Why we shouldn't fear the 'brain drain'
If you’re young, free and qualified, but this week’s Budget doesn’t deliver much hope, read on.
The best wealth-enhancing tip a 50-year-old financial commentator could give a 25-30-year-old is about to be revealed.
No, it’s not starting a business. It’s not KiwiSaver. It’s not buying a house, and it’s certainly not sharemarket trading or crypto-bottom fishing.
It’s far simpler than any of that: “Get out of here.” Yes, go. Pack your bags, grab a friend or partner and leave New Zealand. And don’t come back permanently for at least five years. If you’re a 50-year-old parent and reading this, it’s your job to encourage it.
It’s a time-honoured path.
Right now, the potential “brain drain” is making regular headlines. The borders are open and – shock horror – the estimates seem to ping from 50,000 to 150,000 of us leaving.
This is not news. It’s normal. We’ve always done it in these volumes, and it goes in cycles. Please don’t feel an ounce of guilt. You will repay the country in spades when you come home, get a promotion, start a business, expand our local knowledge, work at a higher level and pay lots of tax into the government kitty.
If we go back to 1997, a 27-year-old-me and 60,000 other Kiwis left home. Migration was still slightly positive, as 67,600 people had the opposite idea. I came back for Christmas 2002, along with 134,000 others. That year had big inflows and only 73,000 departed. It was strong positive net migration of 60,000 people. House prices shot up before my eyes.
From 2003 onwards, anything from 80,000 to 112,000 Kiwis have flown the nest annually.
We’re a nation of people who need to travel to get experience. There’s a long history of positive net arrivals, as we encourage new migrants to bring their skills to us.
Of the past 30 years, only seven have seen negative migration (more people leave than arrive). The largest net outflow was 2011, with a loss of 16,000 people.
It's all part of the economic cycle.
The world economy is going through a period of dramatic structural change as both prices and wages adjust to a commodity crisis and supply squeeze. New Zealand can’t escape this.
There are now many examples of Kiwis being significantly underpaid compared to those in Australia or internationally. While there’s always been an accepted gap for lifestyle, mobility of labour causes the market to adjust. It can be painful, but economic cycles are.
We have to stop thinking that economic change and wage rises will occur on the mere prediction of a brain-drain. No government or employer ever pre-empts. They sit and let it happen until their hand is forced by employees leaving and taking action.
Due to our border closure, we are behind the world. Labour markets are tight and jobs are easy to secure offshore. Other countries have skill deficits, and they’re paying to fill those.
Go and be part of this economic cycle. It’s a big one full of change, but like those of us who went before you, you’re unlikely to have regrets. Enjoy the experience, whatever it may bring.
Leaving New Zealand comes with plenty of caveats:
Make sure you’ve completed your qualifications and got a few years’ experience.
Don’t fear you’re too junior; this is a launch pad.
Go somewhere you’re allowed to work in your profession.
Do your research on living costs, flat sharing, renting and local house prices.
Don’t dismiss buying a property while you’re away. Not every country has out-of-control prices. If you qualify to work somewhere like the UK, cities such as Cardiff and Manchester are full of flats and small, terraced houses.
Do your research on salary levels, but don’t be put off if they’re not much different from home. It’s the trajectory that differs.
Don’t join the work-from-home crowd when you get there. They’re now despised. Be prepared to turn up and work hard.
Don’t become a barista for longer than six months while you’re getting the fun stuff and some initial travel out of your system.
Don’t skip the barista/shop worker step, even if you’re a lawyer, engineer or medical professional. Get any job when you arrive, as it keeps you busy and positive with new friends. Waiting for your phone to ping with the perfect job interview is irritating.
This doesn’t work for lifestylers tapping on laptops in cafes, or those wanting to be ‘insert-anything-fun’ instructors. Rest assured, these people are cool but poor all over the world. If you’re heading for the Alps or the Algarve, it’s not a money-making exercise.
Janine Starks is the author of www.moneytips.nz and can be contacted at moneytips.nz@gmail.com. Opinions are a personal view and general in nature. They are not a recommendation for any individual to buy or sell a financial product. Readers should always seek specific independent financial advice appropriate to their own circumstances.