By Rodney Dickens*
Net migration measures the inflow of permanent and long-term immigrants less the outflow of people leaving the country on a permanent or longterm basis.
In the last year there has been a 30,000 improvement in net migration, as shown in this next chart.
This has important implications for existing housing demand, as covered in the Housing Prospects reports, new housing demand, as covered in the Building Barometer reports, and for consumer spending and economic growth, as covered in the Interesting Times reports.
For info on these pay-to-view reports use the following link to our website – www.sra.co.nz.
The chart shows that the major source of the improvement in net migration has been a large fall in emigration.
We provided clients with an advance warning of the fall in emigration, with what is driving the fall and the outlook for emigration covered in our pay-to-view reports.
However, there has also been a significant increase in immigration, which is partly related to what is driving the fall in emigration.
But the largest source of the increase in immigration has been more immigrant work visas being approved, which is the focus of this Raving.
The left chart above shows that in the mid-2000s the annual numbers of immigrants arriving on work visas was around the same as the numbers arriving with residency visas, but around half the numbers arriving with no visas (i.e. Kiwis returning from OE and Australians arriving who don’t require visas).
In the 12 months ended in September immigrants with work visas had increased to 28,914 compared to 29,768 for no visa arrivals and 12,383 for arrivals with residency visas.
The right chart above shows the seasonally adjusted monthly numbers and the three month averages of the seasonally adjusted numbers annualised. In the three months to September work visas reached 30,756 on a seasonally adjusted and annualised basis.
Like most aspects of migration, work visas are highly seasonal so the seasonally adjusted numbers better show the underlying trend. For access to a discussion of how to interpret seasonally adjusted data use the following link to a free report on our website - http://sra.co.nz/pdf/SeasonalAdjustment.pdf.
The adjacent chart shows that the selected part of Canterbury – Christchurch, Selwyn and Waimakariri – has experienced a sharp increase in immigration from overseas in the last couple of years that explains much of the national increase in immigrant arrivals with work visas.
The demand for workers for rebuilding in Canterbury is largely behind the increase in work visas in the last couple of years.
This link is the Canterbury Skill Shortage List approved by Immigration New Zealand. The list is reviewed quarterly but was last changed in November 2012 when 13 additional job categories were added (see more info about the additions and a general discussion of the issue).
This link is to a recent article that discusses the sorts of jobs where skill shortages are most noticeable in Canterbury and how the types of skills required will change as the emphasis shifts from demolition to rebuilding.
The Reserve Bank (RB) produces the most comprehensive “official” forecasts for rebuilding in Canterbury, with the adjacent chart sourced from the September Monetary Policy Statement (MPS).
The RB predicts that rebuilding activity will increase from 0.7% of total economic activity or GDP in 2013 to 1.9% by 2017. In dollar terms this equates to around a $2.5b increase in spending.
Capacity constraints and the insurance bottleneck discussed in our pay-to-view reports probably mean the build-up in activity will be slower than the RB is predicting, which the RB acknowledged as being possible in the September MPS.
However, there should still be a large increase in rebuilding activity over the next few years that will result in greater demand for skilled workers and, most likely, increased work visas.
The left chart below shows that the increase in work visas since the start of 2012 has been quite closely in line with the increase in consents for new dwellings in Canterbury, which reinforces the link between rebuilding and immigrant work visas.
The right chart shows that the fall in work visas between late-2008 and mid-2010 may have been a response to the deterioration in the national labour market that is reflected in the increase in the unemployment rate.
However, the rebound in work visas since mid-2010 has been accompanied by a limited improvement in the state of the national labour market, as measured by the modest fall in the unemployment rate.
Canterbury rebuilding much more than a national improvement in labour demand is the primary source of the surge in immigrant workers.
Sources of immigrant workers
Unfortunately, Statistics NZ doesn’t supply the breakdown of immigrants arriving with work visas for all countries of residence, but only for the 12 countries shown in the adjacent pie chart.
The adjacent pie chart shows the % of total work visa immigrants by country of residency for the year ended September 2013.
The second pie chart shows the numbers of immigrant work visas by country of residency rather than the percentages of the total.
When it comes to working immigrants NZ relies most on the UK, but the most interesting feature is that 36% of immigrants arriving with work visas come from countries other than the 12 listed in the pie charts (i.e. Other).
NZ relies on immigrant workers from a wide range of countries.
Ireland is one country not specified by Statistics NZ but has been mentioned by some as a country from which workers for the Canterbury rebuild could come.
While Statistics NZ doesn’t supply data for Irish work visas it does supply data showing total immigration numbers for people born in Ireland (blue line, bottom chart).
Over the last few years there has been a reasonably significant increase in immigrants of Irish birth.
I assume the upturn partly reflects Irish workers attracted by the rebuilding, although the Irish upturn started before the first earthquake.
There has been some underlying upside in Irish immigrants as well as a possible are more recent boost from Canterbury rebuilding.
On viewing data on total immigration by country of birth the other country not included in the list of 12 shown in the pie charts that has experienced a significant increase in numbers the last few years is France (i.e. immigrants of French birth).
It is possible that this partly reflects French born skilled workers to work on the Canterbury rebuild, but like immigrants of Irish birth, immigrants of French birth started to increase before the first earthquake (i.e. before 4 September 2010).
The story is a bit different in terms of where the largest increases in immigrants with work visas have been.
When comparing the number of work visa immigrants for the year to September 2013 with the year to September 2010 the Philippines has experienced the largest percentage increase, followed by Other (i.e. all countries other than those specified), Australia and China.
These four have experienced percentage increases greater than the average increase for all countries (i.e. the 48.8% increase reported in the pie chart for the Total), while the remaining nine have experienced below average increases.
Interestingly, the UK has experienced the smallest percentage increase.
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*Rodney Dickens is the managing director and chief research officer of Strategic Risk Analysis Limited.