Wednesday, 26 November 2014

Let's take in more talent from overseas - and quickly

The latest net migration figures got a fair amount of media airtime, and even though a fair slab of it was on the invidious "aren't we doing better than Australia" track, the numbers were still pretty impressive - we had the biggest ever annual level of net immigration in the October '14 year (+47,700), beating the previous records set in the August '14 year (+43,500) and the May '03 year (+42,500). Net immigration is running at over four times its annual average over the past 20 years (+11,700). If you're interested in the details, the big pdf release from Stats is here and the actual data here.

It's interesting to see how sensitive these migration flows are to economic conditions at both ends of the migration journey: a lot of the media commentary, for example, picked up on the big impact on trans-Tasman flows of the strong New Zealand business cycle, compared with the currently sub-par Aussie one. But the same mechanism also works on migrant flows from other places, and it's left me wondering whether we're missing a good opportunity to attract European talent in particular.

We know, for example, that employment conditions in France are pretty grim, particularly for younger people, mostly down to the weak French economy, but aggravated by an inflexible labour market. So it's not surprising to see that the number of French people coming here on work visas has been rising strongly, from 1,187 in the October '12 year to 2,642 in the October '14 year. Unemployment isn't anywhere near as bad in Germany, but again the local slow economy is encouraging more Germans to look for jobs here, and the numbers coming on work visas have risen from 1,703 to 2,723 over the past two years.

But these opportunities to get talented people to come here from overseas don't last forever: the flows are very sensitive to relative changes in the business cycle at both origin and destination. Ireland's the classic example: business conditions were dire in Ireland until this year, when there has been a reasonably robust recovery. And the link to the net work migration flows from Ireland has been immediate: we had 1,298 Irish people coming here on work visas in the October '12 year, and 1,378 in the October '13 year, but it's already started to ebb, with a drop to 1,032 in the October '14 year.

I'd say we have a short but highly promising opportunity to get more skilled people to come here from the recessionary Eurozone. Jobs fairs in Australia are all well and good: but what about also doing a one-off liberal offer of work visas around Europe?

And by liberal, I mean one that doesn't pay too much mind to MBIE's 'Long Term Skill Shortage List', the thing that prioritises the kinds of skills we're normally looking for, partly because the list looks to me rather odd in places - I can believe we're short of engineers of all kinds, a fair array of medical specialists, and anything to do with ICT, but social workers? chefs? education lecturers? statisticians? external auditors? quantity surveyors? - and partly because we can't actually achieve that degree of precision in knowing what we'll need or in linking credentials to innovation or entrepreneurship. For all we know the next big app could be written by a self-taught enthusiast who left school with no qualification.

So I'd be inclined to hoover up as many of Europe's skilled and talented people as we can, while we can, and I'd relax the current immigration criteria to do it. Paper Marseilles and Düsseldorf with easy to complete work visa forms, and see what happens.

It can only be good for us. And if you're not too sure that immigration is good for a country, then read this opinion piece from the Brookings Institution, "Even Piecemeal Immigration Reform Could Boost the U.S. Economy", which says
High-skilled immigrants are good for America, and we should encourage more of them to come here given recent trends in entrepreneurship, where more firms are dying than being created every year. But high-skilled immigrants could help turn that trend around — they are twice as likely to start businesses as native-born Americans. This is especially true in high-tech sectors, where immigrants are not only more likely to start firms, but also to patent new technological discoveries
A bit of piecemeal immigration liberalisation would work for us, too.


  1. Tried that experiment - and rather more than piecemeal. We've had some of the largest, mostly quite well-chosen, non-citizens inflows among OECD countries in the last 25 years, and there is no sign of any improvement in our productivity performance. We've continued to drift away from the rest of the OECD. As, incidentally, has Israel, with the largest immigration inflows and highest population growth in the OECD.

  2. Thanks Mike. Not sure how to respond! That productivity paradox resists all attempts to crack it. Maybe immigration is neither necessary nor sufficient but worthwhile anyway...

  3. Of course, sceptics about the value of immigration to New Zealand (ie specifically NZ) might reasonably note that the only decade in the last 50-60 years in which our productivity growth (real GDP per hour worked) has matched that of our OECD peers was in the 1980s, when there was a large outflow of NZers and only a modest inflow of foreigners (ie before the changed immigration policy really took hold). Not proof of anything of course - nothing really is likely to be in the debate about NZ performance - but I'd have thought it should be another reason to pause for thought.

  4. Migrating to a country is a big decision, and a thing not to be taken lightly.

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  5. Absolutely. My paternal grandfather and grandmother were part of the great Irish diaspora: my father was born in New York in 1917. Dire conditions at home, better prospects in America, so like many millions of others they (separately) took the big decision and moved, like huge numbers of Italians, Jews, Armenians, Swedes, Poles. So you're right, it's a big thing. By the same token it tends to be the more adventurous who tend to make that big decision - another reason for the destination countries to welcome them


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