But they contribute $10 billion to the national economy
Venkat Raman
Auckland, December 6, 2020
Although People of Indian Origin (PIO) contribute about $10 billion to the New Zealand economy, their skills, experience and expertise are underutilised, says a popular economist.
Shamubeel Eaqub, who works of Sense Partners, a boutique consultancy based in Auckland, says that the contribution of PIOs are less than what they can be, and attributes the shortcoming to the mismatch of their skills and income, saying that typically, an average Indian earns $50,000 per annual (gross), compared to the national average of $55,400.
“Reducing barriers for recent migrants will be better for New Zealand Indians and New Zealand,” he said in a Report titled, ‘Economic Contributions of NZ Indians’ commissioned by the Waitakere Indian Association (WIA).
Publication of the Report was embargoed until 5 am today, Sunday, December 6, 2020 but it was breached by WIA and a few others with postings on Social Media and WhatsApp group.
Detailed Analysis
Mr Eaqub’s 28-page Report carries a detailed analysis of the Indian population in New Zealand including their share in the country’s demography, employment by qualification, employment by sector, exposure to various sectors of the economy, rate of unemployment, evidence of lower income, barriers faced by new migrants and economic contribution.
According to the Report, PIO in New Zealand contributed $10 billion to the national economy, which Mr Eaqub said was $303 billion as at the end of 2019 (the actual figure for financial year 2019-2020 was $323.1 billion). International students, visitors (and tourists) contributed respectively another $645 million and $180 million as at the end of 2019.
Occupational preferences
“Indians are more likely to work in retail, accommodation, logistics, health, business support, finance, IT and professional services. On average, Indians in work earned $50,000 per annum, compared to a national average of $55,400; 37% of the difference was explained by a younger workforce; 8% by occupational mix; and 54% due to wage differences,” Mr Eaqub said.
Indians are less likely to work in clerical, administrative, community and personal care occupations, and increasingly likely in sales and professional occupations.
Mr Eaqub said that new PIO migrants face low bargaining power, although the gap is closing.
“Indians are increasingly likely to work in higher income industries and occupations. Reducing this penalty will increase their economic contribution. Age composition matters. But even within age groups there are differences in incomes. Young Indians experience the biggest difference in income from the total (nearly 20%), but the gap is lower in prime working ages (5%-10%),” he said.
Growing population
The Report placed the total number of people of Indian ethnicity at 240,000, accounting for 5% of the total population of New Zealand in 2019. This represented a rise of 3% from 2% in 2001.
The Indian population is young, with a high proportion in the under 5 and 20-40 age groups. They are in their prime working age, and in the family building phase. 78% of the population – or 186,000 Indians – are of voting age.
“Indians, like many other migrant communities, are largely concentrated in Auckland (65% of the Indian population), Wellington (9%) and Waikato (7% of the Indian population), although they are present in every region of New Zealand,” the Report said.
Indians are more likely be highly qualified and employed, with 56% of them holding post-school qualifications, about 1.6 times the national average. 72% of Indians of working age are in work, compared to the 65% on average.
Lower share in business
According to Mr Eaqub, Indians are less likely to be in business (entrepreneurship), making up around 3.5% of employers and self- employed.
“The prevalence of Indian entrepreneurship has trended lower over time, from 18% in 2001 to 10% now with an increasing proportion in paid employment. However, there has been a similar declining trend in entrepreneurship across the economy, and the Indian share of all entrepreneurs has in fact been trending higher, from less than 3% of all entrepreneurs in 2001, to 6.6% in 2018,” he said.
The Report also accounts for changing nature of employment of Indian in various sectors of the New Zealand economy. In 2018, 14% of all Indians in New Zealand were most employed in the retail sector, more than other ethnicities.
However, the share of Indians in this sector has dropped from 22% in 2001.
Moving to higher levels
“Indians also less likely to work in some sectors. For example, 4% of Indian workers are in the construction sector compared to 9% for all ethnicities. However, the share of Indians working in construction has been increasing over time. On average, Indians appear to be moving toward higher paying industries and occupations, “the Report said but admitted that this is not universally true.”
Mr Eaqub said that the economic contribution is increasing over time, not only because there are more Indians living and visiting New Zealand for pleasure and work, but also because they are more likely to be involved in higher paying and higher productivity industries and occupations.
“But right now, the skills and qualifications of Indians is not being put to best economic use. The more the barriers to ‘migrant settlement’ can be reduced, the greater the benefits to NZ Indians and New Zealand,” he said.
