Australia’s Immigration Minister, Chris Evans, has said that the nation will be reducing the number of skilled migrants visas by 18,500. This will be the first of such cuts in 10 years as the domestic labor market weakens to 5 year highs. Such a move will shrink the intake of skilled visas by 14% to 115,000.
In February, the unemployment rate leapt to levels last seen in Oct. 2004. The figure jumped by 0.4% points to 5.2% after economists had expected the figure to print to only 5.0%. The second month of the year also saw 53.8K full-time jobs converted into 55.6K part-time ones, signaling deeper labor-market weakness.
Evans told the Australian Broadcasting Corp. radio station that “we don’t want people coming in who are going to compete with Australians for limited jobs.”
The actions taken by the country’s immigration board may bolster inflation. In the final quarter of 2008, general consumer prices actually fell by -0.3%; the country felt the effects of deflation. Now, since there will be less workers available to meet the labor needs of job providers, employers will need to bid up the price of labor. As this happens the extra cost of labor is likely to be transferred to the cost of goods sold to the public. Hence inflation may rise.
This may sound good in theory, but since the visa cuts will only apply to skilled workers, the effect of such higher prices may only be felt in those goods which employ such people. Such goods may include electronics, research and development, and financial services.
Thus, the visa cuts might not actually help the common Australian, but instead aid those who are highly educated and are hence well-off on a long-term basis.