The talent shortage: Scarcity, stinginess, or confusion?

Published on the 18/06/2021 | Written by Heather Wright

NZ Tech talent shortage

Is New Zealand’s closed border a scapegoat for deeper issues…

Just over 48 hours after NZTech launched a survey into tech experiences with the critical workers immigration exemption around 150 people had filled in the survey.

It’s indicative of the growing concern from companies around the difficulties of getting critical technology staff – a shortage that Graeme Muller, NZTech CEO, says is holding back New Zealand’s economy, slowing the digitalisation of businesses and slowing growth for digital exporters.

“When we talk to Immigration they say use the ‘other critical workers pathway’ and that there should be no issues getting tech people in because they are on the skills shortage list,” Muller says. “Yet we are constantly hearing people say they can’t get people to fill roles in New Zealand and they keep getting knocked back by Immigration NZ and can’t get people in.

The government is trying to create a digital boost but they have turned off the tap of the people who are actually going to provide the service.

“The government is spending $15 million trying to create a digital boost, trying to increase the digital uptake of companies but they have turned off the tap of the people who are actually going to provide the service,” Muller told iStart.

Border restrictions put in place last March mean the only way technology workers can come to New Zealand is under a critical worker exemption. There are specialist exemptions available – critical healthcare workers for example (interestingly that includes bringing in physiotherapists – a valued role certainly, but critical for New Zealand?). There’s no such category for tech workers, leaving IT in the catchall category of ‘other critical workers’ – a category where the exemption is, in the words of Paul Janssen, senior consultant at immigration services provider IMMagine Australia and New Zealand, ‘really, really high’. Short of finding a worker internationally who just happens to be married to a Kiwi or an NZ citizen, it’s your only option currently.

And that ‘really, really high’ threshold comes with a stinger. Janssen notes a change in phrasing to a requirement that the skills are ‘not readily attainable’ – something very different from a role being in shortage.

“It essentially means those skills – not necessarily those people – can’t be attainable in New Zealand,” he says. “It doesn’t necessarily matter if you have tried to find someone and there is an apparent shortage of skills, the skills can’t be ‘readily attainable’. Which makes a very, very high bar.”

It’s a bar that also suggests our government is advocating head hunting local staff from other businesses – something Janssen notes doesn’t solve any problems, merely transferring them to someone else.

Even the musical chairs that has been the tech job market recently appears to be slowing down.

“People have been moving around jobs but even that has stopped because you don’t move three months after you’ve just moved,” Muller says.

Janssen says some IT professionals are getting through the border, including cybersecurity experts – perhaps understandable given Waikato DHB’s recent tangle with that issue.

“It’s not a wholesale thing.

“But if you’re looking for a good developer, programmer, network engineer, where we know that the local market can’t readily supply those, we know that your chance of getting a border exemption is pretty limited.”

Janssen also questions whether Immigration NZ itself has clear enough criteria.

“They’re working off a set of words that can be interpreted in a lot of different ways. What’s ‘not readily attainable’ to them is very different to what is not readily attainable to you and I or to a business that is struggling to grow or deliver on projects because it doesn’t have the staff.”

While Muller hadn’t had a chance to read through the survey responses when he spoke with iStart, he says his gut feeling, based on plenty of discussion with those attempting to bring tech staff into New Zealand, is that there’s another issue at play.

“There is a mismatch between the understanding at immigration of what is needed by the industry, versus the lists or rules they are working off.

“It’s only a guess at this point, but I think the types and names of roles and the role descriptions don’t align with what immigration understands are scarce roles.”

Many of the roles companies are requiring don’t fall into existing Anzsco (Australia and New Zealand Standard Classification of Occupations) listings.

“The shortage is experience in areas which will take a long time to develop in New Zealand. It’s either very advanced technology like data science or machine learning or complicated roles which don’t have a traditional role description.

“You might call it a product manager or something like that in a SaaS exporter, but it will be someone who is looking at product market fit and the design and development of the product not just the coding of it,” Muller says.

“The roles that are critical for companies don’t fit the normal box. It’s roles with strange titles, like user design interface, things like that where Immigration might go ‘oh, that sounds like something marketing could do, so no you don’t need an exemption’. But for a SaaS company trying to penetrate a new market, it’s a critical role.”

Janssen agrees, noting that Immigration is based on Anzsco but the statistical industry and job reference tool is old and hasn’t progressed with change.

“So you’ve got a system that is out of step with how fast the tech sector in particular moves.”

He also points to a lack of training for Immigration officers for what is a complex, challenging job assessing roles across all industries.

Immigration New Zealand declined to answer specific questions on the issue, or indeed to provide any comment about how companies could better manage applications to avoid what appears to be a high number of applications being declined. (It also declined to give any figures around the number of applications being accepted or declined.)

Instead the government agency provided a generic comment stating: “New Zealand’s border restrictions mean that there are limited people who can currently come into the country. Immigration New Zealand’s role as a regulator is to assess people’s eligibility to be granted a border restriction in line with the relevant criteria as decided by Government and set out in policy.”

A follow-up email did, however, note that occupations don’t have to be on a skill shortage list for an employer to hire a migrant worker.

“If an employer can prove there are no suitable New Zealanders available to fill the role, they can hire someone on a temporary work visa. If an occupation is included on a skill shortage list, it just means employers can hire temporary visa holders without needing to look to the domestic workforce first.”

Janssen says that might be correct – under ordinary circumstances, but doesn’t hold true for the current situation.

“The border exemption requirements are far, far higher than what they are listing there. Even being on a shortage list – and we do have several of them and IT professionals do tend to be on those shortage lists, but that in itself at the moment is not enough.

“If you were on the long-term skills shortage list that would not be enough to get a border exemption because that threshold is lower than the threshold they apply.”

Janssen has another key concern: The apparent lack of future planning by the government.

“These border exemptions are very short-term thinking and a means to protect New Zealand – that’s the standard line. But we’re struggling here because we need a longer-term view, a longer-term plan.

“It very much feels like Immigration and the Minister are plugging holes as he goes, keeping different groups quiet in order to just keep the media at bay, without having much of a plan.

“The biggest gap is the lack of a longer-term plan. And we’ve had time to do that.”

Beyond the border
Border closures might be an easy scapegoat, but the spotlight is also falling on other areas. Some suggest businesses are attempting to drive the wage costs down by bringing in cheap labour rather than investing in finding more senior experienced staff in offshore markets.

It’s an argument both Muller and Janssen say doesn’t stand up in their eyes.

“From our research that’s completely incorrect,” Muller says. “There is no downward movement. There’s no discounting on salaries of those coming into the market and there isn’t a pool of talent sitting around because they’re expecting to get more.”

“It is just a genuine global market shortage of these skills and most education systems, not just the NZ education system, have struggled to adapt fast enough to attract people into these new pathways and create new pathways that are more aligned with the jobs of now.

There’s plenty of work being done on the training front, including with the Digital Industry Transformation Plan – but that’s another story.

And New Zealand tech wages are continuing to trend up. NZTech data shows three years ago the median income for a digital worker was $82,000. By 2019 it was $92,250, a figure Muller believes has since increased to over $100,000. (If you’re bringing someone in on the critical worker exemption, there’s a requirement of $106,000, with that figure set to rise to $112,000 come July.)

David Leach, CEO at Kiwi inventory management and PoS system provider Cin7, says almost every appointment his company is currently making is now over budget and over the top of the salary banding Cin7 has in place for the roles.

The company is currently hiring for 15 roles in New Zealand. That’s a pretty stock standard hiring rate for the company, which has been growing rapidly, both in New Zealand and globally.

While previously Cin7 has hired around 10-15 percent of its NZ based staff from global markets, it stopped that when the border closed. Instead, it’s focusing on local hires. But it’s a struggle.

“It’s a lot harder to find people. It takes a lot longer and almost every appointment is over budget. It’s harder and slower to hire because there is a talent shortage. We’re seeing top candidates with four or five options on the table, which makes it hard to be the winner.”

The company is finding similar talent shortages in Denver, it’s US base. In India, where it has around 50 staff, there isn’t the talent shortage, but there is a lot of GDP growth resulting in rising salary expectations.

Software architect Nico de Wet, in a LinkedIn comment in response to the NZTech survey, says he also ‘disagrees wholeheartedly’ on the shortage of talent front.

“There is rather a shortage of good, suitably qualified and experienced management willing to recruit and train locally.”

Certainly, New Zealand does have a dismal record when it comes to investing in staff training.

NZTech’s Digital Skills for Our Digital Future report found companies spend less than 10 percent on upskilling. At the same time the numbers of students studying technology standards is down, as are the numbers enrolling in tertiary IT courses – dropping two percent per annum, and six percent per annum at an IT degree level.

We’ve long relied on migrant labour. To put things in perspective, for the last five years New Zealand has created 4,000-5,000 new jobs a year. And we’ve imported 83-85 percent of those roles in the last three years.

Another person responding on LinkedIn to the NZTech survey, Harrison Grierson head of digital delivery Edwin Ashdown, commented “There is a highly in demand technology skillset mobility debt that NZ organisations are building up, it is not a bubble, it is just economics.

“Technological skills create a hierarchy of demand, and this debt can only be repaid by the highest bidding companies that want great talent.

“We have talent, let the market set demand and supply will follow.”

Where to from here?

Janssen is keen to see that longer term plan from government.

While it was one thing to have reactionary moves last March when the borders slammed shut to help with an immediate threat, 15 months down the track we’ve had time to work out something better than what we have got, he says.

“There are lots of different ways we could do it. But I would have thought by now rather than just plugging those holes and reacting to whichever group are shouting the loudest, we would have thought about what sectors of the economy are struggling, are there really clear shortages and do we better numbers we’ve got if we’re allocating different numbers to different sectors.

“Are we just doing it based on who is yelling at the government loudest, or do we do it based on real need – and a long term need?”

He says while it’s too much to expect a concrete plan right now, some type of plan to give business an idea it is being thought about would inspire confidence.

Muller says the NZTech Digital Tech Critical Workers Pathway Immigration survey will give real data, rather than anecdotes to identify potential areas for improvement. iStart readers are encouraged to complete it.

He expects the data to be collated by the end of the month, complete with plenty of examples and some recommendations for Immigration New Zealand ‘so we can sit with them and work through what the real probability is in different areas’.

“They are standing by waiting for it,” he says.

“This is something companies are not going to solve themselves. We’ve got to collaborate as an industry, rather than all trying and complaining individually. And if there was ever a time for collective impact, this is the time.”

And a footnote: Visa process changes
There’s one other potential stumbling block on the horizon: A new Visa process being introduced in November. It’s a process that will require all employers to be accredited.

Any employer wanting to recruit a migrant from November 1 must be accredited, with accreditation opening in September.

“It doesn’t look onerous or complicated, but you’re talking about an Immigration department that is struggling at the moment with capacity, rolling out an entirely new process and now dealing with tens of thousands employers,” says Janssen.

“Don’t wait for the process to pop up in November. Get ahead of it and start preparing so you can lodge in September when they do an early release, because you can very much expect that it won’t be a quick process.

“If you’re looking to hire a migrant next March and you haven’t done this, you’ll have to do this first before going through the Visa process and suddenly you’re looking at months, rather than weeks.”

Janssen is advocating employers get accredited even if they’re not that likely to need migrant labour.

“Even if you never use it, you’ve got the comfort that once the borders are open if you need to hire a migrant you can do so quickly and not be bogged down by a government process that inevitably will be complicated.”

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