'Everyone is itching to go': Kiwis' lust for travel is hurting the economy

Friday, 3 June 2022

Josef Shadwell (right) and friend Ryan Sutton-Edwards are about to head overseas.

The great Kiwi OE has recommenced - a mass exodus of young Kiwis are heading offshore for travel and jobs, leaving behind gaping job vacancies, writes Sarah Catherall.

Josef Shadwell and a group of 20-something friends are resigning from their professional jobs as lawyers, bankers, engineers and surveyors, preparing to head away on one-way tickets to London.

Shadwell, a Wellington communications executive, and 29 of his friends are part of what economists and analysts fear is the start of a mass exodus of skilled and talented young Kiwis offshore.

Says Shadwell: “We’re pretty excited. We’re going to do some travel first and we’ll end up at the Oktoberfest. We’re the ones who haven’t stayed back to buy a house, which some of my friends who are staying will do as they’ve got mortgages.’’

Ricky Wilson was 25 years old when he first got to use his passport and travel overseas.

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No-one begrudges Shadwell and others for an OE, a long-established Kiwi tradition, but the worry is that workplaces are being left with gaping holes, particularly in the professions.

Out of the OECD countries, New Zealand (and Ireland) have the largest proportion of their skilled and educated population living overseas, and there is a fear this trend may worsen. The Ministry for Business Innovation and Employment (MBIE) has estimated about 50,000 citizens may emigrate over the next year as our borders reopen.

Shadwell and his friends will arrive in London in time to see the Rolling Stones and Adele performing at Hyde Park. Some have got jobs lined up, others will find them once there. The lawyers and bankers have the opportunity to “make some decent pounds’’. While Shadwell intends to eventually return, he’s not sure about the rest of the group.

Business NZ’s Catherine Beard: ‘While overseas workers are no longer flooding in, this is a concern.’

This brain drain is going to worsen skill shortages, according to Kiwibank’s chief economist Jarrod Kerr who says we’ll be short of 20,000 people by the end of the year. We haven’t seen such an outflow of working age New Zealanders since 2012 when 72,000 flocked across the Tasman for the Australian mining boom.

Kerr says: “A lot of it is a bottleneck of people who would have left, all leaving at the same time. They’re generally your 20 to 30-somethings, and they’ve finished university and are wanting to have overseas experience.’’

Ashburton lawyer James Meager says people shouldn’t be criticised for leaving but ‘we’re going to see a massive skills gap’.

The pull to larger economies like the UK and Australia is strong. Even at Kiwibank, there are job vacancies across the board, and the biggest gripe Kerr hears from small to medium-sized businesses are vacancies they can’t fill.

“I think it’s going to be an awkward year. There’s going to be a flow of people out of the country.’’

Kerr says the borders need to be opened to migrants, and other issues - inadequate infrastructure and “ridiculous house prices’’ - should be addressed. ‘’Some of these people are just fed up and want to leave. They’re the ones we want to keep here.’’

BusinessNZ advocacy director Catherine Beard is particularly worried about a drain to Australia, where wages are higher and there are more job opportunities.

“Having young, working-aged people leaving, while overseas workers are no longer flooding in, is a concern.

“For the working person, tax, mortgage and inflation rates are all lower in Australia than here. We already have massive skill shortages across all industries and regions, and the risk of an accelerated outflow of people is that we won’t have enough workforce to support our current levels of production and economic activity.’’

Kiwis are flocking overseas, often to London. Says Lily McDougall, ‘Everyone is itching to go.’

Last week, Ashburton lawyer James Meager, previously an advisor in the National government, raised concerns on LinkedIn about the number of professionals heading offshore. Working mainly as lawyers and also in food technology, he pointed to 18 young professionals who were posting their exciting news that they were off.

Meager worked at the law firm, Simpson Grierson, until last month, where he says five second and third year lawyers are off overseas.

“Every day I’m hearing about people leaving, and they’re in the 24 to 28-year-old age group. No-one should be criticised for going but over the next six to 12 months, we’re going to see a massive skills gap.’’

Lily McDougall has settled into London life more quickly than expected, saying the move was ‘not as scary as some might think’.

With housing costs out of reach for so many and 30-year-high inflation at 6.9%, Meager is worried that the pull to return might not be so great. “There’s that question of, what do we offer here? Have we put up too many barriers so people might prefer to go and stay away?’’

One is Morgan Couch, a 26-year-old commercial litigation lawyer, in Christchurch, who leaves for Canada in October, the first of the junior lawyers in her cohort to leave. She has other lawyer friends planning one-way trips.

“I’m really excited. I want to see where things take me.’’

She plans to work on a ski field, and may then head to London to find a legal job.

Sarah Wilson, a legal recruiter at the firm, Robert Walters, has between 30 and 50 law job vacancies she is trying to fill in the South Island. The gaps are worse in Auckland and Wellington, where law firms are screaming out for intermediate lawyers.

“It’s crazy. The mass exodus seems to have begun. Lawyers can get paid more in London and even Australia and know they can go there and enjoy a cheaper cost of living.’’

She knows some “very good talented lawyers’’ who are leaving, including some who have been headhunted by big firms overseas. “We’re also seeing the ones who are over there who aren’t racing back because they haven’t been able to travel.’’

That’s good news for the lawyers here who are able to get pay rises and promotions. But Wilson does worry about the next few months.

In Wellington, 23-year-old Lily McDougall will hop on a plane in a fortnight with two best friends on a one-way ticket to London. The Otago University graduate has worked for two years in policy in a government department, and will head to London, where she hopes to secure a job and live for at least two years.

McDougall knows “15 to 20’’ people in their mid-20s who are booking to leave early next year.

“Everyone is itching to go. I would have gone straight after uni but because of Covid our plans have been held up. I’ve been saving for this trip which puts into perspective how hard it will be to save for a house.’’

Her boyfriend, Matt Smith hopes to go to London in November, possibly just for a visit. The 24-year-old student has a group of friends who have relocated to Bali for a few months. One has kept his job as a visual designer for a clothing company which he can do from anywhere, as long as he has wi-fi and a laptop.

“I think Covid has shown us how isolated we are down here in New Zealand. Young people are feeling frustrated,’’ Smith says.

The skills shortage is particularly acute in the health sector, where the New Zealand Nurses Organisation has estimated there are 4000 nursing vacancies, including 1000 in the aged care sector.

Shenee Jones, a 27-year-old nurse, is leaving her job in an Auckland hospital emergency department for nursing agency work in Brisbane. She is heading off with two friends - a nurse and occupational therapist. She will get up to $15,000 more in wages per year for easier work. The trio will pay about $600 NZ per week to rent a four-bedroom house, compared with the $900 she is paying in Auckland.

Jones says: “I’m in my mid-20s with no commitments yet, so I want to try living overseas. The stress and toll of my job is unbelievable, and I feel completely exhausted by it.

“I hope to come back here, but the price of everything has skyrocketed. I haven’t even thought about trying to save for a house here as that seems impossible.’’

Ruth Isaac, general manager employment, skills and immigration at MBIE says New Zealanders have always left the country to do their OE and travel, but they have typically come back.

“While the 50,000 estimate could be higher if pent up demand for OEs is realised all at once, it could also go the other way if New Zealanders choose to delay their emigration plans until the international context settles.”