A future without a foreign workforce
I'm sure you will agree that 2020 has not turned out to be the best year of our lives so far.
Governments telling us what we can and cannot do; social isolation from the outside world; balancing the demands of working remotely and helping our children be schooled remotely; massive injection of spending by governments to prop up declining business activity; emergency only trips to the supermarket where we are forced to "battle" over the necessities in life.
I don't know about you, but I have decided not to extend my 60 day free trial of communism!
The continuing economic impacts of the fight against COVID-19 are highlighting some innovative ideas around what business life on the other side of the pandemic may look like. Many of these ideas will deliver a positive disruption to the workplace and workforce.
However, a future with a significantly reduced skilled foreign workforce is not an idea we want to pursue. Let me explain why.
Most of the world is in global lockdown, and with it we are witnessing a consequential devastating impact on global economies. An increasing number of governments are now turning their mind to easing some of the restrictions they have imposed on their population, which includes an easing of business restrictions.
For most of us, and for all businesses, this can't come soon enough. But whenever we return to whatever the new normal looks like for business, we will see a very different workplace and workforce landscape.
One of the last areas of the current restrictions to be relaxed is likely to be the opening of borders. I anticipate that we are likely to see a gradual relaxation of border controls over the next several months, but with it we will likely see very severe measures introduced to control and regulate entry.
With this as a backdrop, it's worth speculating what life would be like for local economies if there was a significant restriction in foreign workforce allowed into the country. Already I am seeing debate of significant reductions in work visa numbers as a consequence of some of the "lessons" we have learnt from the COVID-19 pandemic.
I think a closer examination of the situation in Australia provides a useful lens on what such a future would look like. The scenarios I have discussed below are just as relevant to much larger developed economies such as the United States, Canada, United Kingdom, Germany and France. Though the scale of these economies are larger than Australia, there are similarities, including relance on the free trade of goods and services.
For a country like Singapore, whose economy has largely been built off the back of being the foreign talent hub of Asia, a significant disruption to the flow of foreign talent into that economy would have enormous ramifications for many years into the future.
The impact of COVID-19 on Australia's workforce
COVID-19 is driving the biggest population decline in Australian history. The Immigration Authorities in Australia have reported that 300,000 tourists, temporary workers and students have departed this year. This exodus threatens to deepen a consumer spending slump and hit the housing market.
A deeper analysis of the figures shows that the number of temporary visa holders in Australia dropped by 260,000 in the first three months of 2020, with a further 50,000 departing in the first two weeks of April, according to the Department of Home Affairs in Australia.
Some research predicts a further 300,000 people departing Australia to return home by the end of the year. This outcome could further erode consumer demand and cause a slump in the rental and housing markets.
What's the significance of this scenario?
Australia has enjoyed 28 years of uninterrupted economic growth - the longest period of sustained economic growth of any country worldwide. One of the primary drivers behind this sustained period of economic growth has been Australia's net overseas migration rate, which accounted for 63 per cent of the country's population growth in the 12 month period to September 2019.
The impacts of the current shutdown of Australia's economy will likely result in Australia's economy dipping into recession for the first time in three decades - time will tell. However, Australia, and the rest of the world, can avoid the lasting negative impact of slow or zero growth if it evolves its use of skilled foreign labour rather than remove it as an effective lever for business.
A reduction in population growth in Australia would impact the wider economy, including increased rental vacancies, reduced house values and reduced construction.
Australia's Treasurer recently announced that the government planned to grow the economy from the surge in debt that would result from the approximate $215 billion in new spending.
It will be very difficult, if not impossible to grow the Australian economy from new spending debt without a return to the economic benefits which arise from population growth, particularly skilled migration.
At the moment, the Australian government is encouraging temporary visa holders to "return home" as work dries up and business activity has wound down. This severe contraction in Australia's population will need to cease sooner rather than later if we are to realise the economic growth benefits foreshadowed by the Treasurer as we are gradually woken from our business hibernation.
Compared to the rest of the world, Australia has confronted the devastating health impacts of COVID-19 extremely well. The Australian Government is actively looking to ease some of the existing restrictions on the business community over the next 4 weeks.
How Australia manages the impact of the drop in migrants over the remainder of 2020 will determine the rate and speed of Australia's economic recovery.
I am sure that the Australian Government is looking closely at how a gradual opening of borders can be achieved without a consequential spike in health risks.
The stakes are very high for Australia. We will not see the economic recovery foreshadowed by the Treasurer without a return to planned skilled migration.