Last week the federal government was basking in the glow of a 4.5% unemployment rate and the claim it “created” 200,500 full time jobs in the past year.

What wasn’t spelt out was that at least half of those jobs were filled by guest workers and new migrants, keeping down wages and productivity in the process.

Indeed, the increasingly liberal use of guest worker visas and skilled migration is playing a major role in preventing wage inflation — and its inevitable companion, higher interest rates.

Some 71,150 people came to Australia in the 2005-06 financial year on guest worker visas – 39,530 on section 457 visas, the balance as dependents who also have work and study rights.

That was on top of some 97,500 migrants in the skilled stream program, made up of a variety of sub-classes ranging from 200 “distinguished talent” to 49,200 “skilled independent” with various state and business sponsored categories in between.

It’s an admittedly ropey use of statistics, but for the sake of the argument we’ll apply the rough 4:3 ratio for Section 457:dependents to the skilled stream and come up with 55,714 full-time primary workers. Add the Section 457s and there were 95,244 imported full-time workers.

Add a most conservative estimate of the number of dependents and spouses who would also take full-time employment and you have imported labor taking at least half of the new jobs created.

Yes, this is a mismatch between financial year and calendar year figures but you get the drift. And it’s hardly likely to be lower for the calendar year given the apparent growth in demand for Section 457 visas.

With so much of the demand for new workers being met by the Department for Immigration and Citizenship, it’s not surprising wages growth has been kept relatively low. DIC is the third arm of inflation policy along with the blunt RBA monetary and Treasury’s fiscal instruments.

It could be argued though that turning on the imports reduces our productivity. Without such a large proportion of guest workers, the market mechanism would work to increase the price of labor and encourage it to move to the most productive use. The least productive employers could not afford to compete for labor and would therefore either have to invest more capital or cease to exist.

The current immigration and guest worker policy maintains plenty of negotiating power on the side of employers, never mind WorkChoices. The current corporate reporting season will continue the trend of profits growing considerably faster than labor costs despite skills shortages and the much heralded “war for talent”.

Which might all be a very good thing. You just wouldn’t want to believe any politician claiming it was something magical about their brand name that impacts on interest rates.

The Reserve Bank certainly doesn’t.