Is the Government Expecting a Migration Boom?

A recent government report projects huge increases in employment but at least 72 percent of those jobs are to go to immigrants.

I was a bit startled by a report recently released by the Ministry of Business Industry and Employment which forecast an extra 480,000 jobs over the next ten years. Those with a memory will recall that the 1981 ‘Growth Strategy’ promised a similar number of jobs over a decade but proved to be more a public relations exercise than a serious analysis.

That would be an unfair assessment of the Mobie report, which is forecasting – thinking about – the occupational structure of the future labour force.

The big ‘take’ for me is from a table on page 7, which says that 57 percent of the job growth will be in highly skilled occupations whereas only 11 percent will be in unskilled ones. In contrast today the unskilled make up 16.5 percent of the labour force and the highly skilled 43 percent. Perhaps you are not surprised, but I do not see a lot of serious consideration of the implications. Hopefully, the report will encourage Mobie to think about the problem of upskilling. (There are also useful projections of the future employment structure by industry and a list of those occupations which will experience the highest growth.)

However, there is an easy solution to the problem of our failure to upskill our labour force to which the report’s publicity handouts draw attention. The forecasts are predicated on very high rates of migration with, presumably, the implicit assumption that we can get the skills from overseas while New Zealanders fill the unskilled jobs.

The report’s forecast is based upon about 460,000 net arrivals over the decade. (‘Net’ migration is total immigrants less total emigrants.) The figure is not actually stated so I have had to match it with the official New Zealand labour force projections. (They only forecast up to 250,000 net migrants so I have had to extrapolate.)

But wait a moment. According to Statistics New Zealand, if there were no net migration, the labour force would increase by only 136,000 in the decade. So what the publicity handout was saying was that at least 72 percent of the 480,000 promised jobs are for migrants, not for New Zealanders.

I remind readers that I am not antagonistic to migrants although we are seeing a rise in such antagonism in many parts of the rich world, including among some New Zealanders. Recall I argued that the anti-economic case against immigration is not compelling, even if it is easy to make. (I acknowledge there may be housing problems in the short-term.) But the positive case does not include the argument that migration gives us additional economic growth of output, even though it may not generate per capita growth for New Zealanders. What immigration offers is a more vibrant and open society. (For a thoughtful contribution to the economics of immigration by Julie Fry, a Treasury official, see here.)

However, there is a limit to the ability of a community to absorb immigrants. I’ve not been able to find any estimates of that social capacity. It is clear that depends upon the community’s attitudes (ours are generally positive) and its willingness to adopt policies which integrate the new arrivals. That is not the same as assimilation, for it welcomes the newcomers’ cultural differences and works to incorporate them holistically in society. (If I might dislocate a shoulder by patting ourselves on the back, I reckon we have done pretty well with Muslim migrants compared to some countries.) My guess is 460,000 net in a decade is too many unless we make a huge effort.

That does not mean I welcome all immigrants in the way that this government does. I remain baffled by the story of Peter Theil, the German-American who was given New Zealand citizenship under unusual circumstances, even though he hardly ever comes here. (The failure of the parliamentary opposition to elicit more information tells us something about either them or about parliamentary procedures.) Theil may now be a citizen but I would be surprised if he was a resident for tax purposes. Someone who resides here for less than half a year has to pay tax to New Zealand only on their reported income from New Zealand activities, but not on their entire income. (Details here.) It is said that tax is the price of citizenship. Our price seems to be low.

In fact most migrants pay tax. To get New Zealand citizenship one usually has to live in the country 70 percent of the year, which means their status is as a resident for tax purposes, paying tax on all (declared) income (less any tax paid elsewhere).

Some of our politicians are very aware of the grumbling against migrants. That does not mean that we can expect a significant anti-immigration party since to govern it would have to form a coalition with parties with more benign views towards immigrants. But expect dog whistles; the Mobie report’s migration assumption is a gift to them.


Footnote. The Mobie report seems to have reached its migration forecast by starting with projections of the rate of annual economic growth of 2.8 percent. Given the labour productivity growth of 0.9 percent a year, the forecast needed a substantial increase in the labour force, which could only be supplied by migration. Although not given, the implicit conclusion from the report is that New Zealanders cannot expect a high growth rate of their material consumption in the future. You would not expect them to unless there was a substantial improvement in the quality of the labour force.