New Zealand population set for major change over next 50 years

by Ray Clancy on December 18, 2012

New Zealand population set for major change over next 50 years

In terms of work, jobs, wages and population New Zealand is likely to see significant changes in the next half century, according to a major report from its national statistics organisation. The labour force will grow much more slowly in the next 50 years than in the last 50, by itself reducing the projected rate of real national income growth, though not necessarily income per capita, the report says.

‘The rate of income growth, an important element in funding increased public and private expenditure, will ultimately be determined by the rate of productivity growth. Unlike labour force participation, New Zealand’s projected productivity growth and the impact of an ageing population remain uncertain,’ it explains, adding, ‘On one hand, the changing composition of New Zealand’s workforce may reduce productivity growth, while recent OECD analysis, incorporating a range of other factors, suggests New Zealand’s productivity growth may converge upwards’.

The report explains how New Zealand’s migration balance is volatile, with periods of net gains interspersed with periods of net losses. Net migration, that is arrivals from overseas minus departures, has contributed about one fifth of New Zealand’s population growth since 1970. Net migration has, however, contributed more at different times, for example, net migration contributed roughly half of New Zealand’s population growth between 2001 and 2006. This has also had a significant impact on population composition, with departures exceeding arrivals for some age groups, and arrivals exceeding departures for other age groups.

Quote from ExpatForum.com : “A third of the NZ population – in Auckland. By comparison Wellington (region, includes Wgtn city, Porirua, Lower Hutt, Upper Hutt) approx 390,000. So that’s almost 2 million accounted for, and the rest of the country shares the balance of about 2.5 million. “

‘Net migration is likely to make an even more important contribution in future relative to natural increase, because the ageing population will lead to a lower rate of natural increase,’ the report says. Many also expect slower growth in the labour force in future, as the number of new entrants, people entering the labour force at all ages, exceeds exits, people leaving the labour force, by a narrowing margin. The labour force is projected to grow by less than 0.7% per year between 2012 and 2061, compared with average growth of 1.6% per year between 1991 and 2012.

New Zealand’s average GDP growth is forecast at 2.6% per year from 2011 to 2060, compared with 2.7% from 1995 to 2011, one of the faster average rates of growth projected. In many countries, GDP growth rates are expected to slow markedly as the population ages and labour force growth slows. One major effect will be the substantial growth of the 65 plus population and the effects of New Zealand’s ageing population will be most evident in slower labour force growth and declining aggregate labour force participation, which will result in lower real income growth.

‘These have significant implications for the demand for, and cost of, publicly funded services and transfers, and for private income and public revenue projections. The direct costs of this on health service and pension expenditures will be substantial’ the report concludes.


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