower, at around one in four.

slide12

SLIDE 10

Sponsored migrants are most likely to make use of their skills.

The MODL is highly effective in occupational targeting.

  • 18 months after arrival:
  • almost 4 in 5 sponsored skilled migrants in a skilled job
  • half of those nominating a MODL occupation were employed in the exact same occupation
  • only 2 in 5 of those with lower occupational points were in a skilled job
slide13

SLIDE 11

Is Australia’s skilled migration program succeeding in bringing in younger migrants, who work more and earn more?

Are they earning more?

(some are, some aren’t)

Are they younger?

(yes, very much so)

NP

G

NP

60

G

M

Are a greater proportion in full time work?

(yes, very much so)

NZ

<60

F

NZ

<60

60

F

M

NP

M

<60

60

NZ

G

F

(F) Family entrants

(NP) No points test

(M) MODL occupation

(60) 60 point non-MODL occupation

(<60) Less than 60 point occupation

(NZ) New Zealand Born

(G) General population

slide14

SLIDE 12

Tighter occupational targeting would have labour market benefits

Skills Australia has suggested an approach to workforce planning that identifies priority occupations for which Australia needs to guarantee a future supply.

Targeting these occupations for independent migrants is likely to have participation and productivity benefits relative to the status quo.

slide15

Summary Messages

  • Australia’s processes for selecting independent skilled migrants are, at an aggregate level, effective
    • especially relative to non-selected migrants (family stream and NZers)
    • but less effective than when sponsors choose
  • The role of specialised assessing authorities is a complementary mechanism in identifying independent skilled migrants who have the skills and competence to operate in the Australian labour market
  • Occupational targeting (through a MODL style instrument) is effective for meeting specific skills in demand, but sponsored migration is more effective in putting skills to use