Measuring migrants’ contribution to the Australian labour market

Migrants make substantial contributions to the Australian labour market, driving economic growth, addressing skill shortages, and enhancing workforce diversity. Migrants fill critical roles across key industries such as healthcare, construction, information technology, and education, addressing skills shortages and enhancing the nation's productivity.

Longer-term migrants, having successfully navigated initial challenges like language proficiency and qualification recognition, demonstrate very strong labour market outcomes. Compared to the background Australian population: They are more likely to be engaged in the labour force, more likely to be in full-time work, more likely to hold higher qualifications, and more likely to be in higher paying industries and occupations.

This Research Note explores how migrants shape the Australian labour market through their skills, diversity, and employment patterns. Using ABS migrant census 2021 microdata, it examines the industries where migrants are most likely to be employed, the occupations and sectors they predominantly engage in, and how their educational qualifications and gender distribution influence their employment status.

The analysis shows that long-term migrants in Australia contribute significantly through higher employment, with variations across states and industries shaped by education, skills, and gender, while challenges such as skill recognition and caregiving responsibilities particularly affect migrant women.

What role do migrants play in the Australian labour market?

Long-term migrants are generally more integrated into the Australian labour market and have higher employment rates compared to recent migrants. People who have migrated to Australia since 2000 account for around one-in-six (16.3%) members of the Australian workforce. As this group accounts for 10.7% of the population, it shows that migrants have higher labour force participation than the background population.

The contribution of migration to Australia's workforce is also cumulative, accreting over many years of migration inflows. If we look at "recent migrants" (those who arrived between 2018 and 2021), their share of the national workforce is a much lower 1%. This shows that in the short-run, migration only makes a relatively minor impact on the labour market. It is only over the long term that the contribution of migration fully reveals itself.

However, the utilisation of migrants across Australia varies considerably by state, shaped by economic structures, migration policies, and the availability of opportunities in key industries:

• In Western Australia (WA) migrants account for a large 21.5% share of the employed workforce. WA is an attractive destination for migrants due to its strong mining sector
• Victoria (17.6%) and NSW (16.4%) also show strong utilisation of migrants. The state's diversified economies, spanning sectors such as healthcare, education and manufacturing, supports higher integration rates for migrants into the workforce.
• South Australia (13.7%) and Queensland (13%) have migrant utilisation below the national average. This reflects the smaller size of the labour market and the less diverse range of industries outside the states' main urban centres.
• Tasmania, with the smallest migrant workforce, sees only 1% of its migrants in employment. In these regions, migrants often struggle with limited job opportunities due to the narrower scope of industries.

Overall, while long-term migrants tend to achieve better employment outcomes, state-level variations highlight the importance of local economic conditions and industry diversity in shaping employment opportunities for migrants in Australia.

Which occupations do migrants flow into?

Occupational outcomes for migrants in Australia vary significantly based on factors such as skill level, visa category, language proficiency, and the recognition of overseas qualifications. These factors shape the types of jobs migrants secure, their pathways to employment, and their long-term integration into the Australian labour market.

Migrants are over-represented in professional occupations, where they make up 21.3% of the workforce. This is because migrants entering through skilled visa pathways are particularly well-represented in professional occupations such as engineering, information technology (IT), healthcare, and accounting.

But despite their strong presence in professional sectors, migrants are slightly under-represented in managerial roles, where they comprise 15.5% of the workforce. Migrants often face challenges breaking into managerial roles, due to lower levels of local work experience, cultural familiarity, and strong language skills that these positions typically require.

Migrants also play a vital role in Australia's community services sector, where they contribute 17.6% of the total workforce. Many community workers hold certificates or degrees in social work, community services, youth work, or disability care from Australian institutions, which enhance their chances of securing full-time employment.

Given shortages of workers in industrial roles, migrants are often in demand from construction, manufacturing and utilities. However, migrants are under-represented in these areas, accounting for only 13.6% of trades and 13.3% of operator roles. Securing employment in these areas typically requires Australian certifications and/or training, which acts as a barrier to entry for migrants.

Which industries utilise the greatest number of migrants?

While all industries utilise migrants, there is a clear pattern of clustering towards those with higher skills requirements.

One group of five "professional skills" industries - finance, professional services, ICT, healthcare & social and administrative services - have much higher rates of migrant utilisation, accounting for over 20% of their workforce.

Another group of three "industrial skills" industries - wholesale trade, transport and manufacturing - also have elevated migrant utilisation of around 17%.

This bias towards professional and industrial skills reflects a combination of two factors. One is Australia's skilled migration program, which shapes migration patterns towards professionals with qualifications and experience relevant to these industries. The second is growth dynamics, with these industries all experiencing fast workforce growth in recent years that opens employment opportunities for migrants.

Of equal interest are the industries which under-perform relative to migrant utilisation. Education, public administration, mining and construction all require formal certifications which can be barriers to entry for migrants. Geographic barriers - most migrants are located in urban areas - lead to low utilisation rates in agriculture.

How do qualification profiles of migrants shape the Australian labour market?

The qualification profiles of migrants significantly shape the Australian labour market by influencing the types of jobs they qualify for and therefore the industries they enter. Migrants bring diverse educational backgrounds and skill sets that lift the capability of the Australian workforce and play a crucial role in their successful integration into employment.

Migrants have much stronger educational attainment than the background Australian workforce:

• Around 27% of migrants - both long term and recent - hold a postgraduate qualification, compared to 15.2% of the Australian workforce as a whole.
• Undergraduate qualifications are also more common: 47.2% for recent and 40% for long-term migrants, compared to 29.5% of the total workforce.
• Holding a VET qualification as the highest qualification is lower for migrants than the Australian workforce.
• Only one-in-twenty long term migrants hold secondary education as their highest qualification, half the rate for the background workforce.

The high rate of higher educational attainment is significant and warrants explanation. Migrants are more likely to continue with university than to stop at vocational education and training (VET) or secondary education. University degrees and postgraduate qualifications generally offer better prospects for high-paying, professional roles. It also provides credentials that are more readily recognised by Australian employers and professional bodies, improving employment prospects.

Moreover, completing higher education strengthens a migrant's case for both access to skilled migration pathways, and subsequently permanent residency or citizenship. The skilled migration system therefore structures our migrant intake toward higher education-qualified individuals.

Lower levels of VET qualifications amongst migrants can be attributed to two causes. The first is the bias towards higher education, with migrants more likely to 'skip over' VET qualification. The second are qualifications recognition between Australia and some major home countries of migrants, which may exclude VET holding individuals from skilled migration pathways.

How does gender shape migrant employment outcomes?

Migrants often relocate to Australia for better job opportunities, which creates a strong motivation to secure employment and maintain job attachment. While migrants achieve very strong workforce engagement patterns, there remains notable gender differences in their outcomes.

Male migrants have very strong labour market participation. They are much more likely to be employed full-time (58%) than the background male population (46%). Rates of part-time work and unemployment are relatively consistent.

Female migrants display a similar pattern - more likely to work full-time than the background female population. Consistent with broader social patterns of gender participation in the Australia labour market, female migrants are more likely to work part-time than their male migrant counterparts.

Migrants of both sexes are also less likely to be not in the labour force (NILF). Migrants often move to Australia for economic reasons and thus are highly motivated to participate in the workforce. They tend to be younger on average than the Australian-born population, in their prime working age making them more likely to be actively engaged in the labour force.

However, the "migrant premium" is less pronounced for females than males. The advantage over background rates for full-time participation is wider for male migrants (12%) than it is for female migrants (7%); and while the advantage for non-participation is also wider for males (-13%) than females (-8%).

This indicates that while migrants outperform in terms of labour market participation, gender participation gaps are wider in the migrant workforce than in the Australian population as a whole.

Several factors may explain these differences. Cultural factors - particularly beliefs around gender roles in the labour market - play a role in shaping employment choices amongst some migrant cohorts. Care-giving and domestic responsibilities also contribute. Part-time work is especially common in industries like retail, hospitality, and healthcare, which are both feminised and have lower barriers to entry for migrants.

The employment status of migrants in Australia reflects a complex interplay of factors, including duration of residence, industry demand, qualifications, and gender. Occupational and industry outcomes vary, with skilled migrants gender disparities add complexity, as migrant women face greater barriers resulting in lower participation in full-time work. On the whole migrants have stronger workforce participation outcomes, a result of the skilled migration system and higher qualification attainment.

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