Migrants 'fountain of youth' for New Zealand workforce, economists say
Tuesday, 13 June 2023
Migrants are proving a “fountain of youth” for New Zealand’s squeezed labour market, Kiwibank economists say.
Stats NZ data shows that in the year to April there were 171,800 arrivals to New Zealand, up 208% on the same time a year earlier.
There were 99,500 migrant departures, up 33%, creating an estimated net migration gain of 72,300 for the year.
Kiwibank chief economist Jarrod Kerr said the increase was less than that of the preceding two months, and confirmed the bank’s view that the surge had passed.
He said he expected a peak, on an annual basis, of a net 100,000 arrivals in a couple of months’ time and then for the trend to settle at 35,000 to 40,000 a year.
“It’s quite clear there’s a lot of pent-up demand,” he said.
People who might otherwise have moved to New Zealand in recent years had not been able to.
Workers were going to tourism and construction businesses, which had been short of staff, he said, which should help to ease the pressure on the economy caused by a lack of labour supply.
“Migrants generally are aged 20 to 40 and we have seen 40% of the flow has been people aged 20 to 34. People of that age are high participants, workers keen to work… migrants are a bit of a fountain of youth when it comes to demographics and the ageing population.”
He said his team hoped that would mean that the migration surge was more of a help on the supply side of the inflation equation, rather than boosting demand that could keep prices high.
The migrants were generally lower wage-earners, he said, which could lessen the extent to which their arrival pushed up wages and prices.
But he said an increased population would highlight the need for spending on infrastructure, healthcare and education – and the construction of more homes.
ASB economists agreed the migration surge was likely to be helpful in alleviating capacity frictions by addressing labour market bottlenecks.
“We adjudge the impact of high net immigration on inflationary pressures (and hence OCR settings) as not being as expansionary as has historically been the case, particularly if net immigration inflows continue to recede. As such, 5.50% appears to be the peak in the OCR this cycle.”
They said there was little indication that the immigrants who had arrived so far had caused demand pressure.
Retail activity was weak in the first quarter and recent softness in card spending data showed it was “hardly booming” despite the population growth, they said.
”Likewise, the housing market looks to have troughed, but it’s not setting the world on fire despite more people requiring shelter in NZ.
“The extremely high rates of labour utilisation in the Q1 NZ labour market figures likely reflect this as do continued gains in hiring despite much weaker GDP. With capacity pressures particularly acute in the labour market, our sense is that the stronger outlook for net immigration should result in considerably less upward pressures on medium-term inflation than is historically the case.”
Immigration Minister Michael Wood said the Government’s immigration rebalance had lifted pay requirements for migrant workers to ensure they were treated fairly, and required advertising for local workers before a migrant was sought.
“Today’s strong numbers show that these important protections have not been a barrier to recruiting migrant workers where we need them.
“The fact that migration arrivals in the year to 2023 were above the long-term average continues and a recent OECD report showed New Zealand as the most attractive place for skilled workers is evidence that New Zealand remains an attractive destination for workers to come to.
“Our Green List offers a residency pathway that is appealing for workers in the jobs that we need the most. We’ve extended the number of jobs on the Green List as well as extending our working holiday scheme to support business to get the workers they need.”