Immigration solves labour shortages, this is common knowledge right?
Well not if this recent survey by NZ Consumer Magazine is anything to go by.
Consumer magazine has surveyed trade rates in 18 centres and found they were significantly higher in Auckland than in South Island centres like Christchurch and Dunedin. For example, in Auckland, auto-mechanics charge $60-111 per hour, in Christchurch $45-81 per hour, and in Dunedin just $40-68 per hour.
Plumbers in Auckland charge $56—79 per hour while in Dunedin only $41-62 per hour. The survey also notes that Auckland has a significant problem with unregistered cowboy tradesmen.
According to the logic of pro-immigration economists, diverse multi-cultural Auckland should have plenty of eager tradesmen willing to work for modest rates, while tradesmen should cost an arm and leg in white bread South Island cities with lower immigration levels.
Critics will argue that living cost are higher in Auckland, so tradesmen have to charge higher rates to make a living. This is true to some extent, but living cost are also partly caused by immigration.
Saying immigration solves labour shortages is a highly simplistic, dare I say ideological argument which only applies to a few industries, especially unskilled and non-essential ones, and does not appear to be much help in solving the labour shortage in the skilled manual trades.
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2 comments:
"According to the logic of pro-immigration economists, diverse multi-cultural Auckland should have plenty of eager tradesmen willing to work for modest rates, while tradesmen should cost an arm and leg in white bread South Island cities with lower immigration levels"
Hi, there are a few things I would say in regards to this statement:
1) There is a world-wide shortage of trades people, and as a result there will always be a shortage until the world-wide supply is increased. Allowing some trades people to come into the country will still lead to lower rates than allowing none to come in.
2) Economists are interested in labour flows. Even though most immigrants do go to Auckland, in the last decade there has been a significant flow of people from Auckland to other regions, some of whom would have been trades people.
3) As you said, costs are higher in Auckland which will increase prices. However, incomes are also higher, which will in turn lead to higher prices for 'non-tradable' goods like trades-people. I expect that this would explain a lot of the difference in price.
"Critics will argue that living cost are higher in Auckland, so tradesmen have to charge higher rates to make a living. This is true to some extent, but living cost are also partly caused by immigration."
Immigrations impact on living costs depends on whether it increases production more or less than it increases consumption. If we let in skilled migrants who produce more then they consume, then New Zealand will have lower average living costs. I wrote about this for the Dom post (http://www.infometrics.co.nz/article.asp?id=4257)
"Saying immigration solves labour shortages is a highly simplistic, dare I say ideological argument which only applies to a few industries, especially unskilled and non-essential ones, and does not appear to be much help in solving the labour shortage in the skilled manual trades."
The main problem the world has is that their is a shortage of skilled labour, that is why immigration does not seem to solve these labour shortages. However, reducing immigrations will only makes the shortages more chronic.
I am not saying immigration should not be used to try to moderate labour shortages, but I am saying it is not as effective as business sector immigration advocates suggest.
In the case of tradesmen, whether their is a shortage in a particular area, also seems to be influenced by the ethnic makeup of the area in question.
In Auckland for example, it does not appear that many East Asians are involved in the manual trades despite being a significant proportion of the population, and a big consumer of trade services.
As a conservative, I only favour as much immigration as is necessary to keep the economy ticking along at a modest, sustainable rate without radically altering the demographic profile of the country.
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