IMMIGRATION: THE STATE OF THE NATION

By Heather Barker Vermeer

Immigration provides a vital contribution to New Zealand society; its economy, its resources, and its communities. It enables families to reunite, fills essential skills gaps, expands worldviews, adds capital and contributes to our country in innumerable ways. So, how is immigration tracking in this part of the world, and what impact does that have on the world of franchising?

National media headlines such as, ‘The brain drain continues as Kiwis are leaving the country at record levels’ this winter, are backed up with official data showing 131,200 migrant departures in the year to June 2024 - the highest on record for an annual period.

Net immigration currently sits at 73,300. Provisional estimates provided by Stats NZ in August, for the year to June 2024 year, show migrant arrivals at 204,500, down 1% on the previous year, while migrant departures sit at 131,200, up 33%.

This net migration gain is made up of a net gain of 128,500 non-New Zealand citizens and a net migration loss of 55,300 New Zealand citizens. For potential and recent immigrants looking for business opportunities, this points to more competition for opportunities among new immigrants to Aotearoa New Zealand, but the possibility of fewer existing Kiwis looking for businesses.

So, what does this all mean for franchising, here in New Zealand?

Labour shortage was identified as the greatest foreseeable challenge among respondents in the last National Franchising Survey conducted by Massey University. The lack of availability of suitable/skilled staff prompted 37% of franchisors to actively recruit migrants. As of 2021, migrants or ‘new Kiwis’ comprised 19% (median) of all franchisees. Results of the 2024 survey are expected later this spring.

This year’s culls at media companies Three and TVNZ, and across the public sector, have added to New Zealand’s potential labour supply, particularly in the Wellington region hardest hit by these sweeping cuts. With immigration at already high levels, the fallout from such a wave of redundancies can add to these numbers to create a buoyant labour market. It can also go too far, with supply too heavily exceeding demand.

For franchisors seeking franchisees and for franchisees seeking staff, this could be a boon time; there is more talent to choose from, leading to better-performing franchises.

Being part of a franchise group can offer new immigrants an attractive, well-supported network to belong to; a safety net, which serves as an economic, as well as social support. It allows freedom to ‘create a new life’, while eliminating many of the risks associated with setting up business on your own. It can also allow a smoother path to residency and help overcome some visa hurdles.

Visa changes – the latest

On 29 August, the Government made short term changes to avoid shortages in select sectors ‘while long-term Accredited Employer Work Visa (AEWV) changes are being decided’. From 1 October, new visa charges will be introduced across almost all visa categories. This may prove a minor deterrent to those considering immigration or be a cost that that will be passed onto, and need to be factored in by, franchisors or franchisees hiring.

“Until now, our immigration system has been heavily subsidised by taxpayers. The changes we’re making are shifting the cost to those benefiting from the system. We’re ensuring it is self-funding and more efficient,” says Immigration Minister Erica Stanford.

“The charges remain competitive in comparison to countries like Australia and the United Kingdom, so we are confident New Zealand will continue to be an attractive destination to live, work, study and visit.”

This follows changes to AEWV announced in April and introduced in June, which were widely welcomed by New Zealand’s franchise sector. These ensure franchisees are now treated equally to other employers in New Zealand when it comes to employer visas.

Further changes announced this winter concern dependents of work visa holders who, from the end of October, will be able to apply for the right to work part-time, provided they hold an eligible visitor visa and are awaiting residence visa approval. This means young migrants who have left high school, and are aged 17 to 24, will be entitled to work up to 20 hours per week during the school year, and up to 40 hours per week over the summer holiday period. This aligns with work rights for available to Year 12 and 13 students on a Dependent Child Student Visa.

These changes should help contribute to an increase in the available seasonal workforce, helping franchises fill part-time and seasonal vacancies in some sectors, such as hospitality and retail.

A complicated narrative

In August, the quarterly Westpac New Zealand Economic Overview brought with it some unexpected labour supply data, which Westpac Chief Economist Kelly Eckhold said, ‘further complicates the narrative’.

“One of the main surprises in this data was in relation to labour supply,” Eckhold said. Westpac expects the unemployment rate to peak at 5.6% next year, the overview revealed. “The cooling economy over the last couple of years is now being accompanied by a more substantial softening in the labour market. Unemployment began rising gradually from 2022 but has picked up the pace in recent quarters.

“Employment growth is expected to turn negative in the year ahead as job losses increase. Slowing net migration will also mean substantially lower growth in the working-age population.

“Departures of New Zealanders to Australia are likely to remain high over the year ahead. Job prospects are relatively more favourable in Australia, and we expect the unemployment rate there will rise more gradually than in New Zealand.

“We expect the balance to return to a net inflow of around 40k a year over the longer term. New Zealand remains a relatively attractive destination for much of the world, and our economic performance should return more in line with our peers once inflation is tamed and interest rates can fall.”

The economic overview indicated the surge in arrivals in 2022-23 reflected a catch-up after the Covid-19 pandemic border closure. And this, combined with the slowing domestic economy, suggests most employers are no longer facing the pressure of worker shortages, it says.

Kelly told his audience at the presentation of the latest Westpac New Zealand Economic Review, on August 21, “We think we are going to go from 3% population growth to 0.4%.

“There has been strong population growth over the past year. It seems we are now past the peak in terms of net migration. We will see the labour market continue to strengthen towards the second half of next year.”

Business sales boost

In the business sales market in New Zealand, an ABC Business report on the last quarter showed completed business sales were up 37% at 112 business sales compared to 82 business sales in the same June 2023 quarter. According to the quarterly report, 112 completed business sales is the highest number on record for the first three months of a new financial year, based on 37 years of data.

ABC indicated the key driver for rising business sales is increasing demand, with two distinct buying groups contributing to the elevated demand for business ownership:

1. New immigrants to New Zealand at record levels, with a high proportion preferring to buy a business rather than take a salaried/ employee role. These immigrants are largely Indian, Chinese, and Filipino.

2. Increased redundancy levels from corporate and government entities are bringing more people to the market with an interest in business ownership. The job market is especially tight for higher-paid roles, leading these individuals to view business ownership as the most effective way to replicate their lost incomes.

Business prices have remained flat, ABC reported, compared to last year.

Weeding out poor practice

Meanwhile, teams from the Ministry of Business, Employment and Innovation (MBIE) have been continuing to clamp down on employers engaging in poor practice when it comes to employing migrant workers. In a joint-agency operation, with the Labour Inspectorate and Immigration New Zealand, 11 hospitality and retail businesses in the Queenstown area were inspected following complaints of breaches of employment and immigration legislation.

Brendon Strieker, Compliance Manager for the Labour Inspectorate’s Southern region, said that while the volume of migrant exploitation identified by the Inspectorate across New Zealand has decreased from previous highs, the retail and hospitality sectors remained areas of poor behaviour.

He said the Inspectorate viewed exploitation among the most serious breaches of employment standards. “Exploitation of vulnerable workers undermines the labour market by undercutting fair competition and causing great hardship to the individuals affected. As well as harming people and stifling innovation and productivity it also harms New Zealand’s international image and trade.”

The Franchise Association of New Zealand advocates for best practice across member franchises and works closely with MBIE in its efforts to ensure safe, fair workplaces for immigrants in franchising, as part of its wider advocacy and practical work.

Learn more and level up

In the following pages, as well as at our website – www.franchise.co.nz – you will find extensive reading on how to find a franchise opportunity to suit you, as a recent or even potential immigrant to New Zealand. And learn how franchising can help support a move overseas, financially and much more.

For newcomers to franchising, or those looking for fresh opportunities, head to our unique directory at the back of this magazine (page 60), and online, to browse the latest franchise businesses for sale in New Zealand.

For more on the new immigration levies effective from 1 October 2024, and all the latest New Zealand immigration announcements, see www.immigration.govt.nz