SYDNEY (REUTERS) – A blowout in visa processing times in Australia has left about a million prospective workers stuck in limbo, worsening the acute staff shortages that have crippled businesses and dampened economic sentiment.

Strict border controls for two years and an exodus of holiday workers and foreign students have left corporate Australia struggling to fill jobs and keep their businesses going.

However, a seemingly simple solution to the problem of letting more migrants enter has hit a roadblock due to a backlog of over 914,000 applications for permanent and temporary visas as of Aug 12, according to immigration data seen by Reuters.

Of these, about 370,000 are visas in key temporary categories of visitors, students and skilled visas that are key for the country’s economic recovery. It also includes applicants already in Australia and looking to change their visa status to a more permanent one.

The delays are largely due to resource shortages at immigration offices and a huge backlog of applications that were left unattended for two years as the pandemic forced the government to seal the borders.

Australia’s labour squeeze comes as competition for skilled labour intensifies around the world, especially in industries where the Covid-19 pandemic forced employers to cut jobs or push staff to work remotely.

Industrialised nations like the United States and others in the EU and Asia have been looking to loosen immigration rules and sweeten offers to attract the best talent. New Zealand is also making temporary changes to immigration rules to fill a labour gap.

The new Australian government led by Prime Minister Anthony Albanese is bringing together politicians, business, unions and others to thrash out the problem at a national Jobs and Skills Summit this week.

“The Government acknowledges the importance of immigration and visitors in addressing current labour shortages and stimulating economic activity,” a spokesperson for the Department of Home Affairs told Reuters.

“We are committed to reducing on-hand visa applications to pre-Covid-19 levels, and have ramped up activity to accelerate processing times,” the spokesperson added.

The department has brought more than 180 new staff into visa processing roles since May to tackle the massive backlog.

In the last two months it has managed to process nearly 1.14 million applications of people who are outside Australia.

But with more than 600,000 temporary visa holders leaving the country since the pandemic, a lot more needs to be done to fill the large gaps in the health, construction and hospitality industries.