Fresh data reveals that New Zealand’s borders have well and truly reopened to workers. Demographer Paul Spoonley looks at the promise and problems that go along with that.
Stats NZ has just provided the latest immigration numbers. Much sooner than most of us had expected, they are back to pre-Covid levels. That is both a good thing and a bad thing. The arrival numbers for the year ending in February 2023 were 152,892 – the same as for the year ending in October 2019. But a word of caution.
When you look at the last two decades, the arrival numbers in most years are nothing like 150,000-plus per annum – until you get to the major spike in 2019-2020. In those two years, there is a significant uptick in immigrant arrivals, along with the net gain from immigration flows to an extent that there is nothing equivalent to this period in New Zealand’s migration history. Period.
The arrivals peaked in March 2020 at 184,884.
As Stats NZ points out, the numbers for the year to February 2023 are much higher than the long-term average of 118,884. Similar comments can be made about the net gain of 52,000 to February 2023. It is not as high as the extraordinary figure for April 2020, when the net gain was 89,927 – or as high as a period from 2015 through to the end of 2017. But again, it reaches the same heights as pre-Covid in the main.
The only thing that dampens this net gain is the growing outflow. While the net gain of non-New Zealand citizens is 69,300, there is a net loss of 17,300 for New Zealand citizens.
Again, we are seeing a pre-Covid pattern. Over the last couple of decades, there has been a net outflow of New Zealanders, but in 2021 and 2022, there was net gain as New Zealanders returned home or did not leave. The net losses reached a peak in the “great outflow” in 2011-2012 (in February 2012, the net loss of New Zealand citizens was 44,025).
The question is whether the net loss figure will continue to track up or whether this increase reflects a pent-up demand to undertake OEs and that it might flatten. Time will tell. It is dangerous to take one month’s migration statistics in isolation but if the figures for February 2023 are considered, a couple of things stand out.
There were 21,382 arrivals (which is a lot) and 9,727 departures, providing a net gain of 11,656. Migration stats go up and down annually and between months but that last figure, if continued, would see extremely high net gains from migration.
One indicator that will be encouraging for employers and the international education sector is that in February, 5,850 of the arrivals came on work visas, while those on study visas were tracking at 4,261. If the first continues at this level, then we will see a significant number added to New Zealand’s labour and skill supply. The education numbers are encouraging but still some way off the halcyon days of 2020 when there were more than 80,000 on study visas in Aotearoa New Zealand.
In the media and political commentary over the last year or so, one theme was that New Zealand was not competitive on the global stage in terms of attracting migrants and talent.
It is still early days but this narrative might have to change. However, there are major global dynamics that will continue to present challenges.
The high-income world is desperate for workers – skilled and semi-skilled – and some of the gaps that have emerged through Covid are eye-watering. The US has seen three million workers exit the workforce through Covid (mostly among those aged 60 and over), while they are down about two million migrants (given recent policies and politics). Add in those who have died or those whose participation in work is now compromised by long Covid, and some major labour market gaps have merged.
In 2019, the UK government announced a target of recruiting an additional 50,000 nurses by March 2024. Nursing Times reported that even if this target was met – which is a big ask – the NHS would still be short of 38,000 nurses.
It is not clear from the Stats NZ figures whether New Zealand is beginning to fill some of these domestic shortages. What is clear is that there is now major global competition to fill labour gaps as high-income counties begin to see a large cohort – the baby boomers – exit the workforce, while declining fertility means fewer joining the workforce. Healthcare workers are in extremely short supply everywhere.
Domestically, the new net migration figures mean that New Zealand is beginning to see significant annual population growth. Prior to Covid, New Zealand’s annual population growth was just over 2% compared to an average for the OECD of 0.6%.
Last year, New Zealand’s growth rate matched this (0.6% annual population growth) but the new migration figures means that this has now jumped to 1.5%. And given that Auckland is the destination for about half of all migrants, Auckland’s relatively high growth rate will now resume.
Last year, the Productivity Commission raised a series of concerns in relation to immigration – absorptive capacity, the need to match infrastructural provision to population growth, the involvement of Māori in immigration policy to recognise Te Tiriti o Waitangi obligations, stronger links between education and training policies and migration settings, and a series of specific suggestions in relation to immigration policy settings.
A key aspect was to develop a government policy statement that addresses these matters. My understanding is that this is in progress.
But I would like to see a government population statement, which extends what the Productivity Commission suggests to take into account the very different circumstances of regions. This is necessary because many face population stagnation or decline, the impacts of declining fertility, significant ageing of the population and the impacts of this on labour markets (among other matters). We need to know what population growth rates are sustainable and make sense alongside labour market supply needs, infrastructural provision and equity for New Zealand communities, immigrant or host.
Employers and sectors have demanded increased immigration – and it looks as though they have got it. But shouldn’t we also – as the Productivity Commission suggested – consider a range of factors, of which immigration is a major but only one component? If immigration is the only answer, then we might have asked the wrong question.
Paul Spoonley is the author of The New New Zealand. Facing Demographic Disruption (2021)