Shock, horror - AFR sounds alarm about Aussie jobs being offshored to NZ

An intriguing email arrived in my inbox last night. I'm assuming it was sent to all Australian Financial Review subscribers.

It's from the paper's editor-in-chief, Michael Stutchbury. He sounds the alarm that despite Prime Minister Julia Gillard's "Aussie jobs first" pitch, more jobs are being offshored to the lower wage economies of India, the Philippines and (horrors!) New Zealand.

The immediate spark of concern is IBM's decision to offshore as many as 1500 jobs (about 10% of its workforce) to Asia and NZ.

IBM won't comment on how many, or what type, of jobs are heading here. But the Sydney Morning Herald quotes an analyst who says:

He wouldn't be surprised if New Zealand ended up benefiting the most from the cuts because of the country's cheaper real estate, lower mandatory superannuation for employees and lower labour rates.

New Zealand also had better English language proficiency than other countries in the region, which would help drive productivity when talking with clients.

Australia's cost base has become too high, says Stutchbury. 

And he doesn't see the political will for change any time soon. "Labor can't do it because it is run by the trade unions and is locked into the rhetoric of 'spreading the benefits of the mining boom'. [Opposition leader] Tony Abbott won't do it because he doesn't want to expose himself to the memory of John Howard's Work Choices."

Australia's pain is New Zealand's gain. 

IBM won't be the first to move jobs eastward across the Tasman. The Australian Financial Review itself moved subediting jobs to the cheaper environs of NZ. Heinz moved 300 jobs from Queensland and Australia to Hastings, iiNet (Australia's largest independent ISP) has moved part of its call centre operation to NZ, and the CEO Vocus, which last year bought NZ ISP Maxnet, tells NBR ONLINE his company is looking at building data centres here - in part because labour is cheaper, but mostly because of our cheaper electricity.

We don't want to become a cross between Tasmania and Bangalore; a marginal offshoot of mainland Australia that picks up bottom-of-the-ladder jobs. But let's face it, not every school leaver can be a systems architect.

And this is happening at the same time as we're seeing a boom higher up the food chain as the likes of Orion Health, Datacoom and Xero sign on people for skilled roles.

Australian companies moving jobs to NZ also shows it's not just about wages. New Zealanders are paid less than Australians, and the gap is growing, but India and the Philippines still win hands-down on that front. It's also about factors such as geographic proximity; Australia and NZ being very culturally close (and they are, at the end of the day); the two countries' union on many regulatory fronts; and our handy skills base. The IT labour market is tight, but our workforce is growing.

ckeall@nbr.co.nz

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