Friday, December 1, 2023

Immigration no safety valve for labour shortage

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Politicians ‘don’t have social licence to bring in enough people to make up the shortfall’.
Economist Shamubeel Eaqub says it is not sustainable for the dairy industry to rely on migrant labour as the answer to its worker shortage woes.
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The dairy industry cannot rely on immigration as a safety valve to solve its labour shortages.

Such a strategy is not sustainable and is too reliant on Wellington’s public service, economist Shamubeel Eaqub says.

Speaking at DairyNZ’s People Expo event in Matamata, Eaqub told farmers that politicians do not have the social licence to bring in the numbers of immigrants needed to make up the labour shortfall that exists in the dairy industry and the wider economy.

“Yes, we want immigrants to come and work on the farm, but do you really think politicians are going to bring in 100,000-plus immigrants every year for the next 50 years? No way.

“We are in an extraordinary situation where we have become reliant on immigration as our safety valve and yet there is no strategy, there is no policy and no agreement on how to do this.

“I urge you not to rely on immigration as your safety valve in your labour plan. It’s not going to work, it’s not sustainable and it’s entirely prone to who is in Wellington – and their minds change on a daily basis.”

New Zealand is in a recession – regardless of whether the Reserve Bank believes it or not – and people are scared to make investment decisions, he said.  This means prioritising those decisions into “must haves” and things that can be delayed.

Investing in people is a “must have”, Eaqub said.

The re-opening of the country’s borders following the covid pandemic is a double-edged sword. While more migrants can come in, all of the young people who have been working on farms may now choose overseas travel. Eaqub said the industry should not be too concerned about demand for dairy as the world will keep needing food.

“The biggest issue for us – and the biggest issue for almost every industry that I speak to – is around labour shortages. You don’t have a business if you don’t have people.”

Getting enough people and the right people into work is key, he said.

“I think labour costs will keep increasing at a pretty steady clip … because all of the labour shortages you are experiencing today are not going to get better, they are going to get much worse.”

This is because of NZ’s changing demography. People are getting older and at the same time are not having enough babies, resulting in not having enough young people to work. This is likely to be the last year where there are more people entering the workforce than retiring.

The flipside of the low unemployment rate is there have never been fewer people available to work and many of the people who are not working may not be available to work because they are studying, are retired or are on parental leave.

“We are not the only ones. If you look across the OECD, this is a story reflected across the world. We are probably the tightest labour market in the OECD and there is fierce competition for workers.”

Countries such as Australia and Canada have responded by relaxing their immigration laws to allow more migrants in.

“Our country pretty much goes, ‘immigrants, we don’t really like them’.”

The world is shifting for everybody and the dairy industry has to be better than everybody else if it wants to keep attracting workers, he said.

“That is the nub of all of the challenges that we face.”

The dairy industry has also shifted from a growth to a mature industry, and this changes the narrative of how the rest of the country perceives it.

It needs to re-frame the conversation of how it is perceived, he said.

Every business relies on social licence to operate and too much of the industry’s messaging and language is aimed at one another rather than people outside the industry.

“You are not speaking to the 5% who are dairy farmers, you are talking to the 95% who are not. You are not the audience.”

Headlines that highlight the billions of dollars the industry exports do not resonate with people outside the sector, especially since the numbers of people employed on farms has fallen from one third in the 1900s to less than 8%.

“Export revenue does not resonate. There’s no humanity in the way you describe it.”

The industry needs to be humble and realistic about its size and how it is perceived.

“We are not 100% of New Zealand, we are not the backbone of the country, we are businesspeople doing a thing that people want.

“We are very good at it, we don’t need to be the backbone to justify our business. We do it because we’re bloody good at it.”

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