Engineering an Elite Migrant Workforce

The Government is shifting many levers in what it calls the Immigration Reset. A lot of what has now been put in place, and what is to come, clearly has the objective of wiping out what is perceived as a migrant underclass. In this narrative, overseas workers are poorly paid and poorly treated. They need to be saved from employers who can’t be trusted to behave decently with their staff.

I’m not convinced that shifting the burden of compliance onto employers is the answer. This is certainly what the new Accredited Employer Work Visa scheme does. As explained in a previous blog, it is a 3-stage system – employer accreditation, the Job Check and the individual’s application for a visa. Two of those steps belong to the employer. It has been said by INZ that getting accredited first time around should be simple enough, although as the scheme’s online portal only opened on Monday this week, we have not had time to evaluate if this is the case, or even tell employers what to expect in detail.

As with a lot of regulation, the bad behaviour of a minority means that everybody is loaded with extra rules and bureaucracy. Businesses that are still recovering from lockdowns, disruptions to their business, the increasing cost of credit and a non-existent labour pool have been handed another barrier to recovery. And this is just at the time when we might hope that overseas workers will be coming back to fill some painful gaps. The talk of “well-being” does not seem to extend to small- to medium business owners who create jobs and taxable income.

Now, I’m not on the front line of MBIE’s Labour Inspectorate or Immigration New Zealand Verification and Compliance. Maybe things are that bad. A 2019 study into the exploitation of temporary migrant workers from 2019 found that deception and coercion of those on Work Visas is more widespread than many from the business sector believed. Parliament’s Education & Workforce Committee commissioned an enquiry into migrant exploitation last October, although it doesn’t appear that its conclusions have been published yet. Still, some of what is being done about this doesn’t quite sit right.

Let’s Price Migrants out of the Gutter

One tool that the Government is evidently using to eradicate the perceived migrant underclass is through the salary settings in the new Accredited Employer Work Visa scheme (“AEWV”) which is opening in stages right now. From 4 July 2022, all employers wishing to support non-New Zealanders to apply for a visa must get accredited. For most occupations, they must also pay at least $27.76 per hour or the annual salary equivalent. This figure is the national median wage.

Think about that. The median wage is at the midpoint of all the wages being paid to people around the country. Among the general population, the same number of people get paid below the median wage as get paid above it. This means that all migrant workers on job-based visas are to be paid as well as, or better than, half the rest of New Zealand. Sounds to me like we’re creating a super-class of overseas workers who, statistically, will all do better financially than a substantial portion of the citizen or resident population.

This could create some workplace tensions. In the past, employers who needed migrant workers but who didn’t pay everyone at the median wage, for whatever reason, could simply take people on at the same rate as their other staff, on the mutual understanding that they might only be eligible for a 1-year visa at a time. Now, if they want to hire anyone from overseas at all, they are compelled to pay them more than New Zealanders doing the same job, just to be allowed to employ them. This has probably already been the case in some situations, but it will become more widespread and could fuel the sort of resentment which overseas workers really don’t need.

A left-leaning administration favours improving the conditions of the labour force, so that finding ways to lift wages is naturally on its agenda. There’s nothing wrong with that – in fact, the way inflation is going, wages will have to rise a whole lot more in the next couple of years just to keep up. The point here, though, is that if everyone’s pay goes up across the board, the median wage goes up too. And overseas workers will always have to be paid above that level, no matter how high it goes.

This blanket approach to migrant wage settings ignores regional differences in pay. People working in small towns may not necessarily get paid as much as those in Auckland or Christchurch, because the cost of living in lower (especially housing). Businesses may not earn as much income if they are serving a small or rural market. There has been quite a bit in the media about how the smaller centres are suffering from lack of workers. The effect of this scheme will either be to discourage businesses from hiring – and perhaps downsizing or shutting down entirely – or will squeeze their margins even further after a couple of years of doing it tough through the rocky COVID-19 road that we have travelled together.

Other Options – Sort Of

Certain jobs do not have to pay $27.76 per hour. Among this fairly short list are welders, rest home caregivers and cafe workers, all of whom we need to encourage. Even then, there is another bottom threshold of around $25.00 per hour; and the lower setting for hospo workers only runs until May next year. Is it believed that, somehow, by then we’ll have a batch of keen Kiwis ready to swing on trays and lattes, or a fresh influx of backpackers from Europe once the word gets out that the borders are open again? The first option is not likely, and the second simply means that cafes and restaurants will go back to hiring those on working holiday visas and subjecting them to just the sorts of exploitation which this policy was meant to knock out . . .

Now, open Work Visas are a safety-valve. These allow people to work for whomever they like, such as those sponsored by a New Zealand partner, or those who qualify for a Post Study Work Visa after completing a NZ qualification. Sometime in 2023 – we don’t know when – people on Post-Study Work Visas will only be allowed to work for accredited employers. At present they get a 3-year visa if they finish their degree, for example, which lets them work for whoever they like. This gear-shift will significantly limit their choices about who to work for.

The official line for a long time is that we need to wean ourselves off low-paid overseas workers, upskill New Zealanders and improve conditions for all in employment. The first of those premises is fundamentally flawed at a time when unemployment is at an all-time low. And there are quite a lot of jobs that New Zealanders just don’t want to do, no matter how many training incentives might be waved their way. Certainly, drawing a black line under the median wage as the criterion for hiring a migrant is – I’m afraid – a crude solution which might solve one problem but will create others.

About Simon Laurent, Lawyer

Principal of LaurentLaw Barristers & Solicitors. NZ immigration law specialist.
This entry was posted in Business, Immigration Industry, Immigration Problems, Immigration Visas and tagged , , , , , , , . Bookmark the permalink.

3 Responses to Engineering an Elite Migrant Workforce

  1. Robin says:

    Hi Simon-
    Great insights. I share your concerns about whether this new system will be able to address the issue of migrant exploitation that it is supposedly designed to do, particularly when they will be “forced” to process a large volume of these new accreditations.
    In your analysis you’ve focused on migrants who might otherwise be paid below the median wage, but note also that there might be an impact on higher-wage professions as well. Rather than hiring an experienced Kiwi professional at some higher salary, an employer could bring in a migrant at the media wage. So perhaps an all-around “regression to the median” in salaries, pulling those below up and those above down.

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  2. Hi Simon, this is a good analysis and covers the general concept of what is happening at this point. I would probably go a step further when describing the current government’s intentions. Lifting the wages for migrant workers to the median wage forces employers to increase wages for their entire workforce. Given the tight labour market in NZ employees will just leave and get a better-paid job if they do not get the pay rises. A further point to notice is that the Labour government came to the conclusion of migrant exploitation before any reports were completed. They preempted the productivity commission report which was published in November last year and put rules in place that went beyond what the commission actually found. The big issue is the sneakiness that they use to drive their agenda. This invites speculation and mistrust and causes division within our society, which is exactly what is going on at this time – very opposing camps with little consideration of the other side.

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  3. bep2403 says:

    With this scheme if employers require additional staff and are unable to recruit locally, they will be forced to increase the wages for their local staff to match the salaries they will need to pay to recruit from overseas. For businesses operating in the export sector they will be unable to pass these increased costs on. For businesses involved in the domestic market it will be just pouring more fuel on the inflationary spiral we now have. It appears this scheme was dreamt up by the unions to increase wages without any understanding in economic fundamentals.

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