The Accounting Brain Drain
The ‘brain drain’ is the flow of human capital out of a country, particularly skilled individuals and tertiary graduates. Haylock (2005), observing that 80% of accounting firms are finding it difficult to find and retain good staff, asked, “Where have all the accountants gone?” Hooks (2005) replied, “Overseas, especially to the UK [United Kingdom] and Australia”. Her reply was based on a survey of Kiwi expatriate business professionals (also reported in Inkson et al., 2004; Jackson et al., 2005; Hooks et al., 2005). This study extends their findings by surveying potential accountants before they leave New Zealand (NZ). This survey of 177 accounting students in their third or fourth year of study found that 87% of the respondents intend to work overseas, especially in the UK and Australia. The reasons provided for intending to work overseas were heavily weighted towards higher incomes, developing their careers and having fun. This loss of graduates should be a concern for accounting firms, as it will add to the shortage of entry level accountants. Accounting firms may need to look outside NZ for skilled labour and may need to take advantage of international students already in NZ. Overall, there does not seem to be an end in sight to the brain drain of young accountants from NZ. NZ will continue to lose trained accountants to the UK and Australia and increasingly to other countries until we are able to offer them higher incomes and career opportunities. Responses suggest that students will eventually return to NZ for family and lifestyle reasons, although these are less influential for students than for the expatriates in Hooks et al. (2005). However, NZ is attractive for its safety.. Return of the students could lead to a brain gain as suggested by Inkson et al. (1997) where expatriates return bringing new skills, knowledge and capital. Until long-term strategies of economic growth can be put in place, firms will have to deal with the skills shortage in two ways: firstly, through attracting skilled workers from overseas, this could be achieved in part through retaining international students through the provision of work permits. Secondly, firms can build loyalty in order to retain current staff, as suggested by Boress (1999) and Haylock (2005). Thirdly, NZ needs long-term strategies of investment in technology to grow the economy as implemented by other countries such as India (Cervantes and Guellec, 2002).