Progressive immigration policy, high-skilled women in the labour market

I wrote a couple of weeks ago about how Australia’s immigration framework has likely raised wages for lower-skilled earners over the past two decades. This is an important part of recognising how immigration shouldn’t be viewed as a sop to big business. Apart from wages, there are other factors which should be considered by progressive policy makers and supporters.

One of these is the role low-skilled immigrants play in facilitating highly-skilled women in the labour market. This paper from Cortes and Tessada shows how in the U.S., the presence of lower-skilled immigrants increased time spent in the labour market by an average of 20 minutes per week. While this isn’t a massive amount on average, the authors emphasise “low-skilled immigration has allowed highly skilled women to increase significantly their probability of working more than 50 and 60 hours”. This shows how immigration policy have can great impacts on the distributional effects of the labour market.

This is a complicated debate. First, the U.S. labour market is markedly different from Australia. Policies in Australia such as the childcare rebate and parental leave, together with the provision of more than 10 days of annual leave, seek to support a return to work.  However, given the trend of university enrolments in Australia, more support is going to be required in the future:

Screen Shot 2014-02-03 at 12.25.46 PM

 

(Source: Grattan Institute)

Greater support must be provided in the future. At the moment, many circumstances present themselves to families where the choice to work or provide home care isn’t a choice at all. This should be a choice, made freely by each family.

How this support is provided will be a source of contention. I believe there is an excellent argument for public childcare however in this budget climate, it is unlikely in even the medium term. In the meantime, liberalising immigration laws – at the margins – is likely to assist. This is particularly the case by introducing more aged- and child-care workers into eligible occupations for sponsored visas.

I’m unsure if the Abbott government will seek policy change in this area. These types of ideas would be traditionally ‘liberal’ however they also play into the IR debate which since the WorkChoices campaign is now fundamentally an ALP-positive. Further, some may oppose to these measures as while women may have more access into the labour market, it is being done at the expense of poorer foreign workers. An alternative policy response would be to increase wages in these sectors, attracting more Australian workers.

I applaud the ASU’s campaign for increasing community sector wages. The success they had two years ago in relation to community awards was spectacular. However, given the wage differences which are built into modern labour markets, more people doing these jobs – with proper protections in place as exists under the FWA – would allow an expansion of these services, encourage more university educated women into the labour market and provide employment for lower-skilled workers from other countries, many still developing, allowing remittances to assist in economic development. The argument that all lower-skilled foreign workers will be exploited by employers is a myth and it seeks to remove any agency from the migrant, many of whom earn between 3 and 8 times the income available in their home countries.

The increase in wages of Australian wages was generated by highly-skilled immigration. However the increase has been so immense relative to other countries, there is scope to also use lower-skilled immigration in the pursuit of other progressive policy initiatives. One of these should be providing the choice to highly-skilled women to return to the labour market for as many or as few hours as they wish. Whenever you see the gender income gap mentioned, remember we have an immigration policy which currently does very little to assist. Whenever you see the case for quotas on executives boards, remember the impossible choices women face in terms of returning to work given the lack of support from institutional quirks in the labour market. Immigration will not solve these problems, however small changes will assist at the margin, which in conjunction with other policy choices will see an improved labour market for women.

The main takeaway here is that immigration policy can and does have an impact in a manner which is not traditionally considered. While people will talk about skill shortages and the impact on wages and employment, these issues have a broader social context which is worth remembering.

 

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