Implications and Opportunities in the Legal, Accounting, and Financial Services Sectors
What is the Brain Drain?
New Zealand and Australia have a strong historical bond, sharing economic and cultural ties that have fostered a significant flow of talent between the two nations, particularly among professionals in the legal, accounting, and financial services sectors. The brain drain phenomenon, characterised by the migration of highly skilled professionals from one country to another, has been a topic of concern for policymakers worldwide, not just in Aotearoa New Zealand. In the case of New Zealand and Australia, the brain drain has been particularly prominent in the past 12 months.
Understanding Brain Drain
Brain drain refers to the emigration of highly skilled or educated individuals from one country to another. It typically occurs when individuals seek better opportunities, higher salaries, improved work-life balance, or access to specialised industries that are more developed in the destination country.
Data and Causes
According to recent data released by Stats NZ in July 2023, the number of New Zealanders migrating to Australia has increased by 10% in the year leading up to June 2023.
Key Stats:
- The net migration loss to Australia in 2022 is the largest for a calendar year since 2013.
- Traditionally, there has been a net migration loss from New Zealand to Australia. This averaged about 30,000 a year during 2004–2013, and 3,000 a year during 2014–2019.The net migration loss in 2022 was made up of 33,900 migrant departures to Australia, and 20,400 migrant arrivals from Australia.
- Migrant departures to Australia have increased to levels last seen in 2014−2019.
- Migrant arrivals from Australia are about two-thirds of the 2014−2019 levels.
- In 2022, New Zealand citizens – people travelling on New Zealand passports – made up 80 percent of the 33,900 migrant departures to Australia, and 72 percent of the 20,400 migrant arrivals from Australia.
Several factors contribute to this brain drain phenomenon:
- Higher Salaries and Better Career Opportunities: Australia offers higher salaries in the legal, accounting, and financial services sectors compared to New Zealand. Even in cases where there is a higher cost of living, professionals are enticed by the potential to bolster their earnings and advance their careers in Australia.
- Economic Opportunities: Australia’s larger economy, coupled with its well-established legal, accounting, and financial sectors, provides greater opportunities for career advancement and higher salaries. The potential for professional growth and better remuneration acts as a significant pull factor for New Zealand professionals.
- Industry Maturity: The legal, accounting, and financial services sectors in Australia have historically been more developed than their New Zealand counterparts. This maturity translates into a broader range of job opportunities, increased specialisation, and access to a larger client base. New Zealand professionals seeking to enhance their expertise are drawn to Australia’s more dynamic industry landscape.
- Higher Demand: The larger population and business activity in Australia create a higher demand for legal, accounting, and financial services professionals. This demand generates a competitive job market with a greater number of employment options. In turn, this presents attractive prospects for New Zealand talent seeking career advancement.
- International Exposure: Australia’s geographical proximity to Asia and its stronger connections with global markets provide professionals in the legal, accounting, and financial sectors with enhanced international exposure. The opportunity to work on international projects or with multinational corporations appeals to ambitious individuals looking to expand their horizons and broaden their skill sets.
Impact
The brain drain has significant implications for the legal, accounting, and financial services sectors in both New Zealand and Australia:
- Skills Gap: The loss of skilled professionals creates a skills gap in the New Zealand legal, accounting, and financial services sectors. The departure of experienced personnel can result in a shortage of specialised expertise.
- Recruitment Challenges: The brain drain presents recruitment challenges for New Zealand-based firms. The competitive job market in Australia, coupled with higher salaries and better opportunities, makes it challenging for New Zealand firms to compete for skilled professionals.
- Talent Pool Enrichment: Conversely, the brain drain enriches the talent pool in the Australian legal, accounting, and financial services sectors. The influx of skilled professionals from New Zealand brings diverse perspectives, expertise, and experiences, fostering innovation and raising industry standards.
Opportunities
However, this situation also presents opportunities for the country to focus on its strengths, develop new industries, and attract foreign investment. In response to the brain drain, businesses in New Zealand’s accounting sector have invested in new technologies and training programs, enhancing efficiency and competitiveness.
For Australia, the influx of skilled workers strengthens the economy and addresses the growing demand for professionals in the legal, accounting, and financial services sectors. The Australian market benefits from the expertise and skills brought by New Zealand professionals, improving competitiveness and enhancing the legal system’s effectiveness.
Addressing the Brain Drain
To mitigate the brain drain and retain talented professionals, New Zealand can consider the following measures:
- Competitive Remuneration: Offering competitive salaries and benefits packages can help attract and retain skilled professionals. Additionally, providing opportunities for career progression, professional development, and work-life balance can incentivise individuals to remain in New Zealand.
- Strengthening Industry Infrastructure: Enhancing the infrastructure and resources within the legal, accounting, and financial services sectors can help close the gap with Australia. Investments in technology, training programs, and industry collaboration can create a more attractive environment for professionals, reducing the incentive to seek opportunities elsewhere.
- Collaboration and Knowledge Exchange: Encouraging collaboration between New Zealand and Australian firms, professional bodies, and educational institutions can facilitate knowledge exchange and professional development. Joint initiatives, conferences, and networking events can create opportunities for engagement, promoting retention of skilled individuals.
What about the rest of the world?
The provisional data shows that in 2022, New Zealand experienced a net migration gain of 34,300 from the rest of the world, excluding Australia. This gain outweighed the net migration loss to Australia. In the five-year period from 2015 to 2019, New Zealand consistently had net migration gains from the rest of the world, averaging 62,700 per year, which exceeded the average net migration losses to Australia, which stood at 3,000 per year.
These figures indicate that while there may be a brain drain to Australia in certain sectors, overall, New Zealand has been attracting more individuals from around the world, resulting in a net gain in migration.
Collaboration is key
The brain drain from New Zealand to Australia in the legal, accounting, and financial services sectors is a multifaceted issue with wide-ranging implications. Understanding the causes and impact of this brain drain is essential for formulating policies that can benefit both countries.
New Zealand has the opportunity to focus on its strengths, foster innovation, enhance its industry infrastructure, and attract foreign investment to mitigate the loss of skilled workers. Investing in technological advancements and training programs can enhance efficiency and competitiveness, paving the way for a thriving business environment.
Australia, on the other hand, can leverage the influx of talented professionals to strengthen its economy, particularly in the legal sector. By embracing these skilled individuals, Australia can enhance its reputation as a global hub for business and investment, further fueling its growth and competitiveness.
Ultimately, addressing the brain drain requires a collaborative approach, with both countries seeking to create an environment that retains skilled professionals while capitalising on the opportunities presented by cross-border talent migration.
Get in touch with the team at Tyler Wren to discuss how we can help you in your job search.
careers@tylerwren.co.nz | 09 666 4964