During the past two decades, the Australian economy has experienced fundamental changes influenced by the increasing propagation of globalisation. Globalising forces have reduced barriers to labour mobility across countries and economies. Concurrently there has been an increase in the importance of the ‘knowledge economy’ and thus the demand for highly skilled workers. The combination of these factors has increased the competition for highly skilled workers across national economies and in particular among Pacific Island countries (such as New Zealand and Fiji) in which the domestic demand for highly skilled labour outstrips the available domestic supply. The primary objective of this article is to analyse the impact of globalisation on the Australian labour market with a focus on shortages of skilled labour in Australia. The paper also examines the implications of shortages of skilled labour for other Pacific Island countries and suggests policy initiatives in this area.
1. Introduction During the past two decades, the Australian economy has experienced fundamental changes influenced by the increasing propagation of globalisation. It has gradually been emerging as a completely globalised economy through technological improvements, liberalisation of trade, investment and financial sectors, labour market reforms and changes in market and social conditions. During 2005 Australia was ranked as the 13th most globalised country in the world. The impact of globalisation has been more pronounced on the labour market than on any other sector in the economy. Especially, the demand for skilled labour in a number of knowledge intensive industries has grown at a pace which could not be met without local market adjustments. These changes make Australia an insightful case study on migration in the face of labour shortages. A number of other Pacific Islands countries including Fiji and New Zealand have also been experiencing similar shortages of skilled labour. Therefore intense competition has emerged amongst the labour shortage countries to attract skilled labour and various policy measures have been introduced in this regard. The primary objective of this study is to examine the impact of globalisation on the Australian labour market with special focus on shortages of skilled workers. This study is divided into nine sections. The next section introduces and defines globalisation, which is followed by an examination of the progress of globalisation in Australia. Section four analyses the changes in demand for highly skilled workers in Australia resulting from globalisation before the fifth section assesses the changes in the supply of skilled workers. Section six outlines the Australian Government’s policy responses to the shortages and section seven evaluates the effectiveness of the measures. Section eight examines shortages of skilled labour in Australia and the implications for the Pacific Island countries, before the paper is concluded in section nine.