Thursday, 27 November 2014

Why the shortages?

Yesterday I posted about recent trends in immigration, and made a case for taking in more talented and skilled people, especially from Europe: business conditions there aren't great, they're much better here, and there's a window of opportunity to hoover up some talent.

Along the way I got thinking a bit more about MBIE's lists of local skill shortages, which they use to prioritise people overseas who come looking for New Zealand work visas. There are two of them, the 'Long Term Skill Shortages List', which MBIE says "identifies occupations where there is a sustained and on-going shortage of highly skilled workers both globally and throughout New Zealand", and an 'Immediate Skill Shortage List', which "includes occupations where skilled workers are immediately required in New Zealand and indicates that there are no New Zealand citizens or residents available to take up the position".

On the 'Immediate' list, there's a whole bunch of medical shortages - virtually every speciality you can think of (cardiologists, haematologists,paediatricians, you name it, it's there), the technicians to support them, plus dentists, dental technicians and dental therapists.

On the 'Long Term' list, there's a equally wide range of shortages - anaesthetists, clinical psychologists, GPs, intensive care specialists, nurses of all kinds, obstetricians, physiotherapists, just to pick out a selection, plus we're short vets as well.

Why is this?

I can rule out one explanation: it's not because people aren't interested in taking up these professions. I can't speak for all of them, but I do know about some of them, and I'd be confident that the medical and vet schools aren't short of people trying to get in.

There could be benign explanations.

Maybe we just don't have the resources to turn out all the skills we need, and that could be because we're not a rich enough country or because, like a lot of governments post GFC, ours has had to prioritise pretty hard in recent years, and not everything desirable can be financed.

And then there's the possibility that we've been at home to Mister Cockup. Maybe we've made a complete hames of matching labour market supply and demand, and I'm open to that as a theory, too, especially as you don't get normal labour market incentives working in these essentially centrally planned disciplines.

And then there's a darker hypothesis: that some or all of these professions are artificially restricting local supply. Do the gatekeepers to these careers face an inherent conflict of interest when advising on the level of student intake?

It doesn't help that the possibilities I've listed aren't mutually exclusive. We might have a mixture of cyclical or secular shortage of the readies, ineffective planning, and anti-competitively narrow entry gates. So I don't have any smoking gun answers.

But we can't leave these markets the way they are. They're just not working properly.


  1. don't see the mystery; surely it is simply that other countries can and do pay more than we can afford to

  2. Thanks for the comment, I appreciate it, but that can't be all of the explanation, either. If it were, we'd all have upped sticks and gone to higher-income countries, whereas we're actually getting net immigration (I'd assume that a lot of the people let in on work visas are on those MBIE lists of shortages). It may well play some part for some of the skills, but I think there has to me more than just $ differentials at work