Short‐term fix or remedy for market failure? Immigration policy as a distinct source of skills

• Published date: 01 January 2024
• Author: Chris F. Wright,Colm McLaughlin
• Date: 01 January 2024
• DOI: http://doi.org/10.1111/irj.12412

DOI: 10.1111/irj.12412

ORIGINAL ARTICLE

Short‐term fix or remedy for market failure?

Immigration policy as a distinct source of skills

Chris F. Wright Associate Professor

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Colm McLaughlin Professor

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Discipline of Work and Organisational

Studies, University of Sydney Business

School, University of Sydney, Sydney,

Australia

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UCD College of Business, University

College Dublin, Dublin, Ireland

Correspondence

Chris F. Wright, Associate Professor,

Discipline of Work and Organisational

Studies, University of Sydney Business

Business School, University of Sydney,

Sydney, Australia.

Email: chris.f.wright@sydney.edu.au

Funding information

Australian Research Council,

Grant/Award Number: DE170101060

Abstract

This article analyses the role of immigration policy as a

distinct source of skills supply in liberal market

economies. It draws upon interviews with representa-

tives of employer associations and trade unions in the

Australian construction and hospitality industries to

identify how labour market actors make sense of the

function of immigration policy. Rather than ‘comple-

menting’or ‘undermining’training and other domestic

labour market institutions, as is often assumed,

immigration policy can serve to remedy the systemic

failures of these institutions to supply skills in the short

term. However, overreliance on immigration can

disincentivise reform of the labour market institutions

necessary to generate adequate skills supply in the long

term. The findings suggest the need to reconceptualise

the function of immigration policy in terms of its

distinct rather than equivalent functions to labour

market institutions.

1|INTRODUCTION

The closure of international borders during the COVID‐19 crisis prompted public debates about

the reliability of immigration policy for addressing skills and workforce needs. Such issues have

been especially pronounced in the United Kingdom by the reduced availability of labour from

Ind. Relat. 2024;55:3–19. wileyonlinelibrary.com/journal/irj

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This is an open access article under the terms of the Creative Commons Attribution‐NonCommercial‐NoDerivs License, which permits

use and distribution in any medium, provided the original work is properly cited, the use is non‐commercial and no modifications or

adaptations are made.

© 2023 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd.

the European Union in the wake of Brexit, which has led to questions about the efficacy of

training and other labour market institutions tasked with supplying skills (Alberti &

Cutter, 2022). There have been similar debates in many other countries.

While these public debates about the relationship between immigration policy and the

institutions that address labour market needs have intensified in recent years, these have been

longstanding. For example, when Boris Johnson was UK prime minister, he pledged not to

return to ‘the same old broken model with low wages, low growth, low skills, and low

productivity—all of it enabled and assisted by uncontrolled immigration’(Johnson, 2021).

From this perspective, immigration policy is said to undermine other labour market

institutions. An alternative perspective is provided in a claim from another former UK prime

minister, Gordon Brown, who once said that ‘expanding the skills we need requires not only

new investment in training but a modern approach to the economic and social benefits of legal

immigration’(HM Treasury, 2003). Similarly, former Australian Prime Minister Scott Morrison

argued that ‘skilled workers on sponsored [immigration] programmes are not a substitute for

Australian jobs but they are an integral part of the economic machinery that creates Australian

jobs’(Morrison, 2014). These last two quotes reflect a view that immigration policies

complement labour market institutions, rather than undermine them.

The characterisation of immigration policy as either complementing or undermining labour

market institutions reflects a widespread assumption that immigration policy and training

policy are ‘functional equivalents’, that is, that they both generate skills that can be used

interchangeably by employers (Afonso & Devitt, 2016; Toner & Woolley, 2008). For instance,

Toner and Woolley (2008, p. 48) claim that training and immigration policies are the ‘only two

ways for a nation to secure an adequate supply of skilled workers’. This overlooks other policy

areas that contribute to the supply of skills and workforce generation. For example, social

policy can bring people who are not participating in the labour market into the workforce.

Industrial relations policy can be used to improve wages and job quality and thereby stimulate

labour supply or can create regulatory floors as ‘shock effects’to compel or encourage

employers to invest in training and productivity (Grimshaw & Carroll, 2006;

McLaughlin, 2009).

This article seeks to scrutinise this characterisation of immigration policy as either

complementing or undermining labour market institutions by addressing the following

research question: How do employment relations actors make sense of the roles of immigration,

training and labour market institutions in supplying skills? It addresses this question through

case‐study research of Australian hospitality and construction, two industries that have

traditionally relied upon vocational training to address their skill needs but have increasingly

utilised immigration policies for this purpose.

Although immigration policy is critically important for supplying labour and skills to

organisations, industries and nations, this is not widely acknowledged within academic

research on skills, education and training (Arnholtz & Wright, 2023). Indeed, scholarship on

skills is largely devoid of any mention of immigration policy and its contribution to skills

production. Afonso and Devitt (2016) characterise this area of scholarship as being defined by

‘methodological nationalism’in its focus on domestic sources of skill formation, such as

education and training systems, while generally failing to recognise the role that immigration

policies can play. As Busemeyer and Trampusch claim (2019, p. 144), ‘any political economic

account of skills and training has to consider potential relationships between labour migration

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WRIGHT and MCLAUGHLIN