Economists Say Immigration is Key to Ending New Zealand Recession

By Phil Mercer
Sydney
13 May 2009

Some economists warn that New Zealand will suffer if it cuts immigration because of the recession. As unemployment rises, there is growing pressure on the government to reduce its intake of skilled workers, imitating decisions made across the Tasman Sea in Australia.

Unemployment in New Zealand is at a six-year high and stands at five percent. The economy slipped into recession last year, well before many other developed countries, and the chances of a speedy recovery appear slim.

The International Monetary Fund expects the New Zealand economy to shrink by two percent this year.

Unions: scale back immigration program

Trade unions argue that in such dismal economic times the government in Wellington should reduce the level of skilled migration to protect local workers, especially in hard-hit industries such as construction.

Union officials think New Zealand should follow Australia's example and scale back its immigration program. Canberra cut migration levels by almost 15 percent because of the global economic slump.

Some economists, however, think this is a short-sighted view.

British economist Philippe Legrain says New Zealand needs to prepare now for economic recovery by keeping immigration strong. He says that new migrants are a lifeline to the world economy and a "launch pad" for recovery.

"Different people, with different experience, different ideas, different perspectives sparking off each other can create new solutions to problems, can help to innovate and it is precisely in a recession that businesses need to innovate in order to be prepared for the recovery," he said.

Some migrants complain they are being overlooked

Some well qualified migrants complain that they are being overlooked when applying for suitable positions in New Zealand.

Enoch, who arrived from Rwanda in 2002 armed with two university degrees and the ability to speak four languages, says it took him two years to find work.

He thinks companies in New Zealand are too ready to dismiss overseas qualifications and experience.

"When you have work experience that can be transferred to businesses here is what matters and sometime some employers do not look closely to the CVs to find what is really your experience and what you can do for their businesses," he said.

PM resists calls to scale back immigration

So far, New Zealand's conservative Prime Minister John Key seems likely to resists calls to scale back immigration. Mr. Key says that skilled foreign workers will help the country of just over four million people to eventually recover from its recession.

The largest groups of migrants settling in New Zealand come from Britain, China and Australia, followed by Samoa and India.