Tony Alexander

Economic Commentaries

Who you gonna hire?

Thursday May 23rd 2013

Last week I spent a couple of days in Christchurch seeing how economic activity there is definitely picking up. The city will be a key driver of economic growth for the country over the next few years with Treasury’s latest estimate being that the rebuild will cost $40bn. But the true level of expenditure will probably be more than that.

I came across an unusually high number of people who volunteered the information that as soon as their repairs recently were completed they had their old carpet ripped up and replaced. Others say they plan taking the insurance money and adding more of their own to improve their house beyond what it was before with better fittings, bathroom etc.

This week I spent one day in Auckland giving three talks and from chatting with people a number of things became obvious. First the housing market is on everyone’s lips with intense interest in where prices are likely to go, extreme discontent with the idea of multi-storey infill housing anywhere near where one lives, and questions about whether the aging population will see house prices falling as old folks sell up.

I pointed out that people have been throwing that house price collapse scenario into the ring for two decades now and I’ve responded by noting an absence of evidence from offshore that population aging is associated with people selling off investment properties or even necessarily downsizing to smaller houses. People want to keep a spare bedroom or two for the grandchildren to visit, a home cinema, gym, or even home office. In fact what I have found repeatedly is that five bedroom houses do tend to get sold but not so much four or three bedroom ones.

In fact we need to question the idea of an aging population meaning a massive reduction in the labour force. If the new 40 is the old 30, the new 60 is the old 50, then presumably the new 70 is the old 60 at least and people are going to try to keep working as long as they can. After all, the airwaves for two decades have been filled with stories of elderly living in poverty and needing to save, yet in the absence of such obvious saving and many having lost money after chasing yield in poorly run finance companies, the need and probably desire to work will remain strong.

This is an important point because once Christchurch really gets cracking, once Auckland house building also gets off the floor, and when overall growth is approaching 4% in the economy, the unemployment rate risks falling quite sharply (maybe back eventually to the 3.5% of 2007). Employers will need to start sourcing employees from less traditional sources. That is a key reason why I started publishing Brain Gain NZ earlier this year and why I have populated it with articles from experts noting the poor HR management of NZ businesses, the cultural challenges, and the need to adjust one’s mindset in order to effectively utilise repats and migrants which businesses will need.

For employers who realise this need the movement to hiring repats and migrants is likely to be a tough three stage process. First they will struggle to believe that the people they want cannot be found locally. They will moan about a need for the government to tighten up on welfare benefits, rabbit on about education, then churn through a number of recruitment agencies trying to find one who can tap into the local body of unemployed really eager skilled people they are convinced are sitting out there just waiting to be called up. They are not.

Stage two then will be the employer reluctantly realising they do need to look at recruitment from offshore. But here is where they will make their biggest mistake potentially – thinking they can treat repats and migrants as they have treated their own Kiwi born and bred staff for the past few years or decades. Those folk who have remained in NZ know how the system works, how positive feedback is a rarity and often the only feedback you receive is when you stuff up, how you can’t propose or promote ideas too far from the pack, and how you have to make sure you never look like you are “getting up yourself”.

Migrants and repats however bring an often very different set of skills, way of thinking, and mode of operation which my survey of three months ago suggests NZ-bound employers will struggle to effectively utilise. The LinkedIn discussion group I participated in late last year tells me that what will happen is that the repats and migrants will either leave the country again, perhaps going to Australia, or they will look to start up their own business, or they will simply keep an active eye open for a better employment opportunity elsewhere – probably at a company run by a repat or a migrant where understanding and utilisation of their offering will be better.

Stage three for the employer will then hopefully become the realisation that the reason they are struggling to retain staff and why their sometimes expensive repat and migrant hires do not stick around is not because of some deficiency on the part of their staff, but of themselves. That acceptance of employment management deficiency is very important because like accepting one has a drinking problem it can lead down the road to redemption and growth. In this instance that means seeking out information on how one’s Kiwi-rooted business and employment culture is deficient and how to go about correcting it. That is what my articles posted under the “What we Lack” tab on my website start addressing and what I get people to write about in Brain Gain NZ. Good luck with your journey.

But that then takes me right back to the previous page where I started writing about employing older people. For some employers they will be the answer. That is, for some employers it will be easier to make workplace adjustments to accommodate the probably very Kiwi-rooted older people well used to our culture of under-statement and keeping your head down, than to make changes which allow effective utilisation of repats and migrants. Make your choice.


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