BusinessNZ argues for more immigration

BusinessNZ describes itself as “New Zealand’s largest business advocacy body”.  Its chief executive, the lobbyist Kirk Hope, seems to have easy access to the op-ed pages of the Dominion-Post newspaper, and I’ve critiqued a couple of his columns (here and here) earlier in the year.

Hope –  and presumably BusinessNZ – is a big fan of high levels of non-citizen immigration to New Zealand.  Business groups have been for decades –  as far as I can tell, through all the decades of New Zealand’s relative economic decline.  We’ve had some of the highest controlled immigration flows of any country, and one of the worst relative economic performances.  However large the inflow it is never seems to be enough for the Manufacturers’ Federation (in decades past) or BusinessNZ now.  I have in front of me, the memoirs of Fred Turnovsky, twice head of the Manufacturer’s Federation and one of the “great and the good” of an earlier generation, where he records a lecture he gave at Waikato University in 1971 calling for a doubling in the officially proposed immigration target.

Earlier this week, following the government’s migration policy changes, BusinessNZ had a press release out –  under the heading Migration rules a sign of progress –  which seemed to welcome the changes.  I was quite surprised, but on closer inspection it wasn’t the small drop in the residence approvals programme target they were welcoming, or the cutback in the family quota (mostly non-working older parents), but simply the increase in the points requirement.

“Increasing the points required by skilled migrants to gain residence from 140 to 160 will help sharpen the annual intake towards higher skilled people.”

But, of course, increasing the points requirement isn’t an independent policy adjustment, it is just the logical corollary of a likely increase in demand for residence (mostly because of the large inflow of foreign students in recent years), while the availability of skilled migrant places hasn’t changed.  When demand changes the “price” needs to adjust.

And thus far I agree with Hope.  If we are going to allow in lots of “skilled” migrants, the more skilled they are, the better.  Of course, it is always hard for officials to detect skills, which makes it too easy to fall back on paper qualifications.

In an op-ed earlier in the year, Hope made the case for high levels of immigration to New Zealand on the grounds that we needed lots of immigrants to pay for our superannuation.

Restricting immigration as proposed would harm the economy.

With a birth rate just above replacement level, an ageing population and baby boomers retiring, we need immigrants to sustain the economy and pay for our superannuation, just as in decades past.

In response I noted

And on the NZS side of things, if there are affordability challenges with the current system, we have it in our own hands to modify the system to make it more readily affordable.  We could raise the age of eligibility –  National knows it needs to happen, even if the Prime Minister has pledged not to, and Labour campaigned for a higher age at the last election.  Other countries have made these sorts of changes.  We could also age-index NZS eligibility.  We could modify the entitlements of those who haven’t spent most of their working lives in New Zealand.  And there are other options I don’t support, but which would also ease the fiscal pressures, such as income and asset testing, or linking NZS increases to prices rather than wages.  And we can keep the way open for more older people to stay in the labour force for longer –  on that count, we already have one of the least distortionary old age pensions systems anywhere.  We are quite capable of managing the pressures ourselves.

Large scale immigration might make a small difference to NZS affordability, but it is an awfully big intervention for a really quite small difference.  As it is, New Zealand’s birth rate is around replacement, unlike many European and Asian countries, so the ageing population issues are in any case less pressing here than in most places.

In the end, the best way to support the various social spending commitments society wants to make is to foster a highly productive economy.  We’ve kept on failing to do that, and while immigration policy almost certainly isn’t the whole story, there is no evidence whatever that high rates of immigration have improved the position.

Strangely, the affordability of NZS seemed then to be his main argument for large-scale immigration.

But I suspect that was just an attempt to try to frame the issue in a more generally acceptable way.  In fact, business lobby groups in New Zealand tend to make the case for high levels of immigration largely in terms of keeping the cost of labour down.  Of course, they don’t put it in quite those words.  Instead, the constant refrain is “skill shortages” is mostly just another way of saying “I can’t get enough workers at the wage I want to pay”.    Markets have ways of taking care of looming shortages, or surpluses: the price adjusts.  We don’t hear of shortages of foreign exchange –  the price adjusts. The availability of tomatoes varies with the seasons and storms, but almost always any consumer can buy as many tomatoes as he or she wants, at a price which adjusts (up and down) quite frequently.

When it comes to people, and labour markets, these mechanisms don’t work instantaneously.  But markets take care of structural shifts in the demand for labour, if they are allowed to work.  A commenter argued earlier this week that we need lots of immigration to provide the workers to care for a growing elderly population.  No.  Immigration is certainly one option – look at the staggering number of aged-care nurses we’ve granted visas to in the last decade –  but so are changes in relative prices.  If the demand for labour in that sector increases, then over time relative wages in that sector will tend to rise. In turn, that will draw more New Zealanders to the sector, and will also reward investing in some more labour-saving technologies.  The same goes for almost any sector.  The wages changes might be small, if labour moves easily into the new in-demand sector, or large, if there is some reluctance of people to move into those roles.  But that is how the labour market would deal with shifts in the patterns of labour demand, if allowed to do so.

But to return to BusinessNZ.  Kirk Hope has another op-ed in the Dominion-Post this morning.  It is a useful piece because it is so explicit about his –  and his organization’s (?) -views.  Here is what he has to say:

One in four people in New Zealand is foreign-born, and many New Zealanders routinely leave to live in other countries.

This is what New Zealand is like – it’s ‘migration central’, awash with people coming and going, and it has always been this way.

This is simply quite historically misleading.  Large short-term migration is a new phenomenon –  we saw nothing like it in earlier decades.  And while it is no doubt true that “many New Zealanders routinely leave to live in other countries” –  I’ve done it three times –  the net outflow (the loss of almost a million New Zealanders) dates from when the growing gap between living standards in New Zealand and those in other advanced countries (especially Australia) started to become more apparent.  In successful countries, not many people leave for long.  Compare the net outflow of Norwegians from Norway with the net outflow of New Zealanders from New Zealand and you’ll see what I mean.

Business has long asked for more immigration…

You can’t get clearer than that.  We have probably the second largest controlled immigration programme in the advanced world (behind that other economic laggard, Israel), a residence programme three times the size (per capita) of that in the United States, large and growing numbers of short-term work visas, and still it just isn’t enough for business.

He elaborates

….as in more access to more skilled migrants to do the jobs that New Zealanders aren’t available for.

But as even Hope recognizes, in this and his earlier article, New Zealand hasn’t done very well at attracting really skilled migrants in recent decades.  Which shouldn’t really surprise anyone; after all, New Zealand is an awfully long way from anywhere (ie home and family), and simply doesn’t offer as good material living standards as many other advanced countries (including such migration recipient countries as Australia and Canada) do.   We haven’t been doing well at getting the best people to date, so why should expect to do better if we aim for even more migrants?

And Hope never once refers to the OECD data, cited by Steven Joyce and MBIE, suggesting that New Zealand workers’ skill levels are already among the very highest in the OECD (and the average immigrant had, on those measures, slightly lower skills than the average native).  Perhaps he doesn’t believe the numbers, but if so perhaps he could lay out his specific concerns with the data.  As I noted in my earlier post on that OECD data

Importing people doesn’t look as though it has been a means of raising skill levels here, or in most other countries.  In general that shouldn’t be surprising –  successful countries solve their own problems, and when they succeed they might share their bounty with newcomers. But a different sort of people is very rarely the answer to serious economic challenges.

But to revert to Hope

the points system will be able to deliver higher skills, but not necessarily the specific skills in most demand.

It might not answer the specific need for more engineers, construction managers, quantity surveyors, technologists, technicians and ICT workers – the actual skills needed today.

Fortunately, there is work underway to achieve more weighting in the points system to achieve specific skills such as these.

This is a sort of line he has run before and I commented then.

it is curious to see the leader of a business group reckon that he knows what skills and what industries will be the ones that will prosper in a future, more successful, New Zealand.  And it is puzzling to see so little faith placed in the workings of the labour market, or the skills and capabilities of New Zealand.  It is redolent of some sort of 1960s indicative planning mentality –  the sort of line of argument I have previously criticized MBIE for.

BusinessNZ tell us they believe in markets, private enterprise etc etc, but in fact they seem to want to shape our long-term migration policy around the ability of people like them – and MBIE bureacrats –  to work out quite what skills “the economy” needs right now.  Even though, in granting residence to a 25 year old, we are bringing in someone who might have 40 year plus of working life in New Zealand.  No one knows, or can know, what specific skills will be needed over that sort of horizon.    If we are going to bring in long-term migrants, with an economic focus, lets attract able, energetic, skilled people, with a realistic chance of adapting well to New Zealand, and not try central planning beyond that.

Hope goes on

Business will be hoping this work comes to fruition soon.

Without it, we face the danger of a breakdown in the political consensus around migration policy

If we are not able to import migrants with the specific skills needed, there will be little support for bringing in many migrants without them.

To the second sentence, I can only add “I hope so”. There is just no evidence –  from BusinessNZ, from the NZ Initiative, from MBIE, from Treasury, from National or Labour ministers – that the strong elite consensus in favour of high levels of non-citizen immigration has done anything, at all, to benefit the economic performance of the New Zealand economy as a whole. Perhaps it might produce such benefits in some times, some locations.  But our focus in on contemporary New Zealand –  this specific location.  Of course, the economy is bigger –  there are lots more people –  but there is no evidence, at all, that GDP per capita, or GDP per hour worked for New Zealanders are better as a result.  And that really should be the test, and especially in programme that is avowedly focused on the claimed economic benefits of the programme.   There is no more reason to simply assume that putting an extra million people in New Zealand –  roughly what our immigration policy has done in the last 25 years – would make any more sense than putting an extra million people in Wales, Scotland, Tasmania or Nebraska, if local territorial authorities in those places had control of their own immigration policy.

And what of that final sentence? For all I know, it might be descriptively accurate, but actually I suspect there is little support  now for “bringing in many migrants without them [skills]”.  Why would we, refugees aside?  There might be a case for attracting some really highly-skilled immigrants (not tied to specific current vacancies), but why would we want to bring in people with very limited skills.  At best, doing so could only drag down the relative returns to relatively lowly-skilled (absolutely or relatively) New Zealanders.  At worst, it could drag down our overall economic performance.

Hope goes on

These generalisations are not true. The fabric of New Zealand life, rather than being destroyed by immigration, is largely the result of ongoing immigration and is colourful, interesting and diverse as a result.

My focus in on the economic dimensions of the issue, but as a reminder –  and with no suggestion of causation – living standards in New Zealand (relative to those in other countries) were probably at their best in the 1950s, a period of a great deal of cultural homogeneity in New Zealand.  Large scale immigration –  particularly from different cultures than the native population –  changes societies, and there are likely to be both pros and cons from those changes.  If a country has meaning –  other than just a physical location –  it must involve something around shared identity and values.  If the economic gains from large scale immigration are slim or non-existent ( as I argue in the New Zealand case), one might want to examine more closely the other implications of large scale immigration –  whether that is about environmental pressures, or the declining relative place of Maori (the original native population).  But consciously or not, business lobby groups and their advocates tend to see little role for the nation state.

Having made his arguments about immigration, Hope attempts a pivot.  Never having succeeded in showing that there are widespread economic gains from our immigration programme –  let alone an even larger one – he turns paternalistic.  The problem apparently isn’t large scale immigration, it is the low level of skills of many New Zealanders.

For this group, upskilling is their most pressing need.

This is why the education system needs our focus as debate on immigration continues.

There needs to be more help for unskilled adults to get upskilled in basic areas of literacy, numeracy, communication and computing.

I’m not going to dispute that skills matter, or that the education system (or some families) could do better in equipping people for life and work.

But fundamentally this is a distraction.

The data show that New Zealanders on average have a fairly high level of skills. Not everyone of course –  here, or in any of those other countries.  And, in any case, much of the education system isn’t about adding skills, but about signaling and ranking.  We don’t have a high unemployment rate by international standards, or a low labour force participation rate (and here I agree entirely with BusinessNZ and the NZ Initiative that immigration does not raise local unemployment, or take jobs from natives).  So focus on skills and the best possible design of the tertiary education system all you like, but it really is a different issue from the appropriate immigration policy for New Zealand.

Towards the end of his article, Hope sums up

New Zealand’s shortage of in-demand skills is one of the most important and difficult problems we face, and changes in education should be a hot topic.

We are a nation of immigrants and descendants of immigrants, and our economy needs ongoing migration to cope with the skills gap we have at present.

It is quite staggering to find the leader of (ostensibly) market-oriented business lobby group discuss the labour market, access to skills etc, and never once mention wages (sectorally, or across the board).    His case might be more plausible if he stopped to engage with the counter-argument: why, over time, if there is a “shortage” of chefs (to take one of the leading skilled migrant categories) won’t relative wages for that set of skills rise, encouraging more people to (over time) shift towards those roles?  None of these adjustments happen overnight, but the market process usually works if it is allowed to.  But, of course, it is often just cheaper for firms to seek an overseas worker, than to lift returns to local labour across that set of skills.  Or if he stopped to think macroeconomically for a moment –  rather than simply at the level of the individual firm.

As for that final sentence, you have to wonder about which bit of the last 70 years of New Zealand economic history Hope missed.  We have had high (by international standards) non-citizen immigration for most of that period, and yet constant employer complaints down through the decades about “skills shortages”.  You’d almost suppose this was a really high-performing economy, with endless new outward-oriented opportunities and markets, crying out for people to tap those rapidly expanding markets.  Instead, our relative economic performance has been in decline for almost the whole post-war period, and our exports as a share of GDP has gone nowhere –  unlike almost every other advanced country –  for the last 30 years.    Perhaps BusinessNZ might like to reflect on the view – widespread among New Zealand economists in earlier decades (much to the dismay of Fred Turnovsky) –  that large scale inward immigration programmes add more to demand than they do to supply in the short-term, and thus –  at an economywide level – exacerbate rather than relieve “skill shortages”.  Individual firms don’t experience it that way, but that is the value of macroeconomics.

I could go on, but I’d really urge BusinessNZ to think again, and if they do want to continue to champion really large scale immigration programmes, to find some credible arguments and evidence for the programme (specific to New Zealand), and to engage with the track record of New Zealand’s immigration programme and economic performance over the last 70 years.  As they do, they might ponder the continued extremely high dependence of New Zealand on natural resource exports (perhaps 80 per cent on a broad definition), something that shows no sign of changing.  Our stock of natural resources isn’t increasing, and there is little obvious reason to think that we’ve needed a lot more people here to make the most of what we have.  Instead, we need to tap the smart and able people we do have, the strong institutions, and to get government out of the business of –  unintentionally –  persistently holding up the real exchange rate, and making it even harder than it should be to develop competitive firms based here. Markedly pulling back the immigration target –  not just playing at the edges as the government has done this week –  would be a big part of making that possible.

 

 

 

 

 

 

30 thoughts on “BusinessNZ argues for more immigration

  1. It might be a case that today’s skilled migrant doesnt stick around long and the employer is back to square 1 shortly thereafter, looking for another replacement skilled migrant.

    Of course no care or reponsibility is accepted for the first skilled migrant who doesnt stick around but decides to stay in country. One cause that is fairly obvious is the new skilled migrant ends-up residing 30km from the job, paying a fortune for a house, and spending 4 hours per day in grid-locked traffic

    In summary, the employers lobbyist don’t disclose the employment period the new-comers stick around before they clamour for another one

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    • Exactly, we do not have the statistics on retention, ie churn rate. Statistics NZ is just too lazy to provide us that number which makes correct policy making difficult. International students, foreign workers, returning kiwis are all called migrants.

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  2. Great article, Michael — I have sent Winston Peters, and other members of the NZ First party, the URL for it.

    You’d be a good fit in the NZ First party — and that’s meant as praise, not derogation!

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    • I could commend my policy prescriptions around ageing populations to NZF……….raise the NZS age, index that age to future gains in life expectancy and (and I know this is NZF policy) require people to spend more than 10 adult years here (or in Aus) before they get full NZS.

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    • Yes Winston Peters readily use the gross migrant arrivals of 120k in his xenophobic speaches when he knows full well returning kiwis that number 30k is also included as migrants. The real migrant arrivals of only 15k of that 120k is just conveniently ignored.

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  3. Some thoughts:

    a) the NZ macroeconomic growth model used by Treasury assumes ‘labour force’ as a driver of longer term growth: little surprise policy frameworks encourage population growth

    b) I think it roughly right to state NZ governments have encouraged flexible markets and free trade for the past 20yrs: if so, a (small) business owner in NZ probably thinks of the company ROE ahead of some fuzzy ‘macroeconomic’ outcome

    c) if there were signs of wage inflation, it is likely the RBNZ would crack a sweat over ‘inflation expectations’ and raise rates (based on a curve called Phillip) i.e. aggregate wage pressure seemingly signals too much demand rather than a skill shortage

    d) I guess you need voters to change their attitude; what do the +50s in NZ that make up +50% of the voting population think of the issue? elevated house prices and stable cappuccino receipts are quite a nice combination….

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  4. Interesting points. Some reactions:

    a) I’d be surprised if they assumed a causal link from population growth to productivity growth. But…even if they do, I think that would be a reflection of the same sort of elite consensus, rather than an independent driver of eg immigration policy

    b) and as a business owner that is always the appropriate perspective. I’m not critical of indiv firms who argue that immigrant labour is vital for them (after all ,if their competitor could get such labour and they couldn’t they’d genuinely be worse off), simply that the indiv business owner perspective on their own business is not generally the appropriate basis on which to evaluate the merits of any public policy. Paul Krugman wrote well about business people and public policy some years ago

    (c) but remember that (i) we are talking shifts of demand within the economy (ie sectors in high demand), but (ii) more importantly, if overall immigration were cut back to my 10-15K per annum, we would see a material short-term fall in demand, counterbalanced as the exchange rate fell, interest rates were cut, and resources moved from some (population growth intensive) sectors such a housebuilding, to more internationally-oriented sectors. Overall wage inflation would be expected to accelerate over time, but mostly as productivity growth accelerated.

    (d) yes, the question of what might trigger change is a difficult, and somewhat discouraging, one. It needs a wider sense that something is very wrong. It might even need someone, rough and populist, to tap some of that discontent on a large scale, as Trump did but – one would fervently hope – without the deep Trump failings that render him – like Clinton in different ways- disqualified on grounds of character from the presidency. (sorry lots of qualifiers to be crystal clear that I’m not a trump supporter, or a Clinton one for that matter)

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  5. The only part I’d take issue with you, is regarding “BusinessNZ tell us they believe in markets, private enterprise etc etc, but in fact they seem to want to shape our long-term migration policy around the ability of people like them – and MBIE bureacrats – to work out quite what skills “the economy” needs right now”.

    If there are more people wanting to immigrate than there are places, then someone has to decide who is successful and who is not, and as everyone seems to agree the higher the skill levels the better. So that decision maker has to make choices about what they think is the best set of skills to allow in.

    Or are you suggesting, say, a monthly auction process, where employers bid to bring in an immigrant employee that month. This would allow the decision making to be removed from the bureaucrats.

    I haven’t thought of any other way of avoiding needing a bureaucrat to decide who is successful or not.

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    • I think there are (or should be) two quite different sets of decisions there. One is around work visas (temporary. short term). I think a good case could be made for none at all for jobs earning less than say $100000 a year, which would ensure short-term migrants couldn’t be undermining the position of our own relatively less skilled people. With such a threshold in place, I’d be pretty liberal – can fill any position, but only for a non-renewable term of no more than three years (so that the focus is on genuine short-term pressure points).

      In terms of the residence programme, we are bringing in people with a 40 or 50 year working life ahead of them. It is wrong to focus on immediate so-called skill shortages. I have no real problem with something like the current points system (or perhaps the early points system in the 1990s) for long–term residence applicants. Give points for relative youth, high skills (mostly inevitably formal qualification base) and I would probably give more points either to people from OECD countries (or “IMF advanced economies”), as proxy for most likely to easily adjust), and in areas where professional licences to practice are required (eg doctors) I would discount the qualification if there was not mutual recognition between NZ and the granting country. The focus is on trying to get able hardworking people who have a good chance of adapting quite readily to NZ – and avoiding problem even MBIE acknowledges from the 1990s, where we got people with good paper qualifications who couldn’t practice in NZ and now drive taxis.

      In principle, I’m somewhat sympathetic to an auction, but I don’t think it is politically realistic.

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  6. The sad reality is we have too many animals. It is more productive to have 40 million people rather than 40 million sheep and cows. That’s the reason we fail. Not enough people.

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    • 10 million dairy cows generate a meagre $10 billion in GDP. 4.5 million people generate $160 billion in disposable income. Better to have more people than more dairy cows.

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    • Every other nation on earth has moved from hunter gatherer to agriculture to industrialisation. We must be the only nation on earth that has moved from hunter gatherer to agriculture to industry and then in the infinite wisdom of our economists moved us back to agriculture and decimated our industries with hawkish interest rate rises.

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  7. Interesting essay. Got me thinking about how often episodes of human progress have been associated with tight labour markets: from the productivity and wage growth post the Black Death, to the economic advancement of many black people in the US in the late 1990s, to the economic development of Japan in the 1950s and 1960s to China in the 2000s. One can easily think of a few mechanisms going on there.

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  8. Bad as it was longer-term, the persistent excess demand and protectionism of the 50s and 60s in NZ certainly helped in the urbanization of the NZ Maori population.

    But were labour markets in China really tight last decade, and if anything MFP growth there has been slowing sharply since the mid 2000s?

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    • I think that as the flow of rural workers to the cities started to slow in China, you saw an increase in wages (I think there were other reasons for the slowing in MFP). I also think India’s growth has been slowed by its high population growth, relative to India, as it has been harder to accumulate capital stock per-worker – though this may be about to change.

      I also think the over-full employment may keep some people out of drink and drug addiction. I have no proof points for that one though!

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      • certainly your last sentence resonates with me – some excess demand would be particularly welcome in the US.

        re China, yes I agree wages rose, But of course, the really fast growth, incl MFP growth, came before that,

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  9. Given that 5% of the available work force is drug addled or impaired in other ways and the next 15% are skivers using the system to drag a living off the taxpayer we would appear to be about at the bottom of the employable.
    Given many jobs are short term by nature e.g. orchard and vineyards and construction, who is going to do all this work?
    Its easy to say pay more but the reality is out where we work that there are few people that have the skills nor the attitude for many jobs.
    The reason for this is the dumbing down of our youth workforce.by the demand from the education system (Taxpayer Paid for), that young people should get this utopian dream of higher education. It is discouraging to see 19 year old people still at school going no where, all because they may be good at sport or some
    ( yep the sport freaks have taken over so much of the school system and its money) other feeble reason.

    There are thousands of young people out there doing just that including many going to Polytech and Uni’s who have no idea why, other than being too lazy to move out into the workplace. Constantly we hear employers bemoaning the fact that when they do enter the work force these old teenagers have no idea about what work is about.
    Well if you have spent 19 years i.e.sucking on the dummy then you won’t have any idea.

    We see for example young men doing polytech training for engineering. Learning to weld with stick welders because the poly can’t afford the machinery for mig and tig. Bloody useless.

    We have the labour market for these youngsters totally distorted by not being able to pay youth rates that would reflect their skill levels.
    So when you are an employer you look for someone with the skill, most likely an immigrant.
    Take the fibre installs. The guys that did my two were Fijian.( and did a good competent job.) (so when that job is finished they will move to some other job.)

    Ask the diary farmers and the hospitals about the Filipino’s they employ. Great workers or the two employers I have talked with this week (quite by chance), who have Argentinians working in their places. Couldn’t sing their praises enough as opposed to the locals who sometimes turned up at work ( often impaired), or when they were there not that bothered about their work. One of them in the hospitality industry said that he has never had his rooms as well groomed nor done as efficiently.
    Why, because they are sending money home to keep their families alive as there is no work there. (as do the Fijians and Filipino’s).
    So the threat of starvation and no support systems like we have tends to focus the minds obviously.

    For a long time I have been bothered by the fact that we seem to have low productivity and I have to say that its a mystery to me. I have employed a lot of people over about 50 years and in general terms have had a lot of hard working motivated people. Daily I see many many hardworking people out there working away and just comparing what I have seen in the USA and Australia I am of the view that many Kiwi’s are much harder working than the inhabitants of those and many other countries.Yet we are tagged with this low productivity argument.
    Perhaps we read it wrong, perhaps the things we do are by nature a cause of this. e.g. lets look at say wheat. Wheat is grown in many places.The USA and Australia are big producers and so because of volume they grow in thousand acre paddocks while we in maybe 30-40 acre lots. Now for somethings, some of the wheat we grow is better than what we can import but our process, because it is what it is, is, definitely in the lower productivity area.
    Same could apply for much of what we do remembering the price is a market price and the big guys have the volume which means that we coat tail on them.

    Perhaps it is because we have failed to recognize the potential for better more up to date plant and equipment. Our plant depreciation levels are low so we have to eek out the life of machinery whereas if we had a better depreciation rate, say 50% first year, businesses would invest more in new up to date plant.
    (Keeps more cash in the company).(I don’t think this should apply to motor vehicles. )
    Of course that may well reduce the need for so many immigrants as well. Probably Uncle Bill wouldn’t like the reduction in company tax but it would repay itself in no time.

    I doubt there is no one reason but many that contribute to this apparent low productivity.

    I’m certain of one thing. Pandering to the poor isn’t the way to fix it.

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    • I don’t have too much problem with what you are saying but…..if one is comparing NZ’s relative performance with other advanced countries, I’m not sure it is the answer. Specifically, I’m not sure that the drugs and work attitude problems among some portion of the population are any worse than those in many other advanced countries.

      I don’t thing we solve long term problems by “pandering” to anyone, poor or otherwise, but I do think we need a hardheaded willingness to confront conventional wisdoms – in this case, that lots of immigration is beneficial for the whole economy, and perhaps the more the better. If we made material changes, I suspect it would benefit most NZers, and particularly the relatively poor (mostly because the poor tend to suffer most when economies are mismanaged)

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    • Our 2 largest export industries are agriculture and tourism. Both of which are labour intensive. You would expect to our productivity dropping as these industries expand further. That’s why chefs top the list of skilled migrants. Pretty much to do with tourism now hitting 3.3 million tourists and steadily growing to 4 million. Feeding and cleaning up after 4 million tourists will certainly require more chefs, more waiters and more cleaners. Also more DOC staff to build and clean toilets. Migrants are just unfairly targeted by xenophobic economists.

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    • Of course it is. Someone needs to clean up dirty waterways. Not all dairy farms are fitted out with suction machinery. People are required to clean machinery,Someone needs to sow fertilizer. someone needs to latch cows to suction tunes. Someone needs to herd cows. Someone needs to drive tanker trucks. Someone needs to clean tanker trucks. Etc etc etc.

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    • I see you have left a number of comments on this point, and I’m not going to attempt to respond to each of them.

      Agriculture employs labour in various areas, but it also uses a lot of land, and in the more labour-employing sector (dairy) there is also a lot of physical capital, both on farm and in the collection/processing side. That means that agriculture isn’t unusually labour intensive (whereas, say, a consultant with a lap top, or tradesmen repairing a leaky home might be examples of such industries)

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  10. Your article distils down to one essential – the Business lobby continually asks for more – it is never satisfied – does it never meet its needs in any year?

    There appears to be some confusion is it a demand for greater immigration in the form of more consumers as distinct from skilled workers who are producers of product

    If it is skills they want, It would be more believable if the Business Groups published in the public domain a monthly schedule of skilled vacancies for all to see. Then we could see from the arrivals and departure cards collected by immigration how many arrive and how many actually give up and leave for each category – it is captured

    It’s the paucity of real-data that bothers me

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