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The Concerns and Issues of the "Generation Lost" Beyond the Brain Drain Press Release July 2001

Braindrain Research Results

Survey Media Release - 24 July 2001

What are the "Generation Lost" doing now? The University of Auckland Business School has hosted a web-based survey of New Zealanders who responded to the 'Generation Lost' advertisement placed by Aucklander Richard Poole in late 1999. Over 900 young kiwis responded to this new survey, over half of them overseas and almost all of them tertiary graduates or students in their twenties and thirties.

What are the issues for these mobile, young professionals? Although many are pulled by the traditional OE experience, an increasing number are "pushed" from New Zealand by the combination of lower wages, student debt and limited career opportunities. In addition to these traditional job issues, they are also looking for better support for business start-ups and entrepreneurial success.

The key changes that they advocate for government policy, a growth-oriented revamp of tax policy coupled with an investment approach to education. Surprisingly, they think there is too much attention to the "brain drain" and not enough to attracting overseas kiwis back to New Zealand. Many have suggested that the "lifestyle" advantage that New Zealand has relied on to attract young people back may no longer be enough.

Richard Poole notes that the survey bears out the original concerns expressed over a year ago and demonstrates that many of the issues are seen as critical by the majority of respondents. The survey respondents and Mr Poole are eager to see that both the Knowledge Wave and Competitive Auckland projects address these issues. Future survey work is planned to monitor changes in respondent's attitudes toward New Zealand opportunities over time.

Associate Professor Marie Wilson, the University coordinator of the survey, reinforces the continuing necessity of assessing why talented people leave and do not return. "If we use the NZ Inc. metaphor, then this is a combination satisfaction survey and exit interview of the country's "employees". Of course, any leader would be concerned about people leaving, even if some of them are replaced. Departures are still a lost investment, a lost opportunity, and you are not building capacity in a country that is amongst the most sparsely populated in the world. We can't pretend we don't need these people; we do. If a CEO said don't worry about turnover, we'll just get some more people; they'd be fired. As a country, we should be treating this with equal seriousness."

The Concerns and Issues of the "Generation Lost" Beyond the Brain Drain Results from Online Survey

Concerns about departing kiwis.
Why do they go?
What issues are being overlooked?
What single change in government policy did the respondents advocate?
In relation to business policy, respondents commented on:
Without change, what long term future did the respondents see for New Zealand?
Summary

Introduction

In 1999, Aucklander Richard Poole placed a full-page "Generation Lost" advertisement in The New Zealand Herald and The Dominion, both representing and eliciting views on the perceived "brain drain" in New Zealand. This advertisement and the ensuing media debate resulted in over 1500 e-mail responses. The content of these responses was reported in the media at the time. In late 2000, the original respondents were contacted to participate in a web-based survey, hosted by The University of Auckland Business School, to:

Compile a demographic profile of this interest group;

Document the extent and reasons for their concerns;

Gather a consistent set of responses to issues that were initially raised by sub-groups; and

Identify issues that had been omitted from the research to date.

Method:

E-mails were collected from original newspaper advertisement in the NZ Herald and the Dominion and e-mails that were circulated as a result of the same newspaper advertisements.
E-mails were sent to 1120 addresses of which 680 responded. The e-mails provided a hotlink to the survey web-site, with individualised passwords. Additional passwords were available for new registrants after the e-mails were forwarded to other interested parties. Many of the original respondents forwarded their e-mails, and an additional 250 respondents completed the survey as a result.
The survey consisted of 6 demographic questions, 36 Likert scale options and 9 open ended questions. None of the questions were compulsory.

Who responded:

About 2/3 of the respondents were male (n=584) and just over 1/3 (n=346) were female.
Over three-quarters were between 20 and 39 years of age (n=766).
Two-thirds of the respondents were currently overseas. There was an almost even split between those in New Zealand (380), those in Europe (378) with the remaining 173 in other international locations. .
Most responses came from the following the IT, Finance, Sales and Consulting industries.
Over 70% of the sample had a tertiary education.

Respondents living in NZ and planning to stay are significantly older than any other group, (mean age = 35.36) and have a significantly lower level of education (no tertiary qualification). Respondents living in NZ and planning to leave are younger than any other group (mean age=27.06), and significantly more educated than those living in NZ and planning to stay (graduate or postgraduate). Kiwis living overseas and intending to remain overseas are also significantly more educated than those living in NZ and planning to stay.

Concerns about departing Kiwis:

Although this type of survey would tend to elicit responses from those with concerns, over 75% of the respondents expressed strong concerns about New Zealand's current and potential loss of talent.

Over 600 responses to the survey were concerned with the loss of New Zealand's talented, skilled, and educated people and how that loss will/may impact on New Zealand's economy. A common theme among respondents was the drain on resources to educate people who would then take their skills and knowledge overseas to benefit another economy. This concern was reflected in a general awareness that the loss in resources would create a greater tax burden, i.e. to educate more skilled individuals; and the loss of tax revenue from high-income professionals. For example:

Without the proper talent New Zealand businesses will not be able to drive their companies forward. They will lack the sufficient talent to compete against international competitors.
It may cause innovative ideas/opportunities to be developed overseas rather than here, and therefore growing NZ's research, new business etc ideas out of NZ with other countries benefiting from 'our' young innovative minds.
No concern for a period of up to say 5-7 years, but permanency beyond that is an issue because we have lost talent overseas, and there are less talented people to help share the tax burden.
These are the people who will make the biggest contributions to this country in terms of tax; energy and ingenuity- when there are sufficient opportunities for these people in NZ, they will stay- until then no amount of political whinging and op-ed pieces will change things - except make the climate here even more uninviting.

The state of the New Zealand economy and how it relates to a possible 'brain drain' was an issue that was raised in many different ways. Many respondents believed the economy was to blame for the 'brain drain', while others considered the brain drain to be a significant factor in economic development. For example:

We need well-educated people to stay in New Zealand for the economy to prosper. The investment in their education, their creativity, their 'smarts' are lost to our economy/country.
Because the very best and talented will be offered incentives to stay [overseas], therefore we may not benefit from of best and brightest in the long term - this fundamentally undermines our economy.

Most respondents also considered New Zealand to be their home, however they realised that, for them it had limitations. The lack of opportunity in the business sector, for example, IT and Venture Capital, were cited as one limitation contributing to people leaving and not returning. For example:

At the end of the day most New Zealanders want to live in New Zealand. However what I need to return as do most people I know is a stronger business environment - or for that matter even just a feeling of optimism in the future of New Zealand business - e.g. seeing the beginnings of more success stories like the Auckland yacht building sector. To an extent this is beyond the control of government, but the single biggest thing Government can contribute is a pro business and low tax environment to try to foster that growth and signal it is behind the creation of businesses and wealth.

Why do they go?

While there are many areas raised in the original response to the "Generation Lost" article that are not uniformly shared by all respondents, several areas show widespread agreement.

Over 80% of respondents raised issues of pay levels, particularly the interaction between wage levels and student debt. Respondents indicated that they were effected by:

Higher salary, I am earning four times as much here in London, in a lower position than I held in NZ.
More money and advancement.
Ex partner had student loan; we left NZ because we wanted to buy a house and couldn't get a mortgage until the loan was reduced. Earning NZ$ we could not afford to pay the loan and save - therefore we left. Since leaving we have realised NZ is not the only country you can live with a good standard of living and although we are now separated neither of us have returned.
I left NZ to get some money to pay off student loan. It increased due to interest charges whilst working. Saw little choice. Now I won't come back.

Career opportunities were equally important (82%) and often inter-related with salary issues:

Good wages, career opportunities.
An excellent job opportunity with good salary and plenty of travel opportunities.
More opportunities for being able to start working towards a high paying career.
More money and advancement than possible in NZ.

While career opportunity was seen as important, the opportunity to start a business - through venture capital, tax incentives or government/financial support was an issue that arose for over 50% of the survey respondents. For example:

Government encouraging people from other countries with money into NZ instead of making it so hard to set up here.
More business start up opportunity and support (tax, venture capital etc) from government.
More opportunities in starting new business, perhaps with venture capital assistance.
A government that encourages investment in business, R&D, education & technology, (i.e. lower tax rates for business, incentives for business to invest in R&D as well as more government input, lower costs of university education, more government focus on tech industry).
Increased job opportunities in professional sectors- increased investment in hi-tech sector to replicate Ireland and Singapore.
Stronger economy, better business opportunities with higher salaries or lower cost of living.
Personally, I am in NZ because of lifestyle choice and proximity to family. I am thinking of leaving. I resent working 60-70 hour weeks to get ahead only to have a huge portion of that income paid in taxes at 39%, plus my GST, plus ACC when I also pay private healthcare and education (which I think is a necessity not a choice) . It is impossible to save and accumulate for new business and personal ventures when there is nothing left. I find it hard to personally encourage my talented and 'up and coming' friends and family coming back to NZ because they are being much more rewarded for their efforts offshore at the moment and their lifestyle ain't half bad!

A significant grouping also cited a less receptive NZ culture, with over half citing a lack of encouragement to excel, and over two-thirds referring to the continuing existence of the "tall poppy" syndrome.

Overseas we are valued for our education and our drive, we are encouraged to be successful; in NZ we are set up to be pulled down.

Few respondents (less than 20%) saw the government as responsive to the issues of departing kiwis or the needs and aspirations of young professionals.

What issues are being overlooked?

A consistent theme in the responses was that New Zealanders in general, consider overseas travel to be a natural part of their culture. Travel was seen as an important and effective process in growth, and gaining 'life' and 'work' experience, not to mention being fun and often well paid. The opinion that opportunity in general, whether career, financial or adventure was more abundant and accessible in countries such as the US and the UK was prevalent. With this increased opportunity came increased earning capacity and ability to save or simply enjoy the lifestyle.
Another common theme was the lack of incentives for NZ overseas travellers to return to NZ. Common incentives mentioned included: tax incentives, student loan reductions, career opportunities and government/business support for new business or enterprise. A significant proportion of respondents, however, indicated that the nature of the OE had shifted to longer time abroad and increasing levels of permanent relocation of young professionals.

In addition to the above, there was also an understanding that when travellers return they bring new knowledge and skills back with them. What concerned many respondents was the lack of incentives for returning to New Zealand. For example:

It's not that they leave, its that they don't come back. We encourage young NZer's to explore the world and be independent, the problem is that there is no incentive to return and bring those experiences back and apply them to NZ.

I don't think the fact that people leave is bad. Experience gained overseas is valuable, as is the broader perspective on life (appreciation of other cultures, lessons in self-sufficiency etc) that travelling and working overseas gives you. I think that perhaps "kiwi ingenuity" is partly due to these sorts of experiences. The issue is how to get people back.
'The issue is not to stop people leaving. It's a good idea. The goal should be to ensure that they return after a few years. NZers on the whole love to travel - that's a good thing - it enriches this country.'
Young people leave to travel. I believe you have to ask, "Why aren't they returning".

The opportunities that are available overseas was also seen as an 'overlooked' issue. Some considered training overseas to expand knowledge essential for the future of New Zealand while others considered working overseas in their field the only way to develop their career. For example:

New Zealanders have much more opportunities available to them elsewhere. We need to generate more business in NZ in order to get people to come back. Areas such as Research and Development need attention in NZ. We have so many smart people, but there isn't the venture capital to pass on to these people with great ideas.
Education is well promoted but not backed up with development of opportunity. You get a well-educated bunch of people not prepared to do reception work so the head overseas where there is a shortage and high demand.
However, professional opportunities and adequate. remuneration remains key in the thinking of many.
I have little prospect of paying off my student loan had I stayed in NZ. We are going overseas to establish ourselves financially and business wise. When having done that, we ask ourselves the question: do i want to go home? To a large extent that depends on the pull of the family, how important that is to the individual. However, even my dad told me that he could see little opportunity for me in NZ.
Young NZer's are not settling down the same as they did 10 years ago and are increasingly taking advantage of the employment opportunities and remuneration packages available in the UK and Europe, particularly those with large student debts. Focus has already been put on this problem.
Yes. The "brain drain" can be looked at from another perspective. I think it offers NZ overall an excellent opportunity to widen the skill base of many of its professionals, of whom the overwhelming majority will return. Additionally, where they do not, it is essential that we foster a global network of NZers, and refrain from viewing NZ simply from a physical sense. Technology brings us all closer, and a global network used wisely could be enormously beneficial to NZ.

Many respondents (n=112) mentioned difficulties in finding employment without work experience in New Zealand. For example:

Keen graduates with a lot to offer getting pushed down because of a lack of experience. We do not have a culture of giving a person a chance.
The job market and attitude to graduates is appalling. "We need someone with more experience" is a phrase I and many of my peers hear often.
The difficulty of gaining the required experience to get your first job.
The fact that a degree no longer means that you are able to automatically get yourself into a "good" job. More and more it seems, employers are looking for people with work experience and not just the paper qualification, yet the pressure is always there for young people to get their degree, and then be stranded with no experience and a large student loan at the end.
To gain skills and experience. As a postdoc there is almost no way I could get a job in New Zealand without overseas experience.

Many respondents (n=155) indicated that too much attention was paid to the money aspect, clouding the other reasons for travelling overseas. For example:

The MONEY!!!! For Gods sake it is not about the money, I have a similar life style here in the UK as I did at home, the "brain drainers" are on high salaries before we leave.
I hate to see the ex-pat community cast as selfish and money-oriented. I am overseas because I am faculty at a US university with teaching and research opportunities unavailable to me in NZ. Returning to NZ would mean a pay cut of a factor of 4 (in USD). However I would do it if a suitable position arose.
Taxation is not getting enough attention. Our entire societal well-being hinges on the economy prospering and generating enough tax revenue to achieve social ambitions. New Zealand has to start putting the people first by putting the economy first - a "pro-business" government does NOT mean an "anti-people" regime.
It seems to be all about money over there and lack of it here, together with the jobs/opportunities either offered, or not, to make the money.
Yes. While the money I am making in London is extremely good, that is just the icing on the cake. Because the pound is so strong, and London is the hub of many international flights, it is extremely easy and cheap to travel to many, many places. We can, and do, go away to France/Sweden/Spain etc for the weekend.

The issue of student loan debt was very significant, however opinion was balanced between those who thought it was receiving too much attention and those who thought it was receiving too little.

Student loans are getting too little attention; NZers need to be more global in thinking.
The student loan issue/education cost issue is getting too much attention. I believe it shouldn't be so easy to not pay back your loan when leaving. Some don't come back because they get away with not paying back their loan, and know if they come back they will have to pay it back. if they are made to make contributions while they are out of the country they could come back when they have paid it at least... We need to think more about the kind of lifestyles young NZers like to lead, and how to keep them here.
Student Loans get too much publicity. At the end of the day, we know the rules, borrow the money and pay it back. No big deal.
The long term impact of student loans needs more attention.
The student loan issue is HUGE for us.
'Most young New Zealanders love NZ and want to return though are reluctant and angry that they have to face their crippling student loans on poor wages if they do return.'

There was an acknowledgement that some New Zealanders would return to New Zealand one day, either to settle down or for the life style, however many more respondents were concerned by the lack of incentives to return to NZ. For example:

People are leaving but not permanently. They use what VISAS are available (mainly temporary) and return within 2-5 years.
'I think most NZer's will want to return to Australasia for the lifestyle. Problem is that Australia is very close to NZ, so people will work there for the greater opportunities & still remain close to family/friends. I think attention of brain drain is focused in right areas.'
The fact that these people are leaving straight after university and not even staying for 2-3 years and the increasing numbers of qualified people not returning to NZ full stop.

	What single change in government policy did the respondents advocate? The effect of policy on the business environment in New Zealand was of great concern to respondents. Taxation, investment in R&D and general government support new business ventures and were regarded as very important by over one-third of all respondents. Cutting of spending on welfare/assistance and decreasing taxes/paying off debt with that money. More investment in small businesses and tax breaks for people starting up businesses that would benefit the NZ economy. A move back to private insurance cover for self-employed people. Lower personal tax for high income earners, i.e. don't punish those excelling. Giving businesses tax breaks so they can offer higher wages to skilled employees. Better tax rates. In relation to business policy, respondents commented on: Lowering income tax and business tax rates --- also government being more business versus socially focussed Increased assistance for new business start up. Support using NZ as a place from which to conduct business internationally. Tax incentives - for global companies to come back to our shores and for achievers and small businesses. Increase business incentives. Lower business tax,... will result in more jobs, and employer will have more money too pay workers. God knows they get enough with the GST! To help start up and provide ongoing support for R&D institutions and business incubators. The reduction or elimination of student loans was considered by many to be essential in keeping your skilled people in New Zealand. A few respondents however believed that the student loan was not the problem, pay rates and taxation was the issue. Support the launch of new business initiatives (short term) and address the student loan situation (medium term impact). Lower student loan interest rates. Spending on University education and allowances. As a poor student I had to borrow 27,000 to get my two degrees this is still hitting me and I wont be back until I am over it, if ever! Cancel Student loans, universal tertiary education at low cost. Do something about our student loans. Forgive them! Changing education policies towards funding was a concern with regards to the quality of education in NZ. I think probably the single most important change in government policy would have to be a cut in corporate taxes and support for small businesses with an international focus. Second most important is probably making tertiary education cheaper. More scholarships to a wider array of recipients, NOT NO LOANS. Make people work to get their free ride, and understand the value of their education. Free tertiary education. Govt sponsored programs with big business - e.g., govt & business paying for education & demanding a period of work with the company. I think a return to free tertiary education would allow for a greater skill base to occur within NZ and as a matter of course we may still lose people overseas but there would be educated people remaining to assist the development of NZ.
	Without change, what long term future did the respondents see for New Zealand? Many respondents discussed the long-term impact being mostly economic with regards to lower numbers of professional and skilled people. Many respondents considered this movement to be serious for New Zealand on a global economic scale. There were many references to many factors that both effected and were affected by the brain drain, with almost half predicting continuing talent exodus. It's like having a poor apprenticeship programme, so that eventually no one of real skill and ability is left to run the place A shortage of skills in some areas. e.g. medicine, teaching, hi-tech etc.... 'New Zealand's economy will begin to struggle and there will be fewer people in their mid thirties in NZ to strike out in their own businesses which employ others. New Zealand becomes a tourist destination with a small local population living on subsistence wages. Businesses in NZ struggle to find skilled workers and leave for greener pastures. NZ becomes a land of those too poorly skilled to leave and the elderly.' Winston Peters, MP for Tauranga. Another one-third were predicting continued declines in business performance and New Zealand's position in international indices. Other respondents cited an aging population, increasing welfare costs and a dwindling tax base. Continued stagnation, economic growth below the world average and further sliding down the OECD per capita income scales. New Zealand will fall further behind the rest of the world in economic standards. Huge impact in building solid businesses that generates cash for the economy. Also professional people leaving reduce the knowledge pool that employers can call upon, we will be going backwards in relation with the rest of the world. Decline in NZs standing amongst world in social & economic terms. Some respondents were concerned about the impact of these broader issues on business: No supportive government structure to return to with new businesses. Grows as a 'retirement' and tourism country only. A 'gap' in qualified talented business leaders once the current generation retire
	Summary This survey taps the feelings and attitudes of a large group of educated, young professional New Zealanders. For this group, the pull of the OE includes the excitement of travel, but this is increasingly coupled with a "push" from New Zealand's relative lack of challenging, well-paid jobs with which to develop a career, pay off student loans and begin to build a stable life in New Zealand. While many of these respondents will return, almost half of the survey respondents who are currently overseas are not planning to return. Almost all the respondents felt too much attention was currently focussed on leaving. Where, they ask, are the incentives to attract the New Zealand diaspora back, as Ireland and other fast-growing economies have modelled in the last two decades? Associate Professor Marie Wilson Head, Department of Management and Employment Relations The University of Auckland Business School 1 July 2001 DISCLAIMER Business & Economics Webmaster � 2001 by University of Auckland Business School. All Rights Reserved Permission of the Auckland University Businees School
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