April 25, 2023

Two-Year High for Net Migration, But Is New Zealand Doing Enough?

Is the New Zealand Government’s immigration policies doing enough to attract new migrants? Will we get the support we need for social and economic growth?
Two-Year High for Net Migration, But Is New Zealand Doing Enough?

Net Migration in New Zealand Reaches Two-Year High

After our borders opened again in 2022, New Zealand witnessed a negative net migration as migrant departures resumed their typical rates, whilst the influx of migrants has been slower to rebound. In addition, New Zealanders emigrating also exacerbated the issue, finally being able to leave the country to seek job opportunities overseas, compounding the labour shortage issues for NZ employers. 

Nevertheless, according to recent migration statistics, net migration is finally starting to look positive, with significant migrant arrivals transforming the brain drain into a brain gain. 

(Source: Stats NZ)

In the period between Jan 2022 to Jan 2023, net migration is estimated to have climbed to 33,200 more migrants arriving in New Zealand compared to those who have departed. Although net migration will now be much lower than our pre-covid levels, Immigration NZ aims to increase the number of migrants moving to our country and provide a smoother service with shorter immigration queues and quicker approval times. 

Is New Zealand's Approach to Immigration Enough to Support Economic Growth?

New Zealand's Immigration issues are both short and long-term issues. New Zealand's economic downturn will not be solved quickly by increasing the levels of migrants. With higher costs of living, many companies are not likely to see growth for some time. Controlling the quality of migrants coming in will, however, it encourages employers to hire migrant workers with a higher skill set, which may lead to more economic growth over time. 

In the long term, the benefits of their approach are hoped to increase the productivity of New Zealand companies and improve the earnings for both Kiwi and migrant workers.

The Rebalancing of Immigration Towards a Higher Skilled Workforce

The Government's rebalancing of New Zealand's immigration system is attempting to shift the future migrant workforce to increase the amount of highly skilled workers and reduce the other end of the spectrum to support our economy's growth. 

With the elections coming up, it could be seen as a political move to reassure voters that the Government is addressing the potential impact on our infrastructure and housing rather than the underlying issue of building more houses to support New Zealanders and a migrant workforce. 

The policies structured to allow few people in at a higher level of qualification and skill may help support Kiwis struggling to find housing. However, its impact on our economy could prolong the downturn. This is a long-term strategy and may not help our economy grow quickly.

In a time where costs of living are rising each month, it puts more pressure on employers to pay more to hire new migrant staff and meet higher medium wage thresholds. 

Short-Term Issues Affecting Economic Growth

In the short term, the momentum lost by the closure of the borders to migrants and the restructuring of who is allowed to enter the country has impacted many businesses financially. 

Businesses that have been forced to close or see their growth severely affected due to the lack of labour and higher costs of goods. This has had a roll-on effect on the economy, where inflation has risen to 7.2%

(Source: Stats NZ)

How is the Government Helping Kiwi Businesses?

With a higher rate of immigrants coupled with fewer jobs advertised, there is the potential for a power shift this year back in the employer's hands with a broader choice of candidates. Employers can select based on a higher skill level potential to increase productivity. In the downturn, however, the higher median wage requirement for migrant workers could persuade businesses to continue to favour a less qualified Kiwi employee as a cheaper option.

The Government has increased the amount of holiday work visas and excluded Tourism and Hospitality employers from medium wage hikes for a period to support the short-term effects of its new immigration policies. They have also given several sectors reliant on lower-wage workers additional time to find labour solutions before meeting the new medium-wage thresholds. 

However, for businesses reliant on migrant workers, that could mean a significant increase in the cost of labour which will, in turn, affect their margins and continue to push up the prices we pay for products and services. 

A Long-Term Strategy for NZ Immigration.

To level the playing field and to entice and retain more highly skilled workers, the Government has implemented schemes that will potentially raise wages, streamline immigration and for critical migrant workers fast track their residency. 

The New Zealand green list and Skilled Migrant Visas are designed to help streamline the immigration process and make gaining residency easier if you have the right experience. 

However, it is early days for this scheme. Few statistics have been published about how many people it attracts overall. The figures released for the healthcare sector in March 2023 saw the majority of approved visas for migrants already in the country. However, out of 20 specialist doctors approved for a fast-tracked residency, 40% were new applicants, which could be more promising for our healthcare sector. 

How Can NZ Attract More Immigrants?

Unless we find a solution to the current downturn to help boost consumer spending and cost of living, it will be hard for many companies to see growth in 2023. Limiting numbers into the country at this point may also limit the productivity of companies. So the Government is asking its business community to invest in the future now, improving its technology, increasing training which it hopes will lift productivity in coming years. 

Investing in your business’s future growth could be attracting and retaining highly skilled migrants now. Paying higher wages now may hurt the bottom line further, however, the potential experience you gain when inviting international talent into your business can help raise your game in the longer term. 

Workers planning for the future, and wanting to afford a house and family, will be comparing the economic and lifestyle benefits when selecting a new country. However, if we are to compete with the likes of Australia and Canada, both celebrated for their beauty, work/life balance and security, we need to pay more for this talent. 

Lucky for NZ workers, this wage increase was already in effect last year. With the Private sector average hourly earnings increased by 8.6 percent to $36.09, whilst public saw a smaller increase of 4.3%

(Source: Stats NZ)

The Future of New Zealand's Workforce

By 2038, we will see our over +65 year population balloon to 1.34 million or 21% of our population. At the same time, our population of tax-paying workers supporting the aged population will be reduced to 3:1 within twenty years. This situation is similar overseas as birth rates drop and the cost of living increases. 

New Zealand needs to plan for the next twenty years now to attract more tax-paying workers to support this ageing population. Immigration will play a massive part in helping our economy to grow in the long term. 

The Ageing Population: Healthcare Statistics

To support this ageing population, we need to increase our healthcare solutions, attracting more doctors and healthcare professionals. Our health professionals are also ageing, with 40% of doctors and 45% of nurses over 50. 

General practitioners, for example, are estimated to see their workforce reduced by fifty per cent in the next ten years due to retirement. One in five nurses is also looking to retire in years. The need for new graduates in this area is pushing New Zealand to look to international shores to fulfil their healthcare needs.

We now rely heavily on a migrant workforce to support our healthcare system. Currently, 42% of our doctors, 32% of our midwives and 26% of our nurses are migrant workers. To ensure the health and expectations of caring for New Zealanders are met internally as well as with the support of migrants, New Zealand is investing in training and incentives to retain the people it trains for the future. 

How NZ is Addressing the Healthcare Shortages

The Government has fast-tracked residency visas for many medical roles to capture overseas migrants. 

The healthcare system plays a vital role in caring for our community; due to the pressure of the pandemic and low staffing numbers, the system is reported to have an 11% deficiency in its staff. 

Nursing was vulnerable to this issue, with nurses leaving for Australia attracted by the higher wages. In Dec 2022, however, the Government increased nursing wages in line with their Australian counterparts, which saw an increase of 14% for most roles.*

It's early days to see how this wage increases our nursing retention rate however, we are now more competitive with Australia to attract new nursing professionals. 

In conclusion, New Zealand is finally back in positive net migration in the first month of 2023. However, this positive trend may not necessarily lead to quick economic growth as the country still faces labour shortages, higher living costs, and increasing inflation. 

To address these issues, the government focus on the policy improvements that will help speed up the immigration process and increase the pool of highly trained workers in this country.It urges businesses to invest in their future growth by attracting and retaining highly skilled migrants, despite the potential short-term financial costs. 

Overall, New Zealand's current immigration strategy is aimed at long term growth, increasing the productivity of companies and improving the earnings of both Kiwi and migrant workers in the long run.

Read our article on how the Government is attempting to fix skill shortages for more information.


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*Te Whatuora - Health NZ - Nurses Pay Equality

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