Migration – what is going on?

This post looks at migration issues. What is going on with the migration numbers (there are a fair few statistics for those so inclined by way of supporting evidence) and how might migration factors indicate issues/opportunities in the NZ job market?
This post looks at migration issues for the NZ job market. At the time of writing the kiwi dollar is at post float highs and the latest DoL figures show net migration at a mere 3,900 in the year to June 2011 (it has been dropping steadily since March 2010). In overall terms - Work Applications to NZ - are down across the board some 9.5% from 08/09 to 10/11. Departures from NZ however went up from 65k per month in the year June 2010 to 80k per month in the year June 2011. The overall issue over the last couple of years is thus less people coming to NZ to work and more leaving for overseas destinations.

What is going on with the migration numbers and how might migration factors indicate issues/opportunities in the NZ job market? First lets look at Australia.

Australia
The NZ press has over the year has had lots of stories about ‘the lucky country’ and how their economy is going gangbusters, jobs for all etc etc. Indeed some 39,900 kiwis left for Australia, up 45% in a year, according to the latest DoL numbers. Indeed NZ is currently the largest country for settlers in Australia at approx 17% year to Dec 2010 (by comparison the UK accounts for 10%). It does seem that many Kiwis do see Australia as offering good opportunities.

In considering the trends however and by way of comparison, UK numbers to Australia have dropped some 24% in year to Dec 2010. Overall numbers from Europe have also dropped. So why is it that that more kiwis are going to Australia and less from Europe – do they know something we don’t?

We think two things are going on:
1. Australia has been perceived to tighten up its immigration rules in recent years making it more difficult to enter. Kiwis in general get in by right. It is thus a ready secondary labour market for Kiwis.
2. A somewhat more controversial view that we happen to hold, is that Australia is not as attractive a destination as it was for migrants – thus explaining the European migration drop-off. Currency movements make it much less attractive to move assets from the likes of Europe and the USA than it was. House prices in the Australian cities popular for migrants are also relatively high. Indeed some would say very high. Lastly Europeans do not see Australia in the same light as in NZ. Indeed there is much more awareness that many sectors in Australia are not doing particularly well – after all not everyone wants a job in mining… Also pay in Australia is in many sectors still below that of Europe and the US, though it is in general more than in NZ (see later).
Lastly, and this may come as a surprise, but of those leaving Australia in 2010, 17.5% went to NZ, more than any other country. Perhaps Australia is not quite the ‘lucky country’ for everyone.

Indeed we think that the net migration numbers to Australia from NZ may well flatten out and from a NZ point of view perhaps hopefully reduce, in turn reducing part of the widely perceived brain drain out of NZ.

UK and Europe
Looking at the UK and Europe as a general market. One might expect that given the widely publicised economic issues in these countries that there would be big influx from Europe to NZ. However figures from Immigration NZ show Work Applications for the UK, as an example dropping from some 25k in year 08/09 to 22k in 09/10 and 21k in 10/11.

In many respects this drop is extraordinary. If it is dropping now when economically the news in the UK and Europe is so bad what might it do when these economies turn around? Having dealt with many European candidates over the last year, my own observations are that they view NZ (and Australia, indeed many don’t differentiate between the two&hellipWinking in a very positive light. They like the perceived lifestyle and work balance, climate, activities and so forth. They do however have two big issues
1. Pay. Pay rates in NZ do not compare – even closely – with Europe. Prospective candidates cant get their heads round earning - in many cases we have seen - less than half of what they would expect to get in their home countries.
2. Currency and cost of living. The Kiwi dollar is at post float highs and does not encourage migrants to bring hard earned cash and assets into NZ. A perusal of websites favoured by migrants also shows many indications that general expenditure in NZ is not particularly cheaper than their home countries. Indeed many NZ food products are cheaper in London than in Auckland as are many other – though not all - household goods.

Consequently we think it likely that with these conditions NZ will struggle for now to attract on economic grounds those resident in European countries. Interestingly from what we have seen on the kiwi expat forums this will likely also include many kiwis currently abroad . Indeed as the European economies turn around, migration activity may well go the other way especially as the currently high kiwi dollar offers an opportunity to transfer assets out of NZ at best historical rates. The internet also makes it easier for kiwis to see overseas opportunities and the salaries being offered. Given they are, in our experience, considerably higher – higher in many cases than even Australia – the economic inducements to move will all likely all be one way once the European economies get back on track.

Impact for employers
The future story is, from what we can see in the figures and experience, likely to be as follows:
• Net migration will hopefully stay positive. However it is unlikely to offset by much - if at all - the brain drain out the country. The traditional source of migrants from Europe may well continue to decline. Employers will need to look further afield.
• We expect the NZ press will to some extent wake-up and start reporting that Australia also has problems in many non-mining sectors. This may result in fewer leaving for the ‘lucky country’ in future.
• The economic rewards for working in NZ are an issue. For those candidates who are particularly driven by income and can move overseas the attractions will be more visible than perhaps previously. Employers will need to review their packages for key employees if they wish to keep retention.

The major market we have not outlined is the Asian one. Indeed this is the possible bright spot, at least for migration. In simple terms both NZ and Australia will likely prove very attractive for Asian migrants over the foreseeable future. The major issue in recruitment is assessing and verifying skills and experience of candidates from many Asian countries. In part it may be because many organisations are just not as familiar as they are with the European and US job markets. In economic terms however NZ is likely to still prove very attractive to such job seekers, as it will on the social-political front. We expect the Asian market to account for a greater proportion of migrants.