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Will Immigration Become a Barrier to Growth for the NZ Tech Sector and the Wider Economy?

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With net migration exceeding 71,000 in the year to date, newly sworn in Prime Minister Jacinda Ardern has said she expects those numbers to be cut by 20,000 to 30,000 per annum.

What is yet to be seen is how this will be managed to prevent the stifling of economic growth and business growth particularly for SMEs in the ICT Sector. 

The fear among SMEs in the tech sector is lack of access to the talent and skills they require to grow their businesses and continue to innovate. The skill sets already in high demand now will become an even more rare commodity and will become even more expensive and SME’s could face an impossible battle to grow their capabilities. 

The larger corporates will be in a better position to offer more competitive remuneration packages to local candidates with sought-after skills in order to retract and retain staff. But how will SMEs attract and retain the talents they need to grow when skilled candidates are in very short supply and they don’t have the budgets of the larger players? How will even the most innovative kiwi business ventures ever be able to compete on the world stage when they don’t have access to those resources? How will any industry in New Zealand be able to compete on the world stage if they are unable to stay at the forefront of technology? Is New Zealand going to get left behind while the rest of the world moves forward with technologies like AI, Automation, Cloud, Blockchain, Machine Learning, etc. Technology underpins every industry there is and is having an incredible impact on each and every industry imaginable worldwide. It’s not just the tech sector that will fall behind, it’s everything. 

Smaller firms could be at a distinct disadvantage. If forced to settle for unskilled/inexperienced workers this could result in highly costly bad-hires that could sink a business who might not be able to afford to swallow those costs or doesn’t have the resources to develop its staff effectively and fresh IT Graduates often don’t possess the skills/knowledge these businesses require.

MBIE’s 2017 Sectors Report says “Our challenge is to further develop our training and career pathways to meet the demands of the sector. This is not only vital for the future of the sector itself, but also for New Zealand’s economic future.”

It is still unclear how the Government plans to tighten and reduce immigration but we do know that it’s top of the agenda. Immigration policies will change and it will have an impact. We can only hope the tech sector is able to continue to flourish. 

In June 2016, NZTech reported: The NZ Tech sector is a large contributor to the New Zealand economy creating many jobs, GDP and exports. There are over 28,000 companies employing almost 100,000 people…every dollar invested in growing the tech sector brings a $3 ROI…companies that make smart use of internet services are 6% more productive…if all firms made better use of internet services, it could potentially lift GDP by $34b. 

That was last year, and it doesn’t take into account the innovation happening now within AI and other cost-saving error-reducing technologies that are reshaping agriculture, manufacturing, science, medicine, FMCG, retail, construction, finance, and every other industry you can fathom. NZ Tech’s Chief Executive said that the government should position New Zealand as the “high tech capital of the world”. I for one, agree completely. 

NZ’s IT businesses have earned a reputation on the world stage for being flexible, resilient, adaptable and entrepreneurial, with many high-profile projects coming out of our IT sector. Exports from this industry have been growing 14% per year reaching $930m in 2014 according to New Zealand Now. Overseas funding for early-stage New Zealand technology companies has hit a record high, with foreign investment tripling in the past year. What has attracted investors to New Zealand? Our economy has been stable and experienced economic growth for 33 of the last 35 years.

Being centrally positioned, we enjoy a very advantageous time zone for doing business globally, as well as some of the fastest internet speeds in the world. Businesses that have established Research and Development headquarters in NZ have been able to deliver much higher quality tech due to lower cost facilities, lower average wages and less stringent export compliance and regulations for tech compared to other parts of the world. New Zealand has ranked first in the Prosperity Index for six of the last 10 years – talented individuals from all parts of the world want to live here and are attracted to the Kiwi Lifestyle. We are also the ultimate technology testing ground for the English-speaking world - we offer a smaller sized controlled environment far enough away from the rest of the world that companies can release a product, test, re-release and tinker to perfection away from the watchful eyes of some of their competitors.

New Zealand could be the High-Tech Capital of the world if the government backs the sector instead of putting up barriers preventing the sector from reaching its fullest potential. With government backing IT, innovation in NZ could lead to other sectors flourishing too and to finding better, more reliable and more affordable solutions that could make NZ the North Star for those industries as well. If government doesn’t back IT and we aren’t able to access essential IT skills, the IT sector and likely every other sector will suffer as a result.