Bad news for New Zealand employers (and recruiters) as Kiwi workers depart in record numbers
People2people majority owner and board chair Mark Smith this week announced he has relocated to Wellington and is now taking up a new role at people2people subsidiary Frog Recruitment as a principal consultant – yes, Mark is back recruiting.
This news is notable not just because it is highly unusual for a majority owner to relocate from one of their company’s large markets to a much smaller market but also because it bucks the trend of trans-Tasman moves for workers.
Last week, Statistics New Zealand released its latest international migration update, and there was plenty of confronting news for the country’s new government and employers in general.
Net overseas migration (long-stay arrivals minus long-stay departures) dropped 15 per cent from 97,500 for the year ended May 2023 to 82,800 for the May 2024 year.
More worryingly, the 138,600 migrant departures in May 2024 are provisionally the highest on record for an annual period. The corresponding May 2023 figure was 97,557 migrant departures – that’s a staggering 42 per cent jump in migrant departures in just 12 months.
You have to go back to 2012 for the previous record number of annual departures for a May year – 115,354.
The long-term average for May years in the pre-COVID 2002–2019 period is 119,200 migrant arrivals, 91,500 migrant departures, and 27,800 net migration.
The migration trend presents unpleasant news for the country’s prime minister of only ten months.
Last October’s national election saw the worst defeat of a sitting government in New Zealand since the introduction of the mixed-member proportional (MMP) voting system in 1996. Labour lost 31 of its existing 65 seats, and the National Party, led by Christopher Luxon, became the largest party in the new parliament, with 48 seats in the 123-seat parliament.
Like in Australia’s election the previous year, independents and minor parties significantly increased their share of the vote, with Labour and National’s combined vote share the third lowest it had ever been under MMP and the lowest since 2002.
The new government’s first budget included significant cuts to the country’s public services, with all ministries asked to find savings of at least 6.5%, leading to many public servants losing their jobs.
The economic outlook in New Zealand continues to weaken, with the deficit in the 12 months to June this year widening to $NZ11.1 billion from the $NZ9.3 billion previously expected. Next year’s estimated shortfall is more than double the $NZ6.1 billion gap projected six months ago.
The dramatic decline in the forecasts is due to the Treasury expecting to collect some $NZ28 billion less in tax revenue over the forecast period due to weaker economic growth and the government’s tax cuts targeted to most benefit low- and middle-income households and those with young children.
NZ statistics note the number of long-term departures from New Zealand to Australia is rapidly accelerating. In the December 2023 year, 53 percent of New Zealand citizen migrant departures were to Australia. This share has fluctuated between 41 percent in 1991 and 77 percent in 2012.
The most recent calendar years show a rapidly increasing net migration loss from New Zealand to Australia
2023: 27,000
2022: 14,600
2021: 5,400
2020: +7,340 (due to COVID border lockdowns)
2019: 2,700
2014 – 2018: 3,300 (five-year annual average)
Although dramatic, the recent spike in the above data is a return to longer-term trends.
The annual net migration loss from New Zealand to Australia averaged about 30,000 from 2004 to 2013, plunging to only 3,000 annually from 2014 to 2019.
Australia is home to around 600,000 New Zealand citizens, which is 11 percent of the country’s population. The labour market participation of migrants in Australia is 70%, meaning around 420,000 of our NZ cousins are employed in Australia. That’s 13.5 percent of the current labour force in New Zealand of 3.07 million.
The economy, which was in recession in the second half of 2023, is now forecast by NZ Treasury to contract 0.2 per cent this fiscal year on an annual average basis. That’s a dramatic reversal from the 1.5 per cent growth expected in December. Treasury has now revised the nominal size of the economy down for every year through 2028.
Unfortunately for New Zealand employers, all of this bad economic news is good news for Australian employers. Record numbers of New Zealand workers are pouring across the Tasman in search of better economic opportunities, and this trend is unlikely to change any time soon.
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