The next big Transtasman battle.  

Bubble Trouble – This article is a five-ten minute read in regard to the labour market situation at present and what could happen now, and in the future with the Trans-Tasman Bubble opening. 

In normal times, New Zealand has a fluid labour market. Talent comes in, talent leaves and talent comes back again. It has been part of what makes New Zealand what it is  a diverse and globally connected country that regularly punches above its weight on the global stage. 

During 2019 over 250,000 people arrived in New Zealand on temporary work visas and it was estimated that approximately 800,000 NZ passport holders were working overseas. 

Whether the motivation was an adventure, career opportunities, safety, freedom, or chasing love, the New Zealand economy has always had a consistent and substantial flow of labour in and out. 

Fast forward 12 months, and that flow, has of course ground to a trickle – the stream is barely flowing, and no one needs an explanation on why that is. New Zealand remains virtually shut  bar those returning New Zealanders and the odd skilled migrant who has managed to navigate the incredibly high bar to get in (there have been just 4,00temporary work visas issued in the past 12 months). 

We know this drought won’t continue forever, but what will it look like over the next 12 months and beyond? Like many elements of life during the pandemic, it is hard to predict (the many off-target Covid predictions passed prove this)but with the Australasian bubble underway there are certainly some key things to consider, and the first sign of potential new skills, and fresh water to the stream.  

But what side of the Tasman will win this battle? 

 

The news is somewhat buriedKiwi employers are already feeling the pain. 

Now back to those Covid predictions. The economy bounced back from lockdown and demand for most things either rebounded or remained stronger than was thought, the expected mass unemployment simply didn’t materialise. End of story. 

From about July 2020 to now we saw virtually our entire client base, (over 250 employersbegin to experience talent shortages, with those shortages already excruciating in some industries. The primary sector across agriculture and horticultureunsurprisingly healthcare, the tech sector, construction across both design and build. Retirement village workers, hospitality workers, planners, lenders, mechanics, lawyers, drivers, couriers, teachers, policy advisors, counselors, and many many more. 

The transfer of displaced skills from industries such as tourism and hospitality just simply has not happened, and re-training and redeployment will take timeWhile the targeted Training and Apprenticeships Fund (TTAF) has topped 100,000 since last July and the Apprenticeship Boost Scheme is now extended to August 2021, bringing benefits from 2022/2023 onwards, this doesn’t solve immediate issues, of which there are many.  

When so many industries are experiencing these shortages at the same time, coupled with New Zealand’s limited domestic labour pool that is not being supplemented by international candidates, it makes solutions to these challenges really hard! On top of this, the New Zealand Government poured billions into infrastructure projects, without too much acknowledgement to the global skills truly required. Association of Consulting Engineer(ACE NZ) reports the sector reveals 2100 engineers and consultants need to be hired this year – but 460 of those positions need to be filled by overseas workers as human resources are already too tight here. 

 

Is there looming ‘War for Talent (2.0) and will the first battle be across the Tasman sea?  

Guess what? In most of the areas we are short of skilled workersour cousins in Australia are also screaming out for talent. And the Aussies simply scream a little louder, proof and point Bay 13 at the MCG 

The brain drain was a common term a decade ago to describe Australia taking our supposed best and brightestLured by higher wages, better weather and even cheaper cost of living – thousands of kiwis flocked to Melbourne, Sydney, GC and the mining towns throughout Queensland and Western Australia. This flow continued  although it did slow (SEEK provided data below shows a modest decline in NZ based applicants for Australian roles over the 4 years leading up to Covid) and then fell off a cliff during Covid – it is now starting to tick back up again – this is one to watch. 

 

 

The question many now have is. Should I stay or should I go. 

  • We set out to find the answer and recently conducted a survey of skill professionals (STEM, Construction, Healthcare, Professional services) and almost 1/3rd of those respondents are likely to head overseas when the borders allow. 
  • 60% of those people imagine themselves heading where you ask? you guessed it – AussieAussieAussie!
  • The 2545 age groups are the mobile group most likely to go, with the driving factor being career progression and/or employment opportunitiesIt makes sense right, can’t buy a house, can’t find what you’re looking for from work here, can’t head to the UK, and a Transtasman bubble is on the way – may as well check out Melbourne! 

If history can tell us anything, it’s that while we get a few Aussies coming this way, the number is dwarfed hugely by the numbers flying out of NZ. Our big concern here is how will Auckland manage this, with flow out but no flow in of migrants, working holiday makers, or international students.  

 

When will more skilled people be allowed in? We don’t know. 

It is widely predicted that the quarantinefree zone between Australia and NZ will allow the government to use the 40% of MIQ space that is freed up by the bubble for others, potentially pacific islander workers? 

Respected Epidemiologist and government confidanteMichael Baker has said we should leave them empty because it is too risky to increase the number of people coming in from Covid hotspots. Our Prime minister somewhat reinforced this message over the past few days. 

The government has not yet indicated they have a plan in this area on skilled migrants with recent comments from Minister Kris Faafoi (RNZ) to employers who relied on migrant workers saying, to think differently about how to do that in the future. I think we all understand that things will changes but in the context of an even more tighter labour market – the government simply needs to find the nuances required to maintaining safety but to increase flow of skilled people into the country, versus a reset. 

There is no doubt that more highly skilled people will want to come here but we have a window that will close faster than we think. Why? Because we are not the only place talent wants to live and we are certainly not the only place that wants talent. We need to accept that as amazing a place as we are, the world is full of amazing cities, countries and communities talent can choose from. We can’t rest solely on being “Middle Earth” anymore.  

What we do know is there is talent out there that still wants to come here. Take the tech sector as an example. Our LookSee tech community is overwhelmingly more interested in working in New Zealand post Covid. The graph below pulled from the excellent report on Digital Skills Aotearoa written by digitalnation.nz shows just how competitive it will be. 

 

 

That’s a fivefold increase in global tech jobs over the next 5 years. Even if the reality is growth of only a fraction of this, the point remains the same – great (and even goodpeople in tech will choose where they want to be! When you consider the complexity in the health sector and the stimulus investment into infrastructure around the globe – I am sure the same equation will apply to skilled professionals in Construction and Healthcare – and of course others. 

So, in the short term, an already tight talent market is about to get tighter, and the Aussies well, they don’t muck around. This is going to require employers to think really carefully about retention and having great reasons for talent to join (and talking about those reasons in an interesting way)It’s also going to need the government to be connected to the frontline, not just the fine print of data, and ensure that they respond to the challenges they have. New Zealand has always celebrated its diversity and migrants have always been part of our fabric.  

Long term, it is going to be dynamic when the flood gates open. If we are smart and nimble the flow of talent could work to our advantage. Because we’re sure of one thing, ‘New Zealand is a place where talent wants to live’. But talent has choices, we must make it clear that we’re open to being open.