High flyers

by Mary Jane Boland / 07 March, 2009
A massive 24% of our highly skilled workers live overseas - but the tide is turning.

Late last year, former Waikato journalist Melanie Feisst set herself a deadline: find a job within a week or abandon her much-loved London life and return to New Zealand. Feisst, 28, had been in London for four years, making the most of its proximity to the Continent by doing lots of travelling and enjoying the Fulham home she shares with seven others: six Kiwis and an Englishman.

The recession hit her flatmates hard. By the end of the year, only two had guaranteed permanent jobs. Four had lost their jobs and the other two were actively looking for new roles because they didn't know how long their jobs would last.

Feisst first noticed the impact of the recession in mid-2007. Between June and October, newspapers were full of announcements about unheard-of levels of lay-offs: 20,000 from the banking sector, several thousand from British Telecom.

"Then there was a lull, and I think people would like to have thought that was the end and it would pick up after that," Feisst says. "What actually happened was that things kept rolling into the new year."

Recruitment dried up, contractors were made redundant, and other workers were told to reduce their hours or take a pay cut. Temp work vanished and the jobs many Kiwis were doing - bar work, nannying, landscaping - disappeared. So did the six- to 12-month contract jobs that long-time expats like Feisst were used to being able to secure in consultancy, engineering, human resources and graphic design. "These were jobs that people have had for up to three years. But because you were a contractor, you were the first to go."

Feisst's dilemma is evident around the world, not only to Kiwis but also to the millions of others affected by the recession. New Zealand, though, may feel the effects of the returning expats more than some other countries. OECD figures show that New Zealand, with Ireland, has the world's highest rate of highly skilled workers offshore. A massive 24% of our highly skilled workers live overseas.

But is New Zealand's so-called brain drain of the past two decades about to become a brain regain? Many major accounting and law firms are finding that young workers who had resigned and were about to head off on their OE are asking if they can stay. And recruitment firms and some of our biggest companies report a surge in enquiries from skilled expat workers over the past few months.

After 9/11, the surge of returning New Zealanders - along with new migrants and slowing emigration - resulted in rising demand for property, which pushed up house prices, and more enrolments at higher decile schools.

Prime Minister John Key says the return of talented expats is the silver lining to the recession. He has anecdotal information and official advice that New Zealanders are now returning, particularly from the UK where the markets are extremely weak.

"New Zealand has long lamented that so many qualified and talented New Zealanders have left to live permanently overseas, and clearly if we can have them engaged in our economy, that will be a catalyst for higher growth and greater wealth in the country."

Key predicts the brain regain will stimulate the property market and the consumer-goods market as well as bring more confidence to the business sector, with people choosing to set up businesses and be engaged in the economy. "If you look at periods where we've had upward property prices and stronger retail sales, they've tended to be correlated with times where we have high net migration into New Zealand. The Reserve Bank looks at net migration and sees that as an indicator for the likely impact on property prices and demand."

National's actions demonstrate its support for business, says Key, pointing to the Resource Management Act reforms and more assistance for small and medium enterprises. And he says the policy on the introduction of ultra-fast broadband is important. Key says IT Minister Steven Joyce will soon bring a paper to Cabinet on options for that policy. "For a lot of highly skilled migrants who might return to New Zealand, it's quite possible they will establish either consulting or other businesses where there's a high level of offshore engagement, so the internet is going to be an important part of giving them security so they can run a business from a distant location."

Information technology expert Nat Torkington is one who is awaiting the policy with interest. He says it's also great to see the Government starting to take steps to better address workplace shortages, such as this week's announcement about financial incentives for teachers and health-sector graduates, but he believes more needs to be done.

"This is a great opportunity to start businesses. There will be cheaper, talented people looking for work ... In times of [economic] drought, you get companies wanting to invest in smart people building great things."

Torkington says history shows recession can help create new ventures - which would ideally suit some of the talented returning expats. After the IT bust earlier this decade, the businesses that prospered were the innovative ones, he says.

"We need to have a lot more focus on education and do something to retain the smart people. We don't want to lose them because they're running away from student loans ... otherwise all we are is a university system for the rest of the world, and that's not sustainable."

Richard Manthel, managing director of recruitment consultancy Robert Walters, says his company keeps in touch with thousands of Kiwis in the UK. Ninety per cent of candidates considering returning to New Zealand usually do so for family reasons - perhaps to raise their children in a more relaxed lifestyle or because they want to be near ageing parents. The remaining 10% usually return for a job. But Manthel says that 10% has risen to 25% in the past three months. Contractors and those who are, as he describes, "cashed up" are certainly thinking about returning.

"They're coming in looking to lock up jobs, more for certainty of income back in New Zealand. And they're very realistic about salaries as well. In the past, candidates who have come back with international experience would have three to four job offers, which would help push up their salary. What's happening now is that brinkmanship is not happening."

Robert Walters specialises in IT, sales and marketing, finance and procurement, and Manthel says there has been a decline in the availability of jobs in those sectors here, too. But he says there is huge demand for people with good accounting, business planning and strategic finance skills - people who can help businesses survive during the credit crunch.

However, Manthel says workers who have general skills will suffer, regardless of whether they're local or expat, because there are now often 40 candidates chasing high-earning jobs whereas a year ago there would have been just a handful. His advice is to focus on your skills, "because promoting yourself as a generalist means the chances of getting the role are slim. People need to be quite strategic about how they position themselves."

Telecom employment managers also report an influx of strong senior candidates from overseas, especially for strategy, legal and finance roles. Most of the interest is from the UK, but Kiwis living in Australia are also sending applications. However, their return is being delayed by an inability to sell their property in a soft market, says Telecom's employment brand and strategic resourcing manager, Natasha Whiting. "Overseas candidates are more open to New Zealand salaries ... Significantly, a number of senior candidates seem willing to drop."

Heather Kean, Fonterra's talent and engagement general manager, says the number of people asking about jobs with the dairy giant hasn't increased, but those enquiring have more experience. "There are more enquiries from offshore about the possibility of coming to New Zealand. They're a passive candidate who has New Zealand back on the radar; most are Kiwis looking to return."

Kean says the enquiries are coming from Europe and the US. She believes the recession will provide New Zealand with an important opportunity to assess the areas that most need staff.

And with the New Zealand Institute this week releasing a report predicting unemployment could reach 11% within two years, the emphasis should be on ensuring those workers who return can find jobs.

Kean says there are still many jobs for people with qualifications - such as engineers, doctors, IT specialists - or those prepared to work in provincial areas. She believes the recession will also have a big impact on Generation Y and its approach to education and employment. "There's nothing like a significant depression to sharpen the mind. I'm torn about that, though, because having come through that myself, I think there's huge value in having life experience to give you an idea of what you want to do. As a parent, I want my children to have a great career and also to find their position in life."

In a study of Kiwis expats' views of New Zealand, "From Brain Drain to Talent Flow", Massey University researchers observed a divide between those who chose to return home and those who stayed overseas. These findings followed work in the 1970s by New Zealand researcher George Hines, who discussed a link between migration and motivation to achieve. Migrants tended to have high achievement motivation. "Could it be that permanent migrants from New Zealand drain away not just their skills and talents but their drive?" the Massey researchers asked.

Further work by Kerr Inkson et al at Massey found the stay-overseas groups had higher levels of achievement and influence motivation than those who chose to come home. Those returning placed more importance on family and friends. "Overall, stayers appeared to pursue work-related rewards more than returners, whereas returners placed more emphasis on social rewards," Inkson and his colleagues found.

But one thing may change that: money. In the UK, for example, it's common to find people facing a 40% pay cut in the day rate for IT and finance-sector contractors. Kiwi Stephanie Wyse, a global marketing project manager in London, believes the Kiwis who have made a conscious choice to live and work in the UK will see through the recession and continue to work as they did before. "A drop in contract rates of 10-20% will hurt, but not as much as the cost of packing up your life and returning home. Luxuries, such as a trip home for Christmas, will be cut, but it's worth seeing through [the hard times]."

Wyse's fiance, fellow Kiwi Bryant Longley, is a software developer who had to take a 10% pay cut last year and was then faced with another 10% drop a month later. He fought that one, but since then has found a new job because he realised the project he'd been working on would be sidelined.

The couple have friends who are finding it harder to get work. One is staying with them - and has been on and off for the past three months - because she hasn't been able to get a job in her preferred area of PR, events or marketing since arriving last September.

Ivan Moss, chief executive of New Zealand global talent network Kea, says although the situation is worse in the US, the country is responding faster than the UK. He says Shanghai is the other interesting area to monitor - it has a small number of Kiwis who are senior and well-educated. "We're seeing multinationals withdrawing people from China in a hurry. Our advisory board of 12 there has lost four or five members who have been taken back to the home country of the multinational they work for in the past four or five months."

Kea's North America general manager, Geoff Andrews, reports most Kiwi expats in the US are staying. "Some New Zealand companies are retrenching and cutting back on staff in the US, but they've said to New Zealanders, 'We have nothing for you in the US, but we do have something back in New Zealand.'"

Andrews, resident in the US for 27 years and now a citizen, attributes US-based expats' lack of interest in returning to New Zealand down to one thing: optimism. "If you live here for a long time, [you realise] Americans don't sit on their hands and worry ... There's a lot of confidence in this new President and the consensus is that it's going to be rough for maybe the rest of 2009, but it's going to get better."

So, how will New Zealand be affected by a tide of returning Kiwi expats and a decline in the number of 20-somethings heading off on their OE?

Moss says it's hard to judge the effect on the job market because the obvious main redundancies overseas have been in banking and IT, and New Zealand has skill shortages in almost all areas except banking. But he's adamant returning expats will have a positive effect on the economy: most will bring a partner or a family, most will have a history of hard work, and many will also be innovative. "The challenge for New Zealand is to adopt these people and help them find their niche as quickly as possible. Many people reinvent themselves when they come home."

But he says that reinvention shouldn't come at too high a price. "It's a travesty if a great construction engineer ends up as an electrical engineer." Moss says making the most of contacts will be crucial if and when expats decide to return. "It's a challenge for New Zealanders to make that shift and understand New Zealand is full of edgy, clever, innovative companies and people, so they can see all the opportunities. If it's between taking my chances in London or working in Wellington, [I need] to know there's good stuff in the capital, so that I can go home and go forward."

As it turned out, Feisst met her deadline. She gave up journalism some time ago, has a new role as a growth and innovation consultant and at this stage has no plans to return to New Zealand. Two of her flatmates haven't been as lucky and are still trying to find work.

But Feisst says the changing world has its upside. There are a lot more men in posh slacks and sweaters - probably bankers who have been made redundant - doing the shopping at the local supermarket. And she says the stress of the situation has brought her flatmates closer together.

"We're all watching out for each other and helping with CVs and recommending recruitment agencies. If a bit of work comes up, we tell our friends. I said to someone recently that the recession brings out the best in people."

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