A backlog relating to the processing of skilled migrant workers applying to enter Australia could affect the nation's labor market.

The Australian warns the processing delay is currently standing at 28 months, with an estimated 140,000 individuals caught up in the system.

Quoting a secret briefing to immigration minister Chris Bowen, obtained via a Freedom of Information request, the news source suggested the issue could contribute to a growing skills shortage in the country.

The Immigration Department has warned the government it could face legal action by people whose application decisions are delayed.

In addition, the agency is understood to have highlighted the importance of migrant workers to the economy, as the Australian workforce continues to age.

Business leaders have raised concerns in recent months about growing talent gaps and the wage pressures they are creating.

Recently released figures from the Australian Bureau of Statistics indicated the annual population growth rate slowed 1.7 per cent for the 12 months to June 2010, down from 2.2 per cent the year before.

Posted by Kate Griffin