Skills Shortages set to worsen
Posted by Iain on March 2, 2012, 11:04 a.m. in New Zealand Employment
Skills shortages are starting to bite.
With commodity exports continuing to bring high, if not record, prices, an economy that is growing at 3-4% and the rebuild of Christchurch moving from damage assessment to rebuilding phase the labour market is tightening and tightening quite quickly.
I speculated this time last year that by the first quarter of 2012 employers not willing to look offshore or employ migrants in the country looking for work would by now be finding it increasingly difficult to fill vacancies.
It appears I may have been right.
Skills shortages are well documented in many areas but most noticeably:
• Construction (all areas)
• Engineering (Civil and Design specifically but not exclusively)
• Information Technology
• Banking, Finance and Insurance
There are others that are feeding indirectly off the rebuild in Christchurch along with farming and forestry. The rebuild of Christchurch is meant to take ten years and is going to inject $30 billion into this economy.
I cannot see it happening in ten years however as the skills will simply not be there to achieve it unless there is a big turnaround in outward migration or a massive increase in inward migration. Already the Canterbury Chamber of Commerce is talking about being 32,000-35,000 skilled workers short by mid 2013.
To put the size of the opportunity (for migrants) and the problem (for New Zealand) in perspective if the ten year rebuild timeframe is to be met experts tell us that one commercial (forget residential) building will need to be handed over every four days for a decade.
Think about it and the workforce that will demand.
A workforce that saw thousands of skilled workers heading to a more buoyant Australian economy during 2009-2010. This flow is likely to reverse somewhat as their economy cools and ours heats up but many will have built new lives and their skills are equally in demand in Australia and won’t be charging back home any time soon.
It is interesting that in the past fortnight I have taken on two clients who were able to secure IT consulting jobs (in one case one of the clients turned down the first job in preference of a second) without being in New Zealand for interviews. One has never stepped foot in New Zealand.
With 2 Degrees, New Zealand’s third mobile phone provider rolling out its operation we are seeing increasing competition in the market for Telecoms skills – from technical through to marketing and Customer Service.
With the $1.5 billion roll out of fibre optic cable across those parts of New Zealand that don’t yet have it we are also seeing demand start to outstrip local supply for the skills required by that sector.
What I cannot understand is why the Government has yet to increase its skilled migrant numbers. You will recall in an earlier blog I uncovered the lie that is the Government’s Skilled Migrant Category immigration targets. The annual quota of 27,000 (plus or minus 10%) was replaced this immigration year with a three year rolling target of 81,000 plus or minus 10% when it was clear the Government had no intention of issuing anything like its quota of skilled migrant visas last year (and this).
Interestingly with two thirds of the current immigration year over the Government has issued less than 12,000 skilled migrant and Investor category visas. Annualise that and you get perhaps 18,000 visas against a target of 27,000. Every year about this time fingers are pulled inside the Immigration Department and the numbers of approvals jumps but even it that happens I cannot see more than 20,000 visas being issued – tops. That's at least 7,000 fewer sets of skills we need this year alone.
This means that in the next two years the quota becomes over 30,000 per year to reach target.
Assuming they only approve the same number next year as this, then in the third year the Government needs to issue over 40,000 skilled and investor residence visas or twice as many as they are heading for this year. I question any real committment to this three year target and by next year our skills shortages will be worse than bad – I imagine many sectors will be in crisis.
The fact is the Immigration Department does not have the capacity to process that many visas even if the Government wanted them to. So migrants, employers and New Zelanders are being mislead.
I was told by the head of the Immigration Department a year ago that the numbers of skilled migrants selected from the pool will increase when the economy improves (it has – growth is expected to approach 4% this time next year) and when unemployment falls (it has, it is down to 6.2%) and when skills shortages emerge (hello!!).
It is interesting also that this week the Government has felt confident enough jobs are being created to implement the first of its long overdue welfare reforms in an attempt to persuade the one in eight New Zealanders of working age (18-64) who are on some form of state benefit (handout) to get off their backsides and find a job.
But in continuing to suppress migrant numbers to deal with a political issue they are creating a huge problem. The simple reality is that skilled migrants do not compete with the 16 year school drop out, the solo mother or the 55 year old meat worker who was replaced by a machine – there is very little if any competition between the local unemployed and my clients – never has been and never will be.
The Government needs to begin selecting, approving and granting more residence visas to those skilled migrants we need or this time next year we will have employers screaming for skills and an economy being held back when they cannot.
And Christchurch’s rebuild won’t take a decade, it will take two, and by then many of the locals will have left. And New Zealand will fail to capitalise on the opportunities a growing export driven economy will be creating.
If it could be avoided it might be so bad. This however is simply bad management by the Government.
Until next week
Southern Man – Iain MacLeod
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