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NZ should brace for skills shortage once borders re-open, economist warns

Thousands of Kiwis have returned home in the past year to escape Covid-19, but a leading economist warns it’ll be short-lived and says New Zealand should brace for an “exodus” once borders re-open. 

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Shamubeel Eaqub says while Kiwis are returning home to take advantage of New Zealand’s Covid-free status, long-term problems persist. Source: Breakfast

That’s because issues like the lack of career opportunities, low incomes, the high cost of living and soaring house prices which pushed people out of the country to begin with haven’t changed, Shamubeel Eaqub told Breakfast.

Eaqub said characterising the number of returning Kiwis because of the pandemic as a “surge” wasn’t accurate, either. His research showed about 25,000 people came back to New Zealand last year, compared to 30,000 in a typical year. 

Meanwhile, an estimated 600,000 Kiwis remained overseas. 

“The reasons why people went are still the reasons why people might stay - it’s for the good jobs, it’s for the career opportunities,” he said. 

According to his calculations, average weekly incomes in New Zealand are about 40 per cent lower than those in Australia. 

People are coming back to might face higher costs of living. Relative to incomes, Eaqub calculated:

  • House prices are 15 to 110 per cent higher in New Zealand
  • Rents are 20 to 60 per cent higher in New Zealand
  • Food costs are 40 to 133 per cent higher in New Zealand

Once the borders opened again, he said “we might see an exodus of about 100,000 people”. 

“That's going to mean, all of a sudden, there are not many people around to do the work that we need to get doing,” he said. 

“It is an issue … it’s more those 40,000 to 50,000 people who are not leaving at the moment. New Zealand is a good exporter of people every year. At the moment, we’re not exporting people.”

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This was especially harmful for smaller communities in the provinces who were “exporting our young people like there’s no tomorrow”. 

“I don’t think we should be stopping people from going, but we should really prioritise what is it that’s stopping people from staying here?”