### Migration Shock: Record Numbers of Young People Leaving a Developed Country
The weak economy of New Zealand has driven many of its citizens to leave the country in record numbers. Amid high inflation, elevated interest rates, and rising unemployment, the government recently estimated that 131,200 people left the country in the twelve months up to June, a record high. Of these, approximately 80,200 were citizens, a figure that represents a nearly 70% increase compared to the year ending June 2019, before the pandemic.
Young New Zealanders see the quality of jobs, the narrow range of opportunities, and the experiences they can gain as key factors, according to CNBC. It has been common for younger New Zealanders, also known as “Kiwis,” to seek experience abroad, with strict lockdowns due to the COVID-19 pandemic delaying many travel plans.
Nick Tuffley, Chief Economist at ASB Bank in New Zealand, noted, “We are seeing somewhat pent-up demand for this kind of overseas experience.” He added that the uneven economic recovery from the pandemic has also been a “motivating factor” driving Millennials and Gen Z Kiwis to leave.
Government statistics show that more than 50% of New Zealand emigrants in the year ending June 2024 are aged between 20 and 39, with those aged 25 to 29 forming the largest group among the leavers. Shambhul Ekop, Chief Economist at the New Zealand Institute of Economic Research, commented, “Over the past year and a half, New Zealand’s economy has slowed, and job losses, especially among younger generations, have begun.”
Ekop added, “Until the labor market improves, I do not expect these economic refugees to stop leaving New Zealand.”
#### Cost of Living Crisis
Early in the pandemic, the New Zealand government implemented strict lockdowns and mandatory 14-day isolation for incoming travelers to combat COVID-19. Before implementing managed isolation, then-Prime Minister Jacinda Ardern stated that nearly 40,000 Kiwis returned home between March 20, 2020, and April 9, 2020—more than all the hotel rooms available across the country.
New Zealand was later praised for its swift response to the pandemic, which eliminated the virus for extended periods and led to low death rates. However, the cost of housing—rent and mortgage relative to income—remained high, with housing affordability remaining worse than long-term averages, according to CoreLogic data. Kelvin Davidson, Chief Economist at CoreLogic NZ, noted in August that the share of income needed to cover mortgage payments ranged between 53% and 57% over the past three years. By contrast, “mortgage payments only reached 50% or more of income for six quarters” in 2007-2008 during the global financial crisis.
#### Low Wages
Data shows that neighboring Australia is the most popular destination for New Zealand migrants. Not only is the neighboring economy better, but the Australian government also facilitates Kiwi migration through a special visa. Since July 2023, New Zealand citizens who have lived in Australia for at least four years can apply for citizenship directly.
The Australian government has also sought to attract New Zealand workers in the public sector. Recently, Australia has paid for full-page ads in the New Zealand Herald, promising “warmer days and higher wages” for New Zealand police officers, according to local media.
Recent salary guides from New Zealand and Australia by recruitment firm Hays show that roles across a wide range of industries offer significantly higher wages in Australia. For example, based on Hays data, a construction supervisor—an artisan responsible for a crew—can earn more than 60% more in Sydney compared to Auckland.
Indeed, the slowdown in construction in New Zealand has opened the door for the loss of New Zealand’s construction workers and engineers to places like Australia, according to Tuffley from ASB Bank. Tuffley said, “We are also losing skills from people who have completed their university studies in New Zealand and are looking for other places in the world.”
He added that while net migration to New Zealand had long offset the labor shortages left by migrants and slow birth rates, high unemployment rates suggest that New Zealand may now be dealing with a skills mismatch.
#### Not Yet at the Bottom
Despite growing concerns about brain drain and the loss of skilled workers, New Zealand may not be able to significantly improve its economic conditions in the near term, according to Ekop. He stated, “I think the [economy] will get worse before it gets better,” attributing part of the blame to various New Zealand political moves post-COVID, such as high interest rates, which have constrained consumer and business spending.
While the Reserve Bank of New Zealand reduced interest rates by 25 basis points last month, Ekop says it is unlikely that the economy will begin to respond until 2025.
By/radwa sherif ✏️✏️📚