New Zealand's labor shortage continues

27 August 2007


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A new government report states that New Zealand's labor market will remain tight during the next year as a shortage of skilled workers continues to get worse.

According to the Labor Department's report, the working age population grew by just 0.2 percent during the second quarter. The report also stated that companies are having increasing difficulties finding qualified staff.

The unemployment rate fell to 3.6 percent in the second quarter, causing companies to raise salaries in an attempt to attract and retain employees. Interest rates have been raised three times this year in an attempt to slow spending and fight inflation.

"Labor market conditions will remain tight," said Deputy Secretary for Work Directions Monique Dawson. "Skill shortages remain high and will be a long-term feature of the market. There is a risk shortages could deepen further."

Dawson feels that employers will need to adapt to the changing conditions.

"The labour market has been showing this trend for some time and employers know they need to think outside the square when it comes to recruiting," she said. "They need to consider retraining and up-skilling existing staff before looking for new people and about offering attractive terms of employment."

The skills shortage is a result of strong economic growth for the country. New Zealand's economy grew by 1 percent in the first quarter of 2007 -- the strongest growth in nearly two years.

The government recently lowered the number of migrant places to 45,000 to 50,000 from the previous year's targets of 47,000 to 52,000 in response to the growing economy.

In a speech on the subject last month, Immigration Minister David Cunliffe said that "with the economy strong and New Zealand competing in a global market for skilled migrants, our top priority at present is ensuring we get high quality migrants while not adding to inflationary pressures."

However, New Zealand's point-based immigration program is considered very welcoming to skilled migrants. Active marketing programs, recent changes to immigration law, and migrant satisfaction make Kiwi an attractive destination.