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News from earlier this month

The Australian government has turned down the UK’s offer of a post-Brexit trade agreement that included visa-free work and travel between the two countries.

Trade minister Simon Birmingham said full free movement would not be accepted because it could cause an exodus of highly trained workers to the UK and an influx of unskilled British workers to Sydney and Melbourne.

The 2nd part of that last statement seems a bit weird. At least judging from the case of EU enlargements to the east, both skilled and unskilled eastern workers migrated to western EU (and there wasn't much of migration in the opposite direction). There are actually some countries in the EU that see both processes at the same, e.g. Italy, but the destination countries to which it experience its brain drain (mainly Germany, but also the UK) are not the source countries for (most of) Italy's low skilled immigrants.

So why would unskilled (or low skilled) UK workers flood Sydney and Melbourne (if Australia gave them the chance)? In pure economic terms, there would have to be a large enough different in attraction (for unskilled labor) between substantial parts of the UK and Sydney/Melbourne (wage difference, perhaps also taking into account the cost of living, and also regional unemployment); is that the case though?

(There's an article in the Guardian that says that the cost of living in Sydney is higher than even in London. I'm not sure how that translates into [unskilled] salaries though. Housing definitely seems more expensive in Sydney than even in London, with a median price to income ratio of 12.9 vs 8.5, and even Melbourne at 9.9 has it higher than London.)

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    Because it is hot and sunny with many beaches? – Jontia Jan 18 at 13:08
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    The part of skilled workers leaving Australia is indeed weird: those workers (as everybody else who is not convicted (insert your joke here) can already leave Australia when they want; if England allows them to move in, then Australia cannot do anything about it. – SJuan76 Jan 18 at 15:25
  • Wasn't it the case for much of history that Britons and Australians could travel & work freely between the countries? (Indeed, I wasn't aware that this had changed.) Seems as though Australia was largely populated by relatively low-skilled emigrants from Britain who were seeking new opportunities. – jamesqf Jan 18 at 18:52
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    Just because the minister said it, doesn't necessarily mean it's (entirely) true. "Defending Australia against invading hordes of good-for-nothings" plays better than "Preventing Australians seeking better opportunities elsewhere". – avid Jan 18 at 22:27
  • @SJuan76 I wish! I'm Australian (and considered a skilled worker) and I'd love to work in another country! It's so hard! You can't work in another country without being sponsored. I can't just decide to move to the UK and start applying for jobs. – CJ Dennis Jan 19 at 22:15
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Because it is already an issue.

Visa Overstayers

However, an estimated 86,940 people who entered Australia in 2017–18 breached their visa conditions. Many of them quickly left the country, but as of 30 June 2017, there were 62,900 unlawful non-citizens residing in Australia—a number that has remained roughly constant over the past few years.

50% of unlawful non-citizens had been in Australia for five years or longer. While popular media might portray the majority of ‘visa overstayers’ as European or American backpackers, remaining in Australia for five years or more hardly constitutes an extended holiday or gap year.

While I am unable to find a breakdown of overstays by country of origin, the breakdown of visas requested and granted, puts the UK at the top of the pack, representing 20% of working holidays Visas.

Australia is also a western English speaking country with a safety net benefits system, meaning total failure to work has similar consequences as can be found in the UK. It is also warmer and mainly known as a holiday destination in the UK.

It is not hard to see Australia as somewhere where the grass is greener if you are stuck in an unskilled job in the UK. Present circumstances with fires excepted.

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    It's not clear from that the overstays are substantially from the EU/US. They could be from Asia. Actually, in 2017 Malaysians were the largest group of overstays (over 10K), but there some 3700 from the UK as well (and 5K from the US). But the length of overstay is not specified. – Fizz Jan 18 at 13:25
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    @Fizz I did hope to find better data, but I'm struggling at the moment. – Jontia Jan 18 at 13:28
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    They also have a 20K estimate of foreigners working illegally in Australia (which is way low compared to e.g. the US and probably the EU too), but it's not broken down by country of origin. – Fizz Jan 18 at 13:33
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    Australia is quite a bit harder to get to than the US and EU, which I think is why Visa overstayed is a bigger issue than illegal migration. – Jontia Jan 18 at 13:40
  • @Jontia - is it not easier to get into Australia than the US? I would assume so, and Australia is basically America #2 having joined the US in every stupid "war" they been in, so it's one of the few countries on this planet that is afforded the full might of the entire US's military whom would come to their aid unilaterally. - Where else is there to go, that's worth going to, that you can get into, that you can get a job, in a place that speaks your language? – Mazura Jan 19 at 20:52
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This is politics. So the Australian trade minister gave an argument why a suggested trade deal wasn't acceptable. That doesn't mean his arguments are true, it means he wants a better deal.

It is not too easy at the moment to move from the UK to Australia permanently, and I'm sure the Australians have their reasons for that. They are not just going to change this because the UK comes knocking on the door. Especially since the UK will be desperate to get trade deals, so there is no reason why Australia wouldn't wait for a better deal.

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So why would unskilled (or low skilled) UK workers flood Sydney and Melbourne (if Australia gave them the chance)?

For the same reason why hundreds of thousands of Britons currently live in Spain: better weather. Let's face it, weather in the UK is cold and rainy for the most part of the year. It's double miserable if you live in the northern parts of the country. So it is very appealing for many people to move abroad, especially if they don't have to learn a new language in the process.

For comparison, see the tourism score of London below, as calculated by Weatherspark. The tourism score favors days with no rain and a humidity-adjusted temperature between 18 and 27 degrees Celsius.

enter image description here

In comparison, here's the tourism score for Sydney:

enter image description here

In which of the two cities would you rather live in, all other things being equal?

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    IIRC it's mostly UK retirees who live in Spain. And the cost of living is also lower in Spain, it's not just a matter of better weather. "While the largest single group of Britons in Spain are over 65 [...]" theguardian.com/politics/2017/jun/29/… – Fizz Jan 18 at 22:23
  • @Fizz yes, mostly because you need to speak Spanish to properly integrate into their economy and the salaries are lower. No such issues with Australia. – JonathanReez Jan 19 at 0:39
  • Am I reading these graphs right? The levels of precipitation are very similar in the UK and AUS and almost constant throughout the year in both? – Jontia Jan 20 at 11:38
  • @Jontia that is correct. The chance of precipitation on any given day is between 20 and 30% in both cities. – JonathanReez Jan 20 at 15:13
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I'm not sure this is really a correct answer, but according to Deutsche Bank data both Sydney and Melbourne rank higher than London in average salaries and also in "disposable income" after cost of housing (but not living in general) is subtracted (although housing is a large chunk of that). So, Sydney and Melbourne are financially more attractive cities "on average" than even London. It's possible that the Australian argument was simply based on this fact alone.

But it doesn't quite explain why given this difference in averages, the "brains" would choose to go to London/UK, unlike the "brawns" who (following the average better payoff = "disposable income") would choose to go to Sydney/Melbourne. I mean, going by those average figures, London would have to fear brain drain toward Sydney/Melbourne. One would have to see similar comparative "disposable income" data by job category (e.g. blue vs white collar workers), which I have yet to find...

Some economic theory predicts that countries with higher income inequality attract more skilled workers:

Borjas (1987) points out that migration responds not only to average wages but also to their dispersion reflecting underlying interregional differences in rewards to skills. In particular, regions or countries with a relatively egalitarian wage distribution will attract primarily low-skilled workers, whereas high-skilled workers will choose to migrate to regions with a more uneven wage distribution and higher returns to skills.

The funny thing however is that for one year I could find this kind of data (2008), Australia and the UK have exactly the same Gini coefficient (for income inequality)... 0.34.

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    Maybe specialist workers are paid way more in London than in Australia. If specialists are paid 5 times as an unskilled worker in Sidney and 10 times as an unskilled worker in London, then it would make it more than enough to compensate. – SJuan76 Jan 18 at 15:19
  • A problem here seems to be the assumption that all migrants will automatically gravitate to large cities. One might think that a significant fraction of the "brain drain" emigrants to Britain would head to places like Oxford, Cambridge, and other university towns, while the "brawn drain" to Australia might find opportunity in more rural areas. – jamesqf Jan 19 at 4:33
  • @jamesqf The brain drain and the drawn brawn! – CJ Dennis Jan 19 at 22:20
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Australia and New Zealand impose higher tax rate, better social benefits than the European. Consequently, the countries are less competitive but easier to survive.

Talents will of course move to Europe, where the best will always be rewarded appropriately. They will pay much less tax than Australia/New Zealand (high income). Low skilled Europeans workers will of course prefer an easier environment. They don't pay much tax anyway (low income), absolutely nothing to lose.

UK ranks higher than Australia/NZ in world GDP, it's more advanced in every way. The Australian government would need to "lock" their talents.

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    "UK ranks higher than Australia/NZ in world GDP, it's more advanced in every way." So why would anyone move from the UK to Australia? I'm afraid I'm not seeing the answer to the question here. – F1Krazy Jan 18 at 15:14
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    @F1Krazy An advanced economy will only benefit the talents. Poor/untalented will be happy to stay in a a less competitive country but better social benefits. – HelloWorld Jan 18 at 15:16
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    Than which European country? Many countries in Europe have far more comprehensive social benefit systems than Australia. And lumping NZ (top income tax rate 33%) with Australia (45%) renders this comparison even more meaningless. – Rupert Morrish Jan 19 at 20:09
  • I pay tax at a higher rate in Germany than I did in New Zealand. But Germany has some bunch of taxes that aren't called taxes, so it might be easier to delude yourself into thinking the taxes are lower there. – user253751 Jan 21 at 11:18

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