Skilled Migration Reform in Australia: Prioritise Talent

Synopsis: Australia must move from high-volume migration toward skilled migration reform in Australia that prioritises high-wage, employer-sponsored professionals. Tightening student visas, lifting salary thresholds, and matching migrants to industry needs will reduce underemployment, raise productivity, and improve wages, housing pressures, and long-term living standards for both migrants and citizens. and society.

A Nation Drowning in Talent Yet Starving for Skills

Australia’s labour market is facing a strange dilemma. On paper, there are tens of thousands of new migrants entering the country each year, and yet businesses across key sectors still report crippling skill shortages. Why does a country that attracts hundreds of thousands of workers, students, and professionals annually remain short of doctors, engineers, and technicians? According to the Hays 2025 Skills Report, Australia is experiencing a deep skills crisis despite an abundance of applicants per job vacancy .

The federal government’s Jobs and Skills Australia (JSA) data reinforces this contradiction: there are 29.3 applicants per vacancy, yet only 4 suitable applicants per role. Clearly, numbers alone do not equal quality. The migration system, critics argue, is failing to match supply with demand. Instead of fueling innovation and productivity, it has created a growing underclass of overqualified workers driving rideshare cars and delivering food.

The Current Skills Crisis in Australia

The Numbers Behind the Shortage

At the economy-wide level, Australia should have a labour surplus. But a deeper look reveals mismatches:

• 29.3 applicants per vacancy
• 9.4 qualified applicants per vacancy
• 4 genuinely suitable applicants per vacancy

This gap reveals that while many people are applying for roles, very few have the skills employers urgently require.

Alex Joiner, Chief Economist at IFM Investors, highlighted that Australia is “awash with low-skilled workers,” while simultaneously experiencing a severe shortage of high-skilled professionals. His analysis of net overseas migration data shows that the majority of incoming workers are low- or semi-skilled, further exacerbating this imbalance.

Rising Intake, Falling Standards

In 2024, the Albanese government announced it would raise the planning level for international students by 25,000—reaching 295,000 by 2026. At the same time, English-language requirements were weakened. While this move aims to boost education exports, critics argue it will deepen the problem of underutilised graduates.

The Underemployment of Skilled Migrants

Evidence from Census and Research

The Committee for Economic Development of Australia (CEDA) found that migrants consistently earn less than Australian-born workers, and the wage gap is widening . Senior economist Andrew Barker explained:

“Many still work in jobs beneath their skill level, despite often having been selected precisely for the experience and knowledge they bring.”

According to CEDA, this underutilisation contributes directly to Australia’s poor productivity growth. Migrants are increasingly working in lower-productivity firms, limiting the economic value of their skills.

University Graduates in Low-Skilled Jobs

The 2023 Federal Migration Review revealed that 51% of foreign-born university graduates with bachelor’s degrees worked in unskilled employment three years after graduating . This is not a small margin of error but evidence of systemic failure.

The Graduate Outcome Survey consistently finds:

• International graduates earn significantly less than locals.
• Employment outcomes are weaker, with longer waiting times for stable work.

Deloitte Access Economics Findings

In 2023, Deloitte Access Economics reported that 44% (621,000) of permanent migrants were working in jobs below their skill level . Many of these were selected through the “skilled stream” of migration, which is meant to address shortages. This means almost half of supposedly “skilled” entrants are not fulfilling the roles they were recruited for.

The Productivity Paradox

Why Is Migration Not Delivering Growth?

Economists have long argued that productivity and wages are closely linked. Yet, Australia’s current migration model is doing little to lift either. According to Adelaide University researcher George Tan, 43% of state-sponsored skilled migrants do not work in their nominated occupation. Instead, many end up in retail, hospitality, or service management—sectors that do not match their formal qualifications.

This mismatch leads to “capital shallowing,” where infrastructure and business investment per person declines due to rapid population growth. Despite mass migration, Australians face stagnating wages, higher housing costs, and worsening congestion.

Recessionary Business Investment

While migration grows the population, business investment has remained at near-recessionary levels. Strong immigration without proportional capital investment reduces per capita productivity. The result? Australians face the worst of both worlds: more competition for jobs and housing, but little uplift in innovation or productivity.

Rethinking the Migration System

What Needs to Change?

Evidence suggests that simply increasing numbers is not the answer. Instead, reforms must focus on quality:

• Raise the wage floor for skilled visas above the median full-time salary of ~$90,000.
• Require employer sponsorship for all skilled visas to ensure migrants enter directly into their field.
• Cancel retirement and “golden ticket” visas, which do not address skill shortages.
• Tighten student visa entry standards, focusing on top-performing international students.
• Restrict graduate visas to high-achievers with proven employability.

International Comparisons

Countries like Canada and the UK have shifted towards stricter income thresholds and sponsorship systems. For example, the UK requires skilled workers to earn above £29,000 to qualify for a visa . Australia’s thresholds lag behind, encouraging employers to hire cheaper labour rather than investing in domestic skills or training.

Risks of Inaction

Worsening Skills Shortages

If the current trajectory continues, Australia will face deeper shortages in health, technology, and engineering while simultaneously importing more underemployed graduates.

Strain on Housing and Infrastructure

With migration driving rapid population growth, housing affordability continues to decline. Infrastructure—already stretched—will struggle to keep pace, leading to urban congestion and declining quality of life.

Declining Living Standards

Mass migration without productivity gains dilutes per capita income. Instead of lifting living standards, the system risks locking migrants and locals alike into wage stagnation and higher costs.

Conclusion: A Call for Smarter Migration

Australia’s migration program is at a crossroads. It has become clear that the current model—high-volume, low-skill, and low-wage—is not sustainable. Instead of chasing sheer numbers, Australia must focus on attracting fewer, higher-quality migrants who can directly address skill shortages and boost productivity.

By tightening entry requirements, raising wage thresholds, and aligning migration with actual industry needs, Australia can avoid the trap of underemployment and stagnation. The choice is stark: continue producing overqualified Uber drivers or build a migration system that delivers prosperity for all.

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