A man uses his phone to record a job add posted on a notice board at a backpacker hostel in Sydney, Australia, May 9, 2016. (Photo:REUTERS/Steven Saphore)

The COVID-19 pandemic closed the country's borders for nearly two years and along with an exodus of holiday workers and foreign students left businesses struggling to find staff to keep afloat.

The increase will take effect for the current financial year ending June 2023 and will bring Australia's immigration target largely in line with the annual cap of 190,000 that was in place between 2013 and 2019.

That level was cut by 15% to 160,000 just months before the emergence of COVID-19 in a bid to ease urban congestion.