'Every sector is screaming out for more workers'

Friday, 8 July 2022

Rodney and Rowena Bowler are desperate for the return of migrant workers to help staff their hotel in the Central Otago town of Luggate. (First published June 10, 2022)

A shortage of workers following the Covid-19 pandemic is the first comment of every company across every industry in every meeting that fund manager Nikko Asset Management has at the moment.

“It’s a crisis,” says Nikko’s head of New Zealand equities Stuart Williams, whose team regularly meets with company executives from a wide range of industries. “I’m struggling to think of a single industry that wouldn’t welcome more workers just now.”

He says the worker shortage is seeping into all parts of the economy, constraining production, impacting service and pushing up inflation as businesses are forced to pay more to attract and retain a limited pool of workers.

Unemployment is at a record low 3.2%, wage inflation at a 13-year high of 3%, and price inflation at a 31-year high of 6.9%.

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Nikko Asset Management head of New Zealand equities Stuart Williams wants the Government to let more workers in from overseas to help alleviate the shortage.

Williams feels the Government is not fixing the worker shortage fast enough.

“They are basically controlling the workforce so that wages go up, but in the meantime you actually need people to do the work,” he says.

“The entire world is short of workers and New Zealand is short of workers. There is a battle going on for workers globally and we’re being left behind.”

Williams wants the Government to “just get on with it” and loosen immigration criteria to let workers in.

For the New Zealand tech industry, the border closure exacerbated an existing worker shortage as tech education fails to keep up with demand for staff in the fast-growing sector.

NZTech chief executive Graeme Muller says the industry is short several thousand workers as demand for digital services surged during the pandemic.

“New Zealand is an attractive place to come to for high-paid individuals who are in the tech sector so prior to Covid we had quite a good flow of talent, but the border closures just put the whole thing into a pressure cooker,” he says.

The price of material had all risen in the last quarter, putting increased pressure on construction firms says Ockham chief operating officer Ben Gibbens.

“We are starting to hopefully come out the other side, however it will be incredibly competitive around the world.”

Muller says New Zealand needs to switch its focus to “attraction” rather than “border control” as the country is perceived as being difficult to get into.

“There’s a massive demand globally. For people who are well paid and who’ve got good international career options, you actually need to be attracting them to New Zealand.”

Syft Technologies chief executive Alex Fala says his firm has lost key international staff who could no longer handle being cut off from family and returned home when New Zealand opened up.

The construction industry is also seeing an outflow of foreign workers returning to their families after being locked down during the pandemic in New Zealand, says NZ Building Industry Federation chief executive Julien Leys.

The meat processing industry needs overseas workers to help staff its plants. (File photo)

“We’ve got this double whammy at the moment where we’ve got people leaving and we don’t have anywhere near the numbers coming in as we used to,” he says.

He estimates the industry is short 20,000 workers in an “extremely challenging” environment of record building consents.

Changes to vocational training of apprentices will take years to flow through and in the meantime, a shortage that already existed prior to the pandemic had got worse, prompting rivals to poach workers.

“With our order books in some cases full for the next two years, we know a lot of companies out there just actually can’t do the work because they don’t have the people,” he says. “That’s the number one problem.

“Every sector is screaming out for more workers.”

He’d like the Government to make it quicker and easier to bring in overseas workers, as an acknowledgement that local workers aren’t available.

Primary industries that rely on seasonal workers have been hard hit during the pandemic and remain short-staffed.

The country’s biggest meat processor, Silver Fern Farms, was about 10%, or 700 workers, short last season due to low unemployment levels and restrictive immigration settings.

“This has meant that we've had to prioritise throughput at our processing sites versus being able to fully satisfy our customer demand for some premium product cuts, and ultimately foregoing value,” says chief executive Simon Limmer.

The processing season had to be extended, which left animals on farms for longer, putting pressure on feed supplies.

While modernising working conditions to attract and retain New Zealanders was important, Limmer says the company also needs access to overseas labour.

The horticulture industry was short of Pacific Island and casual backpacker seasonal workers during the pandemic and there is concern the industry will be short thousands of workers again this coming season.

NZ Apples and Pears chief executive Terry Meikle says the recently completed apple harvest is likely to be down more than a previous estimate of 12%.

He wants to see the Recognised Seasonal Employer (RSE) scheme widened to include bigger economies in Southeast Asia, Mexico and India with larger pools of labour to avoid over-taxing Pacific countries.

“The solution is not going to be automation and innovation overnight,” he says. “Surely the Government doesn’t want businesses going to the wall.”