Dynamic Business: Welcome to the new New Zealand

Professor Paul Spoonley. Photo / Supplied

In terms of demography, the last decade has been a roller coaster.

In 2012, the country was in the doldrums in terms of migration — we saw net losses with 53,800 leaving to live permanently in Australia in that one year alone.

The Baby Boomers (born between 1945-1964), one of the largest-ever generations, were beginning to reach the age of 65 — although many stayed on in the workforce.

At the other end of the life cycle, fertility rates (the number of children born per woman) were still above replacement fertility (2.1 births per woman) at 2.2.

When Covid struck in 2020, a very different scenario emerged. Those aged over 65 numbered 800,000, with about a quarter still in paid work. Fertility had dropped to well below replacement at 1.6 births per woman. But immigration was more than making up the numbers.

In the 12 months to June 2020 (so including about four months of lockdown), the net gain from permanent migrant arrivals was just shy of 80,000, a significant leap from the previous highest annual gain for New Zealand. And there were more than 300,000 migrants on temporary work and study visas in the country.

The result was that New Zealand had an annual population growth rate of 2.1 per cent in 2020, much higher than the average for that year of 0.6 per cent for the OECD, and well above Australia (1.5 per cent) and Canada (1.4 per cent), the other high immigrant countries. New Zealand was only pipped for the highest spot by Iceland (2.2 per cent).

Then Covid came.

New Zealand’s annual population growth is currently at the OECD average. And the much-reduced migration numbers made it abundantly clear how much the country had come to rely on migrant skills and labour.

What of the future? What can we expect in the next decade?

Māori will make up an increasing proportion of the working-age population. The Māori population growth is still growing at a rate of 2 per cent per annum and by the 2030s, about one in five New Zealanders will identify as Māori. Because of their still relatively high fertility and their younger age profile, they will make up a quarter of the working-age population and more than a third of the school-age population.

The Pasifika population will also grow from 8 per cent to 10 per cent, with an age profile similar to that of Māori. More of the working-age population will be Pasifika and they will make up more of the compulsory school population.

Asian communities (we must find a more appropriate and respectful way of referring to these very diverse communities) will be the fastest growing and will make up a quarter of New Zealand’s total population and around 38 per cent of Auckland’s. But like Māori and Pasifika, they will be younger than Pākehā.

Asian communities will make up 7 per cent of New Zealand’s over-65 population compared to the 75 per cent who will be Pākehā. But 30 per cent plus of the working-age population will be Asian. These proportions are a little confusing because of the New Zealand practice of allowing people to multiple-identify with different ethnicities. But that is a product of what happens as partners come from different ethnicities — and they bequeath these different ethnicities to their children and grandchildren. These multiple affiliations and identities will continue to grow in the future.

Pākehā has already become a majority-minority in Auckland. They make up the largest ethnic group but are outnumbered by the other ethnic groups combined. They are ageing much faster than others and their fertility is dropping more significantly as Millennial and Gen Z Pākehā women are having fewer children — or none — and having children much later, in their 30s or 40s.

One of the reasons for these shifts in fertility choice is that many more women are going to university and polytechnics (they currently outnumber men) and they are a much more significant part of the workforce. In 2020, 1.5 million men were in the labour force but women were not far behind at 1.4 million.

Issues such as pay parity and conditions, flexible or hybrid working options, recognition and promotion, or positive female role models and support, become ever more important, both in relation to recruitment and retention.

Recognition of the ageing workforce also becomes a more important issue.

As one of those who conduct the annual survey of employer attitudes and policies for Diversity Works, it continues to puzzle me as to why a majority of employers recognise ageing as an issue, yet most do not have policies in place to respond to an ageing workforce.

Then there is the need to understand and respond to the changing ethnic diversity of the future workforce of New Zealand.

Part of this concerns immigration and migrants. One of the paradoxes is that though employers and sectors have become ever more reliant on migrants, these migrants still report that they experience various forms of racism and discrimination in the New Zealand labour market.

There is still room for improvement in terms of helping migrants to adjust to New Zealand or in acknowledging what they contribute to the workplace.

While the ethnic diversity of the working-age population and the workforce continues to change — and to change significantly — as this decade continues and the 2030s arrive, the ability of employers to recruit Māori, migrants and ethnic minorities — and to retain them — will distinguish those who are successful from those who will struggle to fill their labour and skill needs.

Alongside this is the ongoing “labour crunch”; the gap between labour supply and declining fertility, combined with ageing, does not match demand. This began in high-income countries as the global financial crisis receded after 2012, but Covid has put a big exclamation mark behind this challenge.

The demography of high-income economies means the gap between supply and demand will grow over the coming decades.

As the Productivity Commission made clear earlier this year, immigration is part of the answer but attention needs to be paid to improving productivity and the education and training options for the New Zealand resident population. And, I’d add, to addressing the ever-growing issues of workforce diversity.

· Distinguished Professor Emeritus Paul Spoonley is the author of “The New New Zealand: Facing Demographic Disruption” (2021).