Foreign investment and Australian jobs: Empirical estimates and policy questions

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James Laurenceson, Deputy Director, Australia-China Relations Institute, University of Technology Sydney

Svetlana Zarkovic, student, Bachelor of Business (Economics)/Laws, University of Technology Sydney

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Executive Summary

The Australian public is lukewarm in its overall support of foreign investment. However, its contribution to local employment is widely regarded positively. This is particularly important at a time when Australia’s labour market is softening and wages are growing at their slowest pace on record. This paper conservatively puts Australian employment currently supported by foreign investment at around 1.9 million, or one in six of all jobs. With the end of the mining investment boom, a challenge for policymakers is to ensure that foreign investment is welcomed in other sectors, particularly those that absorb a lot of labour such as construction, manufacturing and services. According to the Organisation for Economic Co-operation and Development (OECD), Australia has relatively high restrictions in each of these areas. In terms of investment source countries, evidence is also presented that suggests China may have generated the biggest employment benefits in recent years. This is because the scale of Chinese investment has increased and a growing proportion has gone into the highly labour-absorbing construction sector. Despite the employment benefits, survey and liaison evidence points to many Chinese investors feeling less welcomed than those from other countries. Steps the Australian government and other stakeholders in the Australia-China relationship can take to address such concerns are deserving of greater attention.

Authors

James Laurenceson, Deputy Director, Australia-China Relations Institute, University of Technology Sydney.

Svetlana Zarkovic, student, Bachelor of Business (Economics)/Laws, University of Technology Sydney.