Thursday, August 11, 2022

Exile on Main Street

Neal Wallace
Farmers Weekly journalists Richard Rennie and Neal Wallace investigate how two different districts, Opotiki and Gore, are trying to encourage new workers and address an ageing workforce while facing a static or falling population.

New Zealand’s rural-led economic recovery is being hamstrung by a shortage of working-age staff, an inability to retain people and intergenerational social issues.

Some rural districts already struggling for staff face even greater labour challenges in the coming years if demographic predictions proved accurate.

Work by retired University of Waikato demography professor Dr Natalie Jackson, is forecasting that in the next decade 75% of the country’s regional authorities will experience a decline in their working age population as young people either leave for bigger urban centres or are not being born.

The primary sector worker shortage is extensive: 4000 dairy workers, hundreds of truck drivers, 2000 meat workers, 200 agriculture contractors and up to 10,000 in horticulture

Rural depopulation could be accentuated, with predictions 50,000 people could leave NZ now borders have reopened.

Jackson predicts Opotiki in the Eastern Bay of Plenty and Gore in Southland will experience population losses of 7% and 3% respectively in the coming decade, impacting growth aspirations.

For Opotiki this comes as the district builds a more diverse primary sector, looking beyond traditional pastoral and forestry to the sea and horticulture for income generation for iwi and investors.

In Gore the employment challenge is largely about maintaining business as usual, sustaining and processing the dairy, sheep, meat, wool and cropping industries.

Pre-covid that shortfall would have been filled by migrants, but a combination of closed borders and a government immigration reset tightening access to foreign workers and elevating the wages that have to be paid has curtailed migrant numbers.

Absenteeism is a growing issue among the meat and horticulture sectors with employers claiming the granting of a fifth week of sick leave is being treated by some as annual leave.

On any one day, 15% of meat workers will be absent with that figure blowing out to 25% of staff in some departments.

Along with the existing worker shortage, meat companies have been unable to further process meat and fruit has been left unpicked.

An unemployment rate of 3.2% for the first quarter of 2022 indicates the NZ labour Market is “extremely stretched” warns the ASB.

It is the lowest as measured by the Household Labour Force Survey since 1985 and at 3.2% is above its maximum sustainable level, senior ASB economist Mark Smith said.

Similarly, wage growth has risen to a post global financial crisis high with more to come, as workers seek compensation for soaring inflation.

“While the national working-age population will grow 7% nationally between now and 2033, 31 of the country’s 66 district councils can expect their labour force population to shrink, even allowing for immigration.”

Smith warns the relaxation of border restrictions could tighten the labour market further as Kiwis head offshore on a belated overseas experience.

Jackson identifies north Waikato, Waimakariri, Selwyn and Southern Lakes districts among the few rural districts likely to experience gains in their working population.

She estimates some districts can expect a 12% slide in their working-age population of 20 to 65-year-olds, a figure reflecting a significant drop in NZ’s fertility rate over the past 20 years. 

While the national working-age population will grow 7% nationally between now and 2033, 31 of the country’s 66 district councils can expect their labour force population to shrink, even allowing for immigration.

An optimistic scenario where immigration is 55,000 a year and fertility boosted from 1.6 to 1.9, still means almost half the country’s territorial authorities will still have reduced working-age populations.

The mayors of Opotiki and Gore highlight lifestyle, opportunity, low house and cost of living costs as reasons for locals to stay and people to move there.

Trouble is, virtually every other community leader is touting the same line.

Opotiki Mayor Lyn Riesterer said the district is standing at the dawn of a new era for growth, with significant investment from the Provincial Growth Fund providing a new harbour development linked to mussel factory and farming ventures.

Gore has lent heavily on migrants to fill the worker shortage and is home to 45 ethnicities, but Mayor Tracy Hicks is confident as large urban centres become too costly, New Zealanders will be lured south by opportunity, high wages, lower living and housing costs.