NZ facing possible brain drain

Jackson Thomas says he moved from Auckland to Sydney in March seeking better pay and career opportunities and has already found both.

Thomas, a former journalist at Stuff, said he knew what his potential ‘‘earning ceiling’’ would be if he continued working in media in New Zealand, so decided to pursue better pay in Sydney. ‘‘As soon as there was an opportunity for employment in that space I jumped at it.’’

The 27-year-old now works fulltime as a content editor for fashion and sports media start-up YKTR, which sells clothing and produces videos, podcasts, blogs and social media content.

He also runs an online secondhand clothing marketplace called Vintage Kit, which collaborates with rugby league players to help drive sales.

He started Vintage Kit while living in New Zealand but had been able to grow the business in Sydney because he was closer to the rugby league industry as well as his customer base.

‘‘I’m basically doing the same thing I was back home. It’s just there’s no cap on earning capacity over here.’’

His annual income from both his waged income and his business would result in him earning up to $35,000 more a year in Sydney than he was earning in Auckland, he said.

‘‘So it’s a bit of a no brainer for me.’’ On top of that, the cost of living was cheaper, he said.

Jackson moved to Sydney with his wife, and the two live in a one-bedroom apartment which costs less in rent than what they were paying in Auckland, he said. ‘‘We live exactly the same lifestyle here but make more money, so we actually are better off here then we were back home.’’

Thomas said six of his best mates who he grew up with in west Auckland were all now living in Australia earning far more than they were in New Zealand. ‘‘Everyone skipped over just to make a bit more money.’’

Stats NZ figures for the March quarter show the average weekly income for fulltime workers in New Zealand is $1328.43.

In Australia, the average is A$1711.60 (NZ$1807.66) for fulltime workers, as of November, according to the Australian Bureau of Statistics.

Stories about tech graduates being offered up to $215,000 to work in Australia, and Australian headhunters poaching staff from New Zealand’s already labour-starved hospitality sector highlight just how competitive work in Australia is.

Economist Tony Alexander said wages had always been higher in Australia because of a greater level of capital investment by businesses, resulting in higher productivity.

‘‘Pick a letter of the alphabet, pick what

the profession is, you’re going to get paid more there than here,’’ Alexander said.

There was also a shortage of staff across most sectors in Australia and recruitment companies were on a hiring drive in New Zealand seeking candidates for Australian positions, he said.

Australia had always been an attractive employment option for New Zealanders, he said.

‘‘We Kiwis have historically looked to spend some time in Australia invariably for labour market reasons.’’

He said with the attractiveness of moving to Australia soaring there was a risk of negative net migration flows for New Zealand soon after the borders opened, and probably before.

There was increasing talk of a brain drain to Australia, words not spoken for perhaps one and a half decades, he said.

‘‘We are going to see a good number of people disappear. We have seen it many times before.’’

Not only were incomes higher in Australia, the cost of living tended to be lower so the potential to save a nest egg before returning home was greater, he said.

He said he had no expectations that the wage and productivity gap between New Zealand and Australia would narrow, if anything the opposite would happen.

‘‘I don’t expect the gap is going to narrow at all, I think it’s going to blow out further.’’

Significantly more capital investment in New Zealand businesses was needed to boost productivity, he said.

While there may be an increase in labour productivity growth in New Zealand over the next few years, the lift would be greater across the Tasman, he said.

There are estimated to be just over half a million New Zealand-born people living in Australia, making up just over 2 per cent of the population.

The Productivity Commission’s director of economics and research Philip Stevens said it had not done comparisons of wages between Australia and New Zealand recently.

‘‘The simple explanation as to the differences in wages in the two countries is

that Australia is more productive than New Zealand.’’

New Zealanders worked longer hours for less output than their counterparts in Australia, he said.

‘‘With lower productivity, there is less available to pay workers and firms.

‘‘In terms of what to do about it, the obvious starting point is become more productive.’’

The commission had made suggestions on how to achieve that such as exporting unique products at scale, strengthening trans-Tasman economic relations and profits, and wages, which raised the question: Why is the Australian economy so much more productive?

‘‘It’s not because their workers are smarter than ours because our workers go over there and get Aussie jobs.’’

Australian firms put more money into capital investment than New Zealand businesses did which made their industrial workers more productive.

This resulted in higher wages for not just those workers but workers across all industries in Australia, he said.

So why don’t New Zealand businesses invest as much?

‘‘I think it’s because we don’t really want to. We’re not really hard drivers like the Aussies. We don’t really like big corporate institutions, and we have a lot fewer of them.’’

New Zealand culture was different to Australian culture, and we were happy to accept the consequences of that, he said.

And happy we are, with New Zealand consistently ranked higher than Australia on happiness indexes, he said.

Infometrics senior economist Brad Olsen said Australia was not all that attractive at the moment given the Covid-19 outbreak there but would become more so over time.

‘‘There’s certainly more interest in exploring the option,’’ Olsen said.

People looking to cross the ditch now may find it more difficult to find jobs in Australia given the various lockdowns, he said. The relative position of the labour market in either country was often a dictator of traffic flows either way.