By Dr. Anand Kulkarni
This article, the first of a series, explores the growing relationship between India and Australia. Both countries have much in common from the love of cricket to a shared ocean, institutions derived from colonial legacy, common security and challenges including agricultural and environmental management, and potential complementarities in space research and oceanography just to name a few. Yet in our opinion, the relationship is still underdeveloped, with moments of closeness interspersed with indifference, and even some angst.
Talent is a much sought after commodity around the world, and is increasingly mobile, associated with easier and less costly transport, growing opportunities abroad, and the explosion of online communications which is rapidly shrinking both space and time.
More specifically for a number of developed countries with aging populations’ skills shortages and gaps, access to the global pool of talent is of paramount importance. This is where India is in its element through its young, mobile, skilled and aspirational population: the “demographic dividend” as it is often called. According to the 12th Plan, India will have 63% of its population in the working age group (15-59) by 2022, a strong position that is expected to continue until 2040 (Government of India 2012).
Estimates by Ernst & Young suggest that by 2020, India’s labour surplus will reach 47 million people, meaning that it will be well poised to become a large supplier of labour to countries around the world experiencing labour shortages. This is way ahead of other “surplus” nations: Brazil (+3 million); Mexico (+5 million) and Pakistan (+19 million). By 2020, the U.S is expected to be the largest labour “deficit” country (-17 million), followed by China, possibly surprisingly, but then again perhaps not given its ageing profile (-10million), Japan (-9 million), Russia (-6 million), and the U.K (-2 million) (Ernst and Young 2013).
If these projections are even half correct, expect significant movement of people from India to these and other countries in the years and decades ahead. Indeed, India is a major contributor to the global labour market already.
Indian contribution to Australia:
Australia has been, and continues to be, a “melting pot” of migrants from all over the world. It is rich in diversity and enjoys the benefits that people from all around the world bring, economically and culturally. 45% of Australians are born overseas or have at least one parent born abroad (Australian Government 2016 (a)).
India is a major contributor to the diverse Australian human capital and culture capital:
Indian entrepreneurship, reputation, the skills and capabilities of its professionals, and the vibrant culture that the Indian Diaspora brings, add greatly to Australia’s diversity. What is less known is that India has had long standing ties with Australia tracing back to more than 150 years when Indians ran camel trains, before roads were built, and when Sikhs and Muslims were active as traders. In more recent times, Indian students and professionals, particularly those involved in information technology, have made their mark in Australia (Kulkarni A and Malhotra P 2011).
This article looks at the growing importance of India to Australia in terms of “people engagement”, namely permanent migration.
It would be a slight exaggeration to say that Indians are helping to power the Australian economy, addressing skill shortages and gaps and enhancing economic performance through engagement with the labour market. We focus on the permanent migration categories of skilled migration and family migration. As the table below demonstrates, in 2015, Indians alone accounted for almost one quarter of Australia’s permanent skilled migrant intake. Translating into numbers, this is more than 15,500 skilled migrants from India. It is also worth noting that despite a decline in the overall migrant intake by Australia compared to 2010, India’s share has increased.
The next best is China which in 2015 accounted for 16.4% of Australia’s permanent skilled migration intake.
What is also striking is that India’s share of the skilled migrant intake in Australia rose from 15% in 2005 to 23.8% in 2015. Over the same period, China’s share of the Australian skilled migration rose by far less from approximately 14% to 16.4%. India’s “lead” over China has been progressively widening.
Share of migration to Australia by source country of birth (%)
Source: Australian Government 2016 (b). The humanitarian stream is not included separately here as for the countries listed above the numbers are small. However the total does include the three streams of permanent migration: family, skilled; and humanitarian. Data are for calendar years 2005, 2010 and 2015.
India’s share of migrants to Australia has far outweighed Brazil, the Russian Federation, other BRIC countries, and is higher than other emerging and developed Asian economies: Malaysia, South Korea, Vietnam, Sri Lanka and Thailand.
An interesting pointer to where Australia’s future lies is the decline in the share of permanent skilled migrants from the U.K, a traditional source of large scale migration to Australia. Australia is a beneficiary of its location and proximity to fast growing Asian economies.
Indian migration to Australia is increasingly skewed towards the skilled migrant component of the permanent migration (or settlement intake). Although growing, India’s share of the family stream was 13.2% in 2015, second to China at 22.7%.
When all the permanent migrant streams are combined, we see that Indian migrants to Australia accounted for 18% in 2015 or close to one fifth of the total Australian migrant intake, just ahead of China at 17.2%. What is also interesting is that China previously accounted for a greater intake than India in total, but these roles have now been reversed.
To these numbers should be added an array of temporary skilled migration visas which Indians have been obtaining in droves. For example, between 2006 and 2013, Indians arriving on the temporary Business Stay visa grew more than fivefold from just 6,000 to almost 31,000 (Markus A 2014).
Yet, for India to fully realise its status as a supplier of labour to the world, its education sector needs to be further developed in terms of access, quality and being industry connected and relevant. It is pertinent that India is ranked 89th out of 109 countries on the Global Talent Competitiveness Index. Its relatively poor performance in Vocational Education (Vocational Enrolment is ranked 99th) is one of the factors dragging down the overall ranking (INSEAD 2015). Moreover, India’s policy makers should be very cognizant of being able to retain skilled labour at home to address any current or looming skills shortages. Looking after one’s own backyard in terms of skill needs will have to be a high priority. It will also be interesting to see to what extent “brain circulation” will prevail i.e. used in this context, return migration back to India, or continual movements back and forth to India from places such as Australia, as the globalisation of labour markets further intensifies. There is already some evidence of return migration for example, from the U.S to India as the Indian economy continues to grow.[i] (Kulkarni A 2014).
From the perspective of the Australian-Indian relationship, it is the people’s link that is the driving force. The Indian diaspora is growing and enriching Australia in many ways, including as we have seen as a key supplier of skilled labour. Looking ahead, strengthening the movement of people back and forth between the two countries, including the local Australian population spending time in India on business and work, among other things, will further embellish the relationship between the two countries.
Australian Government 2016 (a) Aussie facts Department of Social Services www.harmony.gov.au accessed February 17 2016
Australian Government 2016 (b) Settlement Reporting Facility data cut prepared by Settlement Policy Branch, Department of Social Services 9th February 2016
Ernst and Young 2013 Higher Education in India: Vision 2030 FICCI Higher Education Summit 2013
Government of India Planning Commission 2012 Twelfth Five Year Plan 2012-2017
INSEAD 2015 The Global Talent Competitiveness Index 2015-2016 Fontainebleau, France
Kulkarni A ‘India and Australia in the Knowledge Economy” Indian Journal of Economics and Business Vol 12 no 1 April 2014 pages 35-74
Kulkarni A and Malhotra P “Indians in Australia: Contributions, Controversies and Challenges” in Dubey A Indian Diaspora Contributions to their New Home MD Publications PVT New Delhi 2011
Markus A 2014 Australian Population and Immigration Statistics www.monash.edu/mapping-population/assets/statistial-trends/statistics tables accessed February 16 2016
[i] The term brain circulation is increasingly used to refer to movements back to country of origin, as distinct from earlier notions of brain drain and brain gain. See INSEAD 2015