Explainer: Are the impacts of brain drain being overhyped and how worried should the average Kiwi be

Kiwis, employers and experts alike are increasingly worried about the impact the ongoing brain drain is going to have as figures show more people are leaving the country than arriving. 

Figures show monthly net migration has been in the negatives since March last year and it's hitting businesses hard. 

Nearly every sector is facing severe worker shortages with the unemployment rate sitting well below four percent for several months. Hospitality, healthcare, education and tourism are being hit particularly hard by the shortages. And the most recent migration figures spell more bad news for employers and the economy. 

Statistics New Zealand data released on Thursday shows Aotearoa saw a net migration loss of 11,500 permanent and long-term residents in the year to June. The figures show the lowest net migration since the 1990s.

It comes after a loss of 10,700 people in the year to May and 8700 people in the 12 months to April.  

Stats NZ population indications manager Tehseen Islam said migrant arrivals and departures are both at their lowest levels since the 1990s.

"Migration gains or losses are historically due to a combination of factors, which include relative economic and labour market conditions between New Zealand and the rest of the world, and immigration policy in New Zealand and other countries," Islam said. 

The net migration loss was largely driven by non-New Zealand citizens, with 36,148 people leaving in the year to June while just 29,260 arrived.

For citizens, 20,000 arrived (down 44 percent year-on-year) and 24,600 left (up 11 pct).

The exodus comes amid challenging economic conditions in Aotearoa. High inflation is pushing the cost of goods and services up and forcing the Reserve Bank of New Zealand to take drastic action by repeatedly hiking the Official Cash Rate (OCR). As a result, mortgage rates are skyrocketing along with the cost of groceries, fuel and almost everything else. 

Anecdotal evidence for several months has shown young, skilled New Zealanders are looking overseas in the hopes of cheaper living costs. And employers are concerned it's going to make staffing shortages worse. 

This appears to be backed up by the recent figures which show young adults are driving the losses. The figures show Aotearoa saw a 5600 net loss of people aged between 18 and 27 in the year to June. That was compared with a net loss of 1800 young adults in the 12 months to March. 

So how bad is the brain drain really? Well according to Infometrics principal economist Brad Olsen it's bad enough to warrant legitimate concern. 

"There's definitely a brain drain - but importantly, there's not enough of the 'usual' brain gain to offset New Zealand's losses of talent," Olsen told Newshub. 

He said while people are always leaving New Zealand, this is normally offset by people arriving as well but the recent figures show the balance between the two is out of whack. 

"Stats NZ numbers show the numbers of departures from New Zealand are closer to normal than arrivals into New Zealand, meaning that more people are leaving than are coming in."

Olsen said the biggest concern is the lack of young talent coming into the country combined with the "considerable" and ongoing loss of talent. 

"With more young people moving away, and not as many moving to New Zealand, the pressure will remain on businesses to find staff to do work. There's a lot of work to be done, with high numbers of jobs being advertised but no capacity to resource these jobs."

He said concerns about brain drain are "well-founded" and until it's resolved Kiwis can expect to continue experiencing disruptions and economic pressures - including inflation remaining higher for longer. 

"Without people to do the work, New Zealanders will continue to encounter disruptions in their lives as it takes longer for things to be done. 

"We've got more work on than we have staff to do this work, and the pressures on the economy are likely to mean that inflation remains more persistently higher for longer for as long as the economy is this stretched."

But it's not just the economy that brain drain hurts, it also makes work-life balance more challenging for many employees. 

"Recent figures from Stats NZ show that New Zealand's workforce has been unchanged for the last nine months, with no growth in jobs observed. 

"But with so much work to be done, Kiwi workers are working longer hours on average - and there's only so long we can burn the economic candle at both ends.

"Two growing concerns emerge - will New Zealand continue to see people heading overseas in larger numbers? And will we see any major turnaround in arrivals into New Zealand? 

"If arrival numbers remain low, and departure numbers continue to hold up, New Zealand risks seeing a longer period of net losses and greater difficulty resourcing an economy that is already under pressure," Olsen warned. 

Not unexpected 

But Massey University associate professor Matt Roskruge has a different view. Roskruge told Newshub with the border reopening it's not unexpected Kiwis are heading overseas.

"There have been ongoing concerns in the media and among New Zealanders of a 'brain drain'...

"However, analysis over the years has provided little support for the 'brain drain' hypothesis, and there is nothing in the current figures alone that I think justifies the level of concern currently being presented," he said. 

Roskruge said that doesn't mean it's a "non-issue" but he said given the reopening of the borders it's not surprising and likely to benefit New Zealand in the coming years. 

"It is not surprising that we are seeing an outflow both of younger New Zealanders - eager to engage in their OE or explore their opportunities overseas - as well as migrants who remained in New Zealand during the COVID period and are now, through push (e.g. visa expiry) or pull (e.g. family, opportunities) returning home or venturing onward overseas.

"I don't think there is sufficient evidence to support a 'brain drain', and would be surprised if net migration wasn't strongly positive in this forthcoming year as we reopen our labour market to international students and skilled workers and relax visa requirements."

He said young people will continue to head overseas but this isn't a bad thing because they will return with experience and skills to strengthen the economy. 

"Even if people never return, there are benefits to having an overseas diaspora- these people are then able to help their family in New Zealand build ties and international networks that have spillover benefits into the economy - especially for import/export/entrepreneurial activities.

"I would expect that these statistics will be somewhat reversed in the following year as the built-up demand for New Zealanders to leave and our overseas guests to return home was released post-COVID, and now we bring back in those students and migrant workers who have been seeking to come and work here but unable with the covid restrictions and the severe lack of capacity to process visas."