Under pressure from companies and the public sector facing a shortage of workers and policymakers fearing it will fuel inflation, New Zealand Prime Minister Jacinda Ardern is set to unveil plans this week to open the country’s borders.
Ardern garnered worldwide acclaim for limiting the local transmission of Covid-19 through an eradication strategy, imposing severe restrictions and hitting New Zealand’s international border, which closed in March 2020.
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However, this tactic is now pushing an economy that is heavily dependent on a migrant workforce, leading to higher costs and lower production. Dairy, gardening, housing, services, health and the wider public sector have all reported serious staff shortages and called on the government to increase borders.
The pressure was visible on Monday when about 1,500 midwives at the hospital quit their jobs, citing overwork due to “critical shortages”. More than 30,000 nurses will go on strike later this month for the second time since June, seeking better wages and working conditions amid staff shortages.
“We rely on internationally trained nurses to meet our staffing needs, but with borders closed we have none,” said Glenda Alexander, New Zealand’s director of industrial services.
“Kiwis do not enter nursing as they are postponed due to workload and low wages,” he added. “Nurses get burned, they get sick themselves and they are constantly worried that they will make mistakes that could affect their patients.”
The hospitality sector has a similar extent. Some 2,000 restaurants went out of business last month as part of a two-month campaign to draw the government’s attention to serious shortages of chefs and other skilled workers.
Ardern has said she will remain vigilant when she outlines her government’s six-month plan for public health and border control on Thursday.
“Any changes to the border regulations will be carefully considered in phases, based on the risks,” he said on Monday. “We have come a long way and we have gained a lot of freedom to rush to this next step and go back.”
Ardern last week opened a quarantine-free one-way street for seasonal workers from Samoa, Tonga and Vanuatu, all countries without active covid cases, to address job shortages in the horticultural industry.
New Zealand has recorded about 2,500 cases of Covid-19, including 26 deaths, among the lowest in the world, and a history that helped Ardern retain power in a October outbreak. The last case of local transmission was in February.
The roadmap will be based on the findings of a report by experts, including epidemiologists, entitled “Reconnecting New Zealanders to the World”.
However, companies are pushing for the plan to include the resumption of labor imports sooner rather than later.
The country’s unemployment rate is at pre-Covid levels, with more jobs than skilled workers. Under-utilization rates, a measure of how many people work less than they would like, are at historically low levels.
Manpower shortages increase costs as employers pay more for staff retention. Annual inflation reached 3.3% in the second quarter, much higher than the central bank forecasts.
Economists believe the pressure will force the Reserve Bank of New Zealand (RBNZ) to tighten monetary policy next week to prevent the economy from overheating.
“Monetary and fiscal policy has probably outpaced demand,” said Sharon Zolner, chief economist at ANZ.
The government provided incentives through wage subsidies, while the RBNZ introduced a $ 100 billion quantitative easing program in pandemic-induced policies that sparked growing inequality and exacerbated a housing crisis.
A major concern for Ardern and policymakers is the Delta coronavirus variant, which is raging in neighboring Australia and around the world.
Delta-powered epidemics across Australia led Ardern last month to suspend a so-called “travel bubble” that allowed quarantine travel between the two countries.
Experts have warned that Delta’s arrival in New Zealand will result in longer blockades, as only 21% of the country has been fully vaccinated.
“(Delta) is much more dangerous than other Covid executives,” Ardern said. “It changes the risk calculation in the same way that it changed everyone’s risk calculation.”