Since 2020, there’s been no greater desire by the collective conscious than that of ‘returning to normal’. When the world hunkered down over 2020 and 2021, 2022 was met with the tentative hope that things were finally coming right.
To a degree, this is true. The borders are open, full lockdowns have ceased, and mask mandates have eased. However, the long-term effects of a global pandemic will be felt for a good while.
For New Zealand, one of the most pressing issues we now face is the worker shortage. It’s a complex problem that comes as a result of social, legislative, and economic factors. Ultimately though, there just aren’t enough people to keep up with demand.
Historically, New Zealand (and much of Oceania) have relied upon migrant work, with migrants making up a larger share of the population than any other region. In 2020, 21.4% of all residents in Oceania (Australia, New Zealand and various Pacific island nations and territories) were international migrants.
It’s natural then, that when the borders closed, the labour market reduced and unemployment decreased.
Recent trends in New Zealand migration paint a more detailed picture of the issue, and the potential solutions to the challenges a short labour market presents.
What happened in 2022? Recovering from the pandemic
It’s no secret that New Zealand, like many parts of the world, was (and continues) to experience an incredibly tight labour market. Low unemployment rates and limitations on international travel have heavily impacted New Zealand’s ability to keep up with consumer demand in almost every industry.
Alongside the border reopening, Immigration New Zealand (INZ) implemented new visa categories and reopened temporarily closed categories to welcome people back into the country. The much-discussed Accredited Employer Work Visa (AEWV) applications opened on the 4th of July, as well as all other existing work visa categories.
Shortly after this, it was also announced that border exceptions put in place for Covid would also be phased out.
On the 27th of July, three new Residency categories were introduced to encourage skilled workers into the country for the long term (we discuss these further in this blog). With this came the Green List, a comprehensive list of the roles that would qualify for the fast-tracked to residency visa.
There were a lot of changes and adjustments throughout the year as INZ responded to public concerns and feedback on the proposed schemes and categories. Nurses were bumped up to Straight to Residency on the Green List, and many more roles were added to the Work to Residency visas. If you are interested in knowing more about how these visa categories have changed, INZ reports it all in their News and notifications.
On the whole, students and visitors experienced the least change in application processes. People seeking work in New Zealand saw more adjustments and changes as the government aimed to alleviate industries suffering worker shortages.
As of November 2022, New Zealand’s unemployment rate was 3.3%, translating to roughly 97,000 people. This rate is at an all-time low since the 2007 recession which saw unemployment drop to 3.6%. So, although borders had opened, it would take time for applications to be processed and approved before new workers could enter the country.
Opening the borders isn't a silver bullet solution people are still leaving
July last year was very exciting for Kiwis and those wishing to travel to New Zealand. The borders reopened! Many breathed a sigh of relief, hoping that people would flock to New Zealand to fill the gap in the labour market, study and visit from abroad.
Provisional data from stats.nz for the year ending October 2022 showed that even though many were returning to the country, many also left. Arrivals came out to around 78,700, while departures were 82,800, creating an annual loss of 4,100 people.
Breaking this down further, 38,400 New Zealand citizens left the country, offset by only 23,300 arrivals, creating a net loss of 15,100 Kiwis. Non-New Zealand citizen arrivals did outweigh the departures, with 55,400 people coming into the country, with 44,400 people leaving. This created a net gain of 11,000 people. So, in all, 15,100 left the country, only partially replaced by 11,000 non-New Zealand citizens.
It makes sense that there would be a flurry of departures from New Zealand once the borders opened. Many Kiwis are afflicted with the travel bug, and 2 years of inactivity meant there would be a backlog of would-be travellers itching to get out of the country ASAP. Further, those who were stuck in the country over lockdown would also be departing over this time period.
Overall, 2022 set down the grassroots for long-term change, and we can only wait and see what 2023 will bring.
What do the trends tell us about 2023 and beyond?
New Zealand has relied upon immigration to keep the ship running for a long time. However, the border reopening is not a silver-bullet solution to the issue. This is not to say it will not ease up, but that it will take time.
Predictions for 2023 are positive, Kiwibank economists predict an influx of around 30,000 people in the coming year. INZ is still adjusting and finalising elements of the immigration process such as changes to partner work visas, but for the most part, things are stabilising.
Recent changes in New Zealand politics may also play a part in immigration. Since Jacinda Ardern stepped down as Prime Minister, there have been calls for immigration as a priority to the new Prime Minister, Chris Hipkins. Namely, agricultural, tourism and business leaders want to see stable, sustainable changes that ensure New Zealand has a skilled workforce that meets sector demands.
We’re optimistic about the coming year. New Zealand has been working on a long-term Immigration Rebalance Scheme that many of the INZ changes have fallen under. Although there are some teething pains, the goal is to create a higher-wage and higher-productivity economy that attracts the skilled workers needed in New Zealand.
