As a business advisor, I work with a broad cross-section of businesses. These include tech startups, and those in the manufacturing, retailing, franchising, and construction sectors. With very few exceptions the main issue currently confronting them is finding employees with the skills needed to meet the demand for their services. Due to the scarcity of those available, wages are being inflated to unsustainable levels, with no commensurate increase in productivity. Prices, therefore, increase accordingly.
In short, we have less stuff + higher cost of inputs + more money printing = spiralling inflation and a cost-of-living crisis resulting largely from a labour crisis.
So, why is that so? How are there suddenly fewer people around? What has created this labour crisis?
Reason 1: Largely unreported was last week’s report from Stats NZ revealing that more people left the country than arrived for the 16th consecutive month. In the year to June, 11,500 more people left than arrived. About half of the loss were New Zealand citizens, and about half were non-citizens.
For 20 years New Zealand has averaged 30,000 more people coming than going. Now there’s more than 11,500 going, there’s really 40,000 fewer, mostly working age, people.
Reason 2: ‘Work Ready’ beneficiaries are up about 35,000 since COVID hit. The Public Service (non-frontline Government employees) has gone up by 17,000 since Labour took office.
Businesses are missing at least 100,000 people. At the same time, the treasury has been printing money like there’s no tomorrow.
Little wonder then that employable talent is desperately short and prices are rising.
Immigration is by far the largest factor. Five years on from Labour’s ‘Chinese sounding names’ scandal and campaigning to slash immigration, the immigration landscape has completely changed. The parochial and bigoted attitude of ‘they clog up the schools and roads and hospitals, so we have to restrict those who have the privilege of being admitted’ has been shown up for the trite, xenophobic sentiment that it is.
Everywhere you look Governments including Spain, the U.K, Australia and Singapore give concessions for Kiwis to move to their country. Meanwhile, our bigoted government is still obsessed with its ‘Immigration Reset’, which according to immigration consultants I’ve spoken to seems to mean building in confusing additional layers of compliance designed to stall the approval process.
While all those successful economies with a similar population base to NZ such as Denmark, British Columbia, and Colorado, have combined with far larger labour markets such as the E.U or Canada or the U.S. New Zealand only has Australia. This however makes matters worse as their average wage is 40% higher this relationship actually serves only to deplete our talent pool.
Yet, here we are, the country with some of the lowest wages, longest distance to travel, and one of the worst labour crises, also manages to have the least welcoming immigration department.
The solution is clear. Stop viewing all foreigners as a threat. It is time to join the rest of the developed world and compete for the talent we need. The next step is to have an immigration reset that involves employing the best process improvement experts to streamline the visa approval process. After all, how hard can it be to set a clear set of criteria and verify whether an applicant does or does not meet them?
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