Woodhouse says no evidence yet that high temporary migration is suppressing wages at the low end; English says watching skill levels and wages closely; Pressure growing on Govt as ANZ, RBNZ, Auckland Chamber of Commerce call for migration review

Woodhouse says no evidence yet that high temporary migration is suppressing wages at the low end; English says watching skill levels and wages closely; Pressure growing on Govt as ANZ, RBNZ, Auckland Chamber of Commerce call for migration review
Immigration Minister Michael Woodhouse talking to reporters in Parliament on August 16, 2016. Photo by Lynn Grieveson for Hive News.

By Bernard Hickey

The Government has pushed back at growing calls for a review of low-skilled migration levels, saying it has not seen any evidence yet that higher levels of relatively low-skilled temporary migration was suppressing wages or substituting for unemployed New Zealanders.

Over the last month, ANZ CEO David Hisco, Reserve Bank of New Zealand Governor Graeme Wheeler and his deputy Grant Spencer, billionaire philanthropist Stephen Jennings and Auckland Chamber of Commerce CEO Michael Barnett have called for a review of migration settings, given concerns that a surge of temporary and often low-skilled migration was suppressing productivity growth and wages, and pushing up house prices and rents.

Treasury warned ministers in December it was concerned lower skilled migrants were dragging on productivity and wages. See my March article on that here.

Last week Wheeler said he was looking at the quality of the surge in migration since 2013. Wheeler pointed out that 160,000 people had entered the country and increased the workforce by 4% over the last two years.

"And that's added some downward pressure on wage outcomes in terms of the expansion in the labour supply. And clearly it's added quite a lot of pressure into the housing market as well," he said.

Immigration Minister Michael Woodhouse denied there was evidence that high levels of temporary migration, particularly to fill labouring jobs on farms and orchards, was suppressing wage growth, although he acknowledged Treasury had warned it was a risk.

"They said there was a risk that that would occur, but I don't think the evidence is clear yet," Woodhouse told reporters in Parliament.

"What we're seeing in the increased labour demand is that is a sign of success, not failure. If you go out into the regions they are screaming out for more workers to meet the labour needs for growing horticulture, viticulture and agriculture industries. You'll see that wages are increasing above inflation. Whether you completely remove the international labour market and have a pure supply and demand model, I think in the short term that could be quite damaging. But in the long term I think it's important that New Zealanders are at the front of the queue for those jobs.

'Less certainty for temporary foreign workers'

He also denied there was exploitation of cheap foreign labour happening in some parts of the country.

"I don't think there's any evidence that that's happening. What we are seeing over time if an industry relies on (international) labour over time, their wages don't tend to rise as fast as New Zealand workers, and that's explainable because they have quite uncertain futures in New Zealand," he said.

"They're on temporary visas and they may need to go home at any time, so they may not get the sorts of promotion opportunities that might be available. Apart from that, I don't think the evidence is clear that there is wage suppression in those occupations," he said.

Quarterly Employment Survey and Labour Cost Index surveys for the June quarter showed wage growth slowing despite an accleration in economic growth. The QES measure of average hourly earnings showed annual wage inflation slowing to 2.1% in the June quarter from 2.8% a year earlier, while the LCI measure showed the Index's annual inflation rate falling to a six-year low of 1.5% in the June quarter. The construction sector's hourly wages grew just 2.1% in the June quarter from a year ago.

'Letting the market decide could be bad in short run'

Asked if migration should be restricted to allow supply and demand to be matched through higher wages, Woodhouse said increased demand for labour was a sign of success and turning off the tap of temporary migrants would be bad in the short run.

"What we seeing in the increased labour demand is that is a sign of success, not failure. If you go out into the regions they are screaming out for more workers to meet the labour needs for growing horticulture, viticulture and agriculture industries," Woodhouse said.

"You'll see that wages are increasing above inflation. If you completely remove the international labour market and have a pure supply and demand model, I think in the short term that could be quite damaging. But in the long term I think it's important that New Zealanders are at the front of the queue for those jobs," he said.

Labour Immigration Spokesman Iain Lees-Galloway released figures last week showing that work visas were issued for 6,500 labourers over the last year when there were 15,600 unemployed New Zealand labourers.

English watching wages

Finance Minister Bill English was also asked about the calls for a migration review and whether low-skilled migration was suppressing wages.

He said the Government was getting more in-depth data on the issue, but had not seen evidence of a link yet.

"The mainstream advice is that it doesn't have much impact. We're pretty interested in the issue because we look at it both from the point of view of household incomes, which we'd prefer to be rising, and also from the point of view of the welfare liability, who are on welfare and you'd want to see in jobs if that was at all possible, so we're pretty interested in how that interaction goes," English told reporters.

"Up to now that advice has been that there isn't a substitution effect. We're always working at it because we'd like to see the long-term cost of welfare come down and the best solution to that is people getting jobs and we would want to see New Zealanders incomes lifting," he said.

"We have been looking at it for two to three years. Everyone understands there's parts of the country where there's use of migrant or temporary labour and there's people who are unemployed. You're always looking at how those two things interact."

English pointed to growth in wages in Christchurch during the most intense period of the rebuild as a sign that demand growth for more workers that exceeded supply would lead to wage inflation rising.

"You saw it happen in Christchurch and now it's happening north of Taupo because the construction industry is growing at about 20% per year. It is pulling people in. It is having to pay more, particularly for areas that are short. If you hear the anecdotal evidence it's going to build up to an increase in wages," English said.

"That's what's you'd expect. If wages aren't rising, there isn't a shortage. I'd hope that is the case in the construction because there's a lot of houses that can be built in Auckland, that's picking up steam pretty fast. It would be great if there's sufficient labour for that to happen without the costs of the houses going up even faster."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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24
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Holy cr*p-a- moley these guys are going to end up with permanent cricks in their necks from looking the other way all the time.

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Evidence? How much evidence do you need? Our median income is below the calculated and widely recognised living wage at a bit over $30k before tax.
That's half of all Kiwis earning less than a living wage and completing directly with ultra cheap and desperate third world labour. Little wonder our productivity levels are so poor - we are importing labour from two countries with some of the world's lowest education and productivity levels - India (in particular) and China. Low wages will directly cause low productivity (seen how they build roads in India with $2/hour labour) so no mystery that our productivity per worker isn't performing better.
This needs to be recognised for what it is; government driven treachery of the working poor of this country.

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Clearly our government has left the country.

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This just in, the NZ National party is to receive the Nobel Prize in Economics for truly profound, revolutionary contributions to the body of knowledge that contradict 200 years worth of theory.

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Meanwhile Winston Peters head (and support) continue to expand in the vacuum known as "the centre" which neither National or Labour wants to occupy....

The next election is going to be a defining moment for NZ. Immigration and affordable housing are going to be major issues just like in the Brexit vote. I still do not understand why they just don't ban foreign ownership of residential property......

"continue to expand" ?? is wishful thinking. Only problem is that this is not showing up in the recent polls. See the table in the RH sidebar, and the chart in the Opinion section. Maybe they will, but they haven't yet. If anything, WP is languishing at below 8% and below the last election level of 9%. Still, a new poll is due at the end of this week (RoyMorgan).

Of course polling results are the only quantitative data we have - but it is also worth noting the accuracy of these (or at least their ability to predict a future result) has been pretty poor in other recent elections.

Please don't stop immigrants coming in.
They appear to be the only people willing to work at rest homes and clean up my Father In Law 4/5 times a day and not complain.
In fact I would say pay them more.
16/17 dollars an hour for poop cleaning, no where enough.

They "appear" to be the only ones because these jobs are not even advertised locally.
My old Mum is in a rest home with moderate dementia. Almost all of the staff are from India and change from time to time as you would expect. The strange thing is I never see these jobs advertised, this in a high unemployment area. I understand they are placed through an agency that has figured out (not difficult) how to pull the wool over immigration NZ's eyes. I don't find them exceptionally good at what they do (haven't had them change my nappies though) so the attraction must be the low wages they are willing to accept; which directly challenges the ridiculous claim that low paid foreign workers are not driving down local wages.

Trade me often has adverts from different rest homes wanting staff especially in Hamilton a growth area for resthomes.

That may be so Ngakonui but only one advertised for the whole of Northland apart from some specialised - registered nurse etc. and we are a big area for retirees. That's on Trade me jobs and a lot of the ad was all about having to have visas, work permits and so on so obviously targeted at non Kiwis from the get go. Never seen any in the local papers.

Sorry, but real jobs are just not advertised in 'the local papers' anymore. According to the ANZ jobs ads survey, in June there were 2,615 jobs advertised nationwide in newspapers. In the same month online, there were 38,339 job ads. 94% of all jobs being advertised are posted online. For a start, that makes them visible to people far outside the zone covered by the 'local newspaper'.

And another thing that I'd love to know about, is, how come whenever there are new shops (lots around Hamilton north east) the businesses are 100% run by immigrants? Are shop keepers, bakery owners, butchers, vege shops, pizza outlets, liquor store owners etc etc etc in such short supply?

I think it's because some migrants can't get jobs so the only answer is to buy one.Their kids also work in shop.

Surely, that is not what our immigration policy is about?

The same goes for taxi drivers. If they can't find work they get funded or provided with small loans to start a business. If they don't think the business is worth their time they leave.

I read a while ago a lot of small shop owners as listed above are lucky to make minimum wage for the long hours they work. How many kiwis would be prepared to take the risk of buying such a business and putting in such long hours?

Pretty much what I thought, just buying their way in, so there goes the essential skills schtick

Yes that's fine and I would agree with you David, But the question is; do the low wage workers have access to a home computer to look for work online when their living in a garage?

NZ churns out hopeful new nursing degree graduates each year. Many can't find the work they were hoping for. My wife's ward recently employed 7 nurses. Sure the DHB advertised it (on their own site), but surely at least 1 kiwi would have been acceptable, - No. Four are coming from the Philippines, 2 from India, and the 7th from the UK. I imagine the excuse would be that they immediately needed experienced nurses. This, sadly, isn't unusual but should never have been allowed to happen. Why are we not utilizing our own people????

I hear same for me someone at the coal face. Plenty of nurse graduates here cannot get their first placement. Yet the DHB's keep bringing out poorly trained dubious degree holders form far and wide. Mngt love em because they are compliant. But their level of skill and training is often dismal.

This exactly what is happening and it is a disgrace. Nursing graduates struggle to find jobs in NZ after qualifying because it is cheaper for DHB`s to employ Nurses from India and the Philippines who will be on lower pay scales than experienced NZ Nurses and dont require the continued education ans support new graduates require.

Business owners not only pay low wages to immigrants but the employer also get money to give job letter to support them (immigrants) for PR. It is a big racket and everyone is aware of it as this government is only interested and cares about $$$$$, how they come or its outcome is not important to government

Immigrants seem to love purchasing corner dairy and other cash flow businesses for the tax free incomes which possibly makes up for the long hours. It does seem there are two favored options for business purchases, houses to rent back to us and corner dairies, liqueur outlets, high cash flow recipe.

If those jobs paid more, kiwis might be able to afford to do them, because that is what it amounts to. Rest home wages are really only secondary wages in the old fashioned way, with wifey out working though she doesn't really have to. That is what they reflect. Anyone wanting to get ahead in their life, under their own steam leaves those jobs well alone, so yes, as long as immigrants are prepared to accept the rubbishy wages paid, then indeed they are contributing to keeping them low in this country. I fail to see how any other conclusion can be come to.

What does it take to make these guys wake up. Probably a couple of terms in the opposition. Unfortunately that seems unlikely to happen soon.
To me the point of economic management by government is to lift incomes and security of individuals. There is nothing interesting in raising GDP if it does not address incomes and security first.
Lets look at Queenstown, which uses masses of workers from Brazil who are quite happy to put up with the low wages, poor conditions and high living costs. Because it's still better than Brazil I guess.
At the same time hotel rooms are often hard to get, and room prices have gone through the roof.
What would wrong with boosting wages, attracting Kiwis to work for a change. Cash in their pockets would flow into the economy boosting other business.
Instead we have overseas owned enterprises, earning widnfall profits currently, importing low pay staff from overseas.
I see no reason for New Zealand to do that.

What we're seeing in the increased labour demand is that is a sign of success, not failure. If you go out into the regions they are screaming out for more workers to meet the labour needs for growing horticulture, viticulture and agriculture industries
....
That's true, the rosehips of central otago are dropping on the ground due to not being able to get workers for $1/hr

What else would Woodhouse say ....the truth: ...Which is businesses in NZ are so ham strung with H&S costs , compliance costs, taxes - both direct and indirect, there is not enough money left over to pay a decent hourly rate for their workers........don't believe me, why do we need WFF and the accommodation supplement ? .......why don't we scrap WFF and the accom. supplement and just pay higher wages and salaries !! .......... NZ is in the race to third world status.

We have enough chefs now. We can remove it from the long term skill shortage list. We need road workers, planners and mono rail engineers.

Funny those complaining about immigration in New Zealand seem to forget the "brain drain" of 40,000-50,000 New Zealanders that migrated to Australia annually over the last 15 years. Australia grew by the total population size of New Zealand over the last 13 years. Can only wonder how that suppressed wages in Australia.

Australia is growing by 1 million in population every less than 2 years!

New Zealand needs migration right now as the local Kiwis are ageing fast, New Zealanders still moving overseas, has declining low birth rates below replacement level & Ghost towns appearing in the regions.

NZ has had 4 periods of population decline over the last few decades. parts of New Zealand needs migration especially the regions in the North Island & the whole South Island which will barely grow in population over the next 2 decades.

Within the next 2 decades New Zealand will have more people over 65+ than under 15.

New Zealand needs targeted migration of skills that are actually needed - an "entrepreneur" coming in and opening another corner dairy is not an entrepreneur - they are a shop keeper. Immigrants need real skills, with real world application to New Zealand.

Retail manager is on our skilled category list. That's how nuts things have got!

Because the people running repeat immigration scams through fake shops keep asking for them.

Like Countdown - our local Countdown has gone to the pack. I think the managers there run a make work scheme for the shelf stacker's because the shelves are changed around every month and I can never find anything.

First they tell us we need more young workers....then we bring their old parents in...then they tell us robotics is destroying all the jobs anyway. Confused?

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Many kiwis are leaving and not having kids because of housing and living costs. We need more migration like a hole in the head.

The reason for no kids because it costs the GOVERNMENT too much money . Not only the cost of the kid eg hospital, day care, schooling ... It is more the mother leaving for at least a couple of years AND THEREFORE NOT PAYING TAX.
So we need more workers , for what ever reason , but it costs too much for the parents plus takes 20yrs and Government and therefore ... we can have lots of immigration ... yay.
That's what I think anyways

Tell this to government and will get a response - your problem and we do not care as you are just a vote for us which can be easily manipulated at the time of election.

Pay Mr Woodhouse the average wage.

https://www.theguardian.com/world/2016/aug/16/new-zealands-most-shameful...

Meanwhile John Key is increasing embarrassing us to the rest of the world

This news site seems to take delight presenting New Zealand as an emerging third world candidate. Here is yesterday's reference.

Hardly the building blocks of a food export trading relationship.

they wouldn't be wrong either.

Keep complaining all you common taters. You don't know what poverty is...government paying for hotel rooms, shocking!! If only for these kids...
http://www.news24.com/SouthAfrica/News/63-of-young-sa-children-live-in-p...

What, South Africa's fecking disgrace is worse than our fecking disgrace, so we should just shut up and not bother fixing anything until our fecking disgrace is bigger and worse than anybody else's? Don't be stupid and disingenuous. We don't even have the excuse of rebuilding after decades of apartheid.

I'm not even going to dignify this with answer you inconsiderate..

Pathetic.

Try to follow the logic here. Conditions in South Africa are independent of conditions here. Child poverty in New Zealand is getting worse. The fact that the children of many nations are doing it harder than our kids doesn't invalidate the child poverty here, or make it better. Bleating that we should shut up about child poverty because it's worse elsewhere does precisely feck-all for the kids of NZ or anywhere else, and is just a disingenuous attempt to deny the problem. So do something about it, through voting or whatever, or get out of the way.

Local media plays upto JK and we get news from overseas media as that may be hard for national to manipulate.

.

"At the end of the day we are going to do nothing- In fact we are going to take the rest of the year off."

And get paid $500K a year of taxpayer money to do nothing but go on holidays around the world, while pretending to give lots of salary to charities (JK), even though this has never been, and most likely never will be substantiated in any way.

I smell bullshit... mr Woodhouse

good photo love the mullet, suits him with his manners and ideas

Is that a mullet, or the hair of the puppetmaster standing behind him with a hand up his bum, feeding him his lines.

Perhaps this is John Key's legacy

The Saitu children are not alone in their desperation. One-third of New Zealand children, or 300,000, now live below the poverty line – 45,000 more than a year ago.

The fact that twice as many children now live below the poverty line than did in 1984 has become New Zealand’s most shameful statistic.

Thañks John Key for this type of prosperity

http://www.newshub.co.nz/politics/data-shows-collapse-in-number-of-affor...

Vote for John Key

Anyone that still believes a thing this government comes out with really is not playing with a full deck.
It's a relentless stream of garbage and propaganda.

Nothing new. Government and his ministers are in permanent denial to suit their agenda - whatever it may be but is not for the benefit of people of nz

Which government will come out and accept the mistakes in their policies, is this even news ?

Do not accept your mistake but atleast try to ractfy them but ego and arrogance will not allow them to correct themselves. Start of downfall.

The whole purpose of high immigration is to lower wages and salaries. Yes Australia has had a huge increase of immigration in recent years - and would you really want New Zealand to be like Australia? You are not aiming very high if you do. They do have very strong unions though. And, I think, they still have an arbitration Court simliar to ours of the 1980s

Our Prime Minister will still Deny as does not suit him :

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11695063

How could anyone ignore and not act is beyond normal human being.

As they say it is the darkest before dawn so next year is election year.

Aha! Our own NZ Goebbels. A big lie repeated often enough becomes the truth.....

3 Reasons to fail at living
1. Complain about everything
2. Blame everybody
3. Not be greatfull

4. Poor spelling and grammar.