Australia Losing $104 Billion in Economic Value Due to Migrant Workforce Barriers: Education Giant

The company contracted by Home Affairs to test migrants’ English proficiency claims Australia is losing about $104 billion in productivity a year due to the difficulties transitioning migrants into the workforce.

Pearson provides the internationally recognised Pearson Test of English which is used by Australia, the United States, Canada, the United Kingdom, New Zealand, and 116 other countries to test language proficiency among migrants.

Pearson’s Country Head for Australia Taha Haidermota said the company analysed local labour market data finding Australia was losing just under 4 percent of its 2024 GDP—the equivalent of the output of its entire agricultural sector—due to the transition barriers (pdf) faced by skilled migrants.

“Skilled migration, when it’s targeted and well supported, should be seen as essentially a productivity strategy,” Pearson told the Joint Standing Committee on Migration on May 19.

Closing the “transition gap” would not only be a boon to the Australian economy, but would also save migrants the personal toll of investing in the wrong skills for future work.

Haidermota told the committee that skilled migration “fills critical workforce shortages, lifts productivity, and strengthens Australia’s social fabric.”

Three Quarters of Skilled Migrants are in Skilled Professions

Meanwhile, Pearson’s research found a 91 percent employment rate among international students and skilled migrants, out of which 72 percent are working in skilled professions, often in sectors that face acute shortages such as construction, engineering, healthcare, and technology.

“These are high-contributing taxpayers,” Haidermota said. “The median income amongst those we surveyed was $93,000 a year which is well above the national median income, so I think the data that we found really challenges the idea that skilled migrants are a burden on the system.

“In reality, our data points to the fact that they’re helping power the economy in the critical workforce gaps.”

Australia needed to concern itself with “are they able to find employment that matches their skills? Are we fully utilising the skills that they have? Are we supporting them in developing new skills?”

“So that’s the gap that we see in transition that that would boost productivity,” he said.

Skilled migrants were also dubious about Australian education providers.

“Our research showed 67 percent of individuals said there’s rapid change, [and] the pace of change is accelerating, but only 24 percent actually felt that traditional education providers were keeping pace, so again there’s a gap,” he said.

Part of the answer was allowing qualifications earned overseas to be more easily recognised in Australia.

“So, if you are requiring electricians to come to this country and then submit their qualifications for recognition, they essentially have to be in Australia for X months, and they’re not working for those months until that accreditation comes through,” Haidermota explained. “Is there a way in which we can recognise or allow those qualifications to be credited here?

His comments come as the Treasury predicts about 1 million new migrants arriving in Australia by 2028.

Migration has been a political flashpoint and is a major driver behind the conservative-leaning One Nation’s popularity, resulting in the party winning several seats at the South Australia state election and the federal Farrer by-election.

One Nation pledges to cap migration at 130,000 per year citing strain on infrastructure and social cohesion—the party’s popularity has forced the centre-right Liberal Party to adopt its own tougher stance on migration.

The Pearson representative says migrants should be supported in further English skill development, particularly the specialised language used in the field in which they work—something 81 percent of migrants say they want, but which only a third of employers support.

“[Testing of] English language learning, at the moment, is essentially for migrants at the point of entry,” Haidermota told the committee.

“The reason why language proficiency is so important is because it’s essentially a communication skill, and all of our research about productivity losses and the transition gap points to what we call productive skills: adaptability, communication, collaboration.”