In a troubling reflection of New Zealand’s deteriorating economic climate, a record number of Kiwis have chosen to leave their homeland, driven by rising unemployment, soaring interest rates, and sluggish economic growth. According to the latest data from Statistics New Zealand, 131,200 people departed the country in the year ending June 2024, marking the highest annual departure rate on record. This exodus comes as the country grapples with its second recession in 18 months and faces a host of other economic challenges.

The economic downturn in New Zealand has been marked by a series of grim economic indicators. The country’s economy contracted by 0.1% in the final quarter of 2023 and by 0.7% on a per capita basis, as reported by Stats NZ. This contraction follows a 0.3% shrinkage in the previous quarter, officially placing New Zealand in a technical recession. Over the past 18 months, the nation has faced two recession periods, with negative GDP figures recorded in four of the last five quarters. The annual growth rate has stagnated at a meager 0.6%, underscoring the persistent weakness in economic performance.

The central bank’s forecasts had anticipated a flat economic growth figure, with economists predicting a range of outcomes from a narrow contraction to fractional growth. However, the reality has been even bleaker, reflecting a broader trend of economic stagnation.

Record migration figures

Amidst this economic turbulence, New Zealanders are leaving the country in unprecedented numbers. Statistics New Zealand’s latest report indicates that 131,200 people left New Zealand in the year to June 2024. This figure is provisional and represents the highest annual outflow on record. Of those departing, approximately one-third are headed to Australia, highlighting the country’s role as a major destination for New Zealand emigrants.

The data reveals that 80,174 of those leaving were New Zealand citizens, a figure nearly double the number seen before the COVID-19 pandemic. This significant increase in citizen departures underscores the growing dissatisfaction and uncertainty among New Zealanders regarding their economic prospects.

Impact on net migration

Despite the high departure rates, net migration—defined as the number of people arriving minus those leaving—remains robust. However, economists anticipate that net migration will decline as the economic conditions in New Zealand deter potential immigrants. The softer economy and reduced job opportunities are expected to lessen the appeal of New Zealand as a destination for foreign nationals.

The surge in departures and anticipated decline in net migration reflect broader concerns about New Zealand’s economic health and its impact on population dynamics.

Declining economic indicators

Further compounding the country’s economic woes are the deteriorating performance indicators across various sectors. In the 2024 CGGI rankings, New Zealand fell out of the top 10, landing in a middling 13th place. This drop marks a decline from the previous year’s ranking of 9th. Particularly concerning is the country’s fall in “leadership and foresight,” dropping from 6th to 15th place, and the “attractive marketplace” ranking, which fell from 15th to a dismal 22nd.

Additionally, the OECD’s PISA assessments reveal a steady decline in New Zealand students’ performance in maths, science, and reading. These trends reflect an erosion in the fundamental educational and economic foundations of the country, raising alarms about long-term sustainability.

In response to the unsustainable migration levels and economic challenges, New Zealand has implemented stricter work visa regulations. Authorities have introduced new requirements for low-skilled applicants, including English-language proficiency and a reduced visa duration of three years, down from five. Immigration Minister Erica Stanford emphasized that these changes are part of a broader strategy to rebuild the economy and address concerns related to migration levels.

The tightened rules also affect applicants for most work visas, who now need to meet specific criteria for skills and work experience. Employers are responsible for ensuring that migrants meet these requirements before offering employment. Additionally, the government has scrapped plans to fast-track residency for certain occupations, such as welders and fitters, signalling a shift toward a more selective immigration policy.

The new regulations aim to attract and retain highly skilled migrants, particularly in areas with skill shortages, while prioritising New Zealanders for jobs in fields with no such shortages. This approach reflects the government’s focus on balancing immigration needs with domestic employment priorities.

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What this means for the job market?

Despite relatively strong employment figures, the high interest rates have dampened consumer confidence and spending, creating a challenging environment for the job market. According to IMA Asia, while job losses have not yet reached a crisis level, major employers across various sectors are already feeling the pinch. 

Companies such as Amazon, garden centre chain Bunnings, and food manufacturer Goodman Fielder, alongside several universities, announced staffing cuts. This trend is a worrying sign for both current employees and job seekers.

The NZ Institute of Economic Research (NZIER) in its latest quarterly survey of business opinion highlights that while companies are still hiring, the demand for new staff is waning. Retailers, manufacturers, and the service sector are showing reduced enthusiasm for expanding their workforce. This decline in hiring demand reflects the broader economic uncertainty and reduced consumer spending power.

The impact of this record emigration on the job market is multifaceted. On one hand, the departure of skilled and unskilled workers alike could lead to short-term gaps in the labour force, potentially benefiting those who remain as job competition lessens. On the other hand, a sustained exodus of talent could undermine the long-term growth prospects of various sectors, as businesses struggle to fill critical roles.

New Zealand's record emigration figures signal a period of significant economic turbulence and uncertainty. The immediate effects on the job market include potential labour shortages and reduced hiring demand, which could further impact the nation's economic stability. As the country navigates these challenging times, it will need to address both the causes of the emigration trend and its consequences to steer towards a more stable and prosperous future.