It only took 102 days of pleas from employers, an inflation outburst and a series of bad opinion polls for the Labour Government to unwind some of its migration 'rebalancing' initially announced on May 11.
And make no mistake. This is a significant loosening, but it has yet to ‘go nuclear’ and throw open the doors to guaranteed and/or faster pathways to residence for many more categories of lower paid workers on temporary work visas. There is plenty of time between now and the next winter of discontent for that to happen, and in time for the next election.
That further loosening is still possible if the wage inflation and political pressures remain intense going into the election late next year. New Zealand is also having to battle much harder for workers and students to choose us over Australia or Britain or Canada, who are also loosening their settings in desperate attempts to fill open positions and take the edge off wage inflation.
Under intense pressure from employers wanting lower-wage workers to fill staffing gaps for the summer, the Labour Government loosened the migration setting on Sunday to try to ease inflation pressures and knock out one of the Opposition’s main prongs of attack.
Just over three months after releasing a tough new immigration ‘rebalance’ aimed at lifting wages for those working on temporary work visas to the median wage of $27.76/hour, the Immigration Minister Michael Wood announced an easing of the settings and cut the wage rules for years for the aged care, construction, meat processing, seafood and adventure tourism sectors.
He also doubled the cap for working-holidaymakers, who can work for anything above the minimum wage, and extended visas for backpackers already here.
Low wage sectors given years of reprieve
Wood made the announcement at Sky City to emphasise the help the government wanted to give the tourism and leisure sectors ahead of the summer. The key details of the changes as laid out in this MBIE document, included:
- a doubling of Working Holiday Scheme cap for 2022/23 to allow an extra 12,000 working holiday makers to enter;
- the working holiday-makers visa of people already here or about to arrive and that are set to expire between 26 August 2022 and 31 May 2023 will be extended for 6 months;
- those who held working holiday-maker visas for 2020, 2021 and 2022, but couldn’t come because of Covid, will be automatically issued visas so they can come between October 1 and January 31 and work for 12 months; and,
- the extension to exemptions for the median wage rule ($27.76/hour) for workers coming under the new Accredited Employer Work Visa for two to three years.
The industries exempted, their exemptions and the discounted wages are as follows:
- the aged care sector extended for two years at $26.16/hour, with ‘level 4’ workers provided a two-year pathway to residence; the construction sector extended for two years at $25.00/hour;
- the meat processing sector extended for two years at $24/hour; the onshore seafood processing sector extended for three years at $24/hour, with updates each year to maintain it at 86% of median wage;
- the offshore seafood industry extended at minimum wage plus $3/hour for three years, although rising by rising $1/year until hitting median in October 2025; and,
- another feature of the announcement was a plan to replace the current caps with a new Pacific worker programme from 2024, similar to the RSE scheme.
This would represent a major increase in the scale of the RSE scheme.
Michael Wood’s framing of the rebalanced rebalancing
Wood said the immigration rebalance was always designed to be flexible to deal with changes in scenarios.
“As the world recovers from COVID-19, labour shortages continue to be a persistent ongoing global symptom," Wood said.
“Our immigration rebalance was designed during the pandemic and included the flexibility to respond to scenarios, such as the global labour shortage we now face. These measures are about providing immediate relief to those businesses hardest hit by the global worker shortage," he said.
“We have listened to the concerns of these sectors, and worked with them to take practicable steps to unlock additional labour, we know these measures will help fill skills gaps, as businesses work towards more productive and resilient ways of operating.”
Reaction mixed
National's Immigration spokeswoman Erica Stanford described the changes as too little and too late.
"When pressed about the actions the Labour Government has taken to incentive working holiday makers to come here, Minister Wood could only point to an email campaign," Stanford said.
“Because of the staffing shortages, restaurants are forced to close their doors for two or three nights a week, and hotels have to ask guests to change their own sheets. Yet Labour has continued to move at a glacial pace, and it is businesses hurt most by covid that are paying the price," she said.
Stanford said the Government should also:
- raise the age limit to 35 years for working holiday visas;
- immediately open applications to all countries we offer a Working Holiday Visa to;
- grant a six-month extension to the working holiday makers already in New Zealand with Visas expiring before the end of the year; and,
- allow anyone who has already had a Working Holiday Visa to apply for a second and third visa if they work in tourism, hospitality or agriculture.
FIRST Union General Secretary Dennis Maga criticised the extended exemption of meat working, aged care, construction, seafood and adventure tourism from the median wage requirement. He said there had been little consultation with unions.
"Given the lack of consultation on this proposal, it’s difficult to escape the conclusion that this a cheap labour stitch-up between the Government and businesses," Maga said.
"In the construction industry, for example, the average hourly wage has now reached $33.77, and is growing at 5-6 percent per year. Enabling employers to recruit for almost $9 dollars an hour below this seems a clear attempt to constrain wage growth here in one of our key productive industries," he said.
"The immigration rebalance was supposed to push back against this kind of wage repression, but it seems that the Government is conspiring to undercut this approach."
Chambers of Commerce welcomed the move.
"We are pleased that the Government has listened to the business community and further adjusted their immigration settings to increase access to labour in some of the sectors that need it most," said Leeann Watson, Chief Executive of the Canterbury Employers’ Chamber of Commerce.
"Labour market constraints are the biggest issue facing Canterbury businesses. Our recent Quarterly Canterbury Business Survey found that three in four businesses were finding it more difficult to attract and retain staff, and that it is significantly prohibiting business growth," she said.
95 Comments
Common sense? Rubbish - re-inventing slavery. I considered it ironic on Sunday when the news of the day was all about this, easing up on median wage requirements for immigrant workers, and on the Sunday program on TVNZ John Campbell has an article on RSE workers being utterly shafted for accommodation in Marlborough. No one is questioning the business's about if they cannot afford to pay their employee's fairly then perhaps they shouldn't have the employees or shouldn't be in business? Too many I've advised on, the focus has been on the owner's 'wealth' and status rather than the health and efficiency of the business. I have huge concerns going forward from this.
Also, businesses that can't pay decent wages to attract and retain Kiwi workers should have no place in this economy. All they do is further crowd out the limited infrastructure available in NZ for productive enterprises.
This is nothing more than the worst kind of corporate subsidy paid to employers who neither wish to pay workers at fair market rates nor want to invest in labour-saving technologies.
This is admittance that her government has utterly failed to fix all of the underlying issues NZ. Instead Jacinda has taking the easiest option - in one wave of an order they chose to stuff the further generation and ignore fixing everything: infrastructure, climate, the poor, productivity, superannuation savings, crime, housing costs, inflation and that will encourage more of the young professionals we need - to leave.
The problem seems to be a lack of talent, vision, experience and real consideration for the team of 5m vs the elite.
History will not look kindly at all on the legacy of Orr/Ardern/Robertson.
The problem is the complete absence of an ethical stance in Labour or National vis-a-vis this issue.
They both seem ready to pander to businesses who demand cheap exploitable labour that's subsidised by the rest of society. Labour should seriously consider renaming their party to National Lite as they no longer seem to represent working Kiwis.
Sounds good Murray but that's not the issue. The problem is that at 3.3% unemployment in NZ, growers cannot get Kiwi workers, plain and simple. There is a very limited limited window to harvest crop and currently growers have to let whole fields go bad because they don't have the manpower to pick the fruit or vegetable. That's a terrible situation which will make fruit and veggies in NZ at the supermarket too scarce and more expensive, that's what's meant by increasing inflation. It also means growers are operating at a loss and some may have to close down,
I've done fruit picks many years ago Yvil. It is hard physical labour on the minimum wage. That is why there are no workers. I really do think that if the owners offered better pay and conditions , they would get more workers. But like any business their cost structures must be under control. Business in NZ have for far too long found it too easy to cut costs by cutting wages rather than looking at other ways to improve efficiency. Now it is coming home to roost.
Quite astonishing! A post with no commercial understanding at all, who believes that if a producer's price goes through the roof, the end product will be at the same price, gets 16 (so far) upticks. It's hard to believe that readers of a financial website such as Interest, have no basic understanding of commercial reality, they have clearly never tried to have their own business, produce something, hire people pay a gazillion expenses, taxes and then sell the product for a profit!
Actually, his comment was reasonable. Certainly the supermarkets' (outsized) profit margins are relevant to what they can afford to charge.
Like all prices, fruit and veggies prices are determined by supply and demand. If consumer demand is relatively elastic (because shoppers' budgets are maxed out already), then supermarkets will accept lower profit margins and keep fruit and veggie prices where they are.
True. There is pricing certainly. But turnover rules. Simple reality already. Product at a price left on a shelf is not revenue and the costs, overheads to support that product being there, are there regardless. Better to sell 10 units at 20c net margin and clear $2.00 than 5 units at 30c and clear $.1.50.
You make some good points on the seasonal labour shortage in agriculture. There are better ways to address worker exploitation in the sector than just hold back on RSE permits.
However, extending concessions to sectors, such as construction, meat processing and aged-care, seeking permanent employees and rife with cases of low wages and poor working conditions.
This is a systemic problem that I think starts in the banking sector. Banks get to choose the loans they make, and as a result they make them on real-estate at almost no risk with a 14% ROI the are literally laughing all the way to...
Anyway the issue is financing in the productive sector is chronically bad and hard to get, even at 2nd tier lenders. Therefore hard working growers are not able to automate more of their operation and as a result are still hamstrung by manual labour.
They should pay more as it is hard, honest work, but then again we should be using our prisoners and unemployed before shipping in the next lot of overseas immigrants to further collapse our social services and infrastructure.
The chance of government fixing this...zero, or possibly -20% or so as the follow the current course.
Someone was having a moan yesterday about r/newzealand's negativity about this policy - it appears Interest commentators are of the same mind. Perhaps everybody is, except for the property speculators and those who want labour but aren't prepared to pay even a miserly $27/hour for it.
No, this is stupidity, not common-sense.
Even in NZ, we are overpopulated ex-fossil-energy, and it is in increasing contention.
They would be better telling the truth, being proactive rather than reactive. Proactive is leadership. Reactive is followership.
Simple, really.
Whatever it is, it is plain this government is a real professional in the art of vacillation. Either they cannot react to an event or issue, until after it has happened, or they have no idea about what action they do actually take, as to what it will do, either positively or negatively. Abysmal track record.
So we're told migration doesn't have a wage suppression effect, but loosening migration settings is being used to combat wage inflation?
And my favourite question no one asks: Wage inflation is retrospective, because your employees are paying higher prices for goods long before you increase their wages. So if wages are to be stopped from increasing with more workers, then are we just telling employees that should just live with their wages not keeping up with living costs?
If so, how is this not functionally a tax increase in the form of a policy adjustment from central government?
This is a real business opportunity. Building slums of 20+ "units" (tiny 1 bed apartments) for the tax breaks has just been given a final shot in the arm by this immigration. I will be looking to see what pops up, I would be surprised if I don't get some marketing on this before the end of the month. Get in early, crank the capital gains get out after a couple of years, the tax break can be sold on. Gold mine.
Fitz ever thought about it this way?
More migrants - more construction workers to build houses
More people working at A & E, less wait time
More aged care workers - better care for the elderly
Who do you think is a better worker, the average migrant or the average Kiwi?
Except we have tried this for years and years, since the clark government really and that has not manifested.
Also the migrants chain migrate, bringing more people and consuming more housing without the payoff of more houses. It does not resolve the pension crisis because grandparents chain migrate. It does not improve wages, it suppresses them.
It is as it was in the Roman Republic, in 19th century America or even late 19th century New Zealand, mass immigration is used to flood the labour pool, suppress wages and drive property speculation.
Yvil is correct, we have just tried nearly 3 years with no cheap labour and look where we are. Certainly worse than with cheap migrant labour
There is a lesson here, don't ++++ around at school, get an education, get a trade or professional degree, take some risk.
Every propsperous nation has access to cheap labour, you can't have it all so stop complaining.
we have just tried nearly 3 years with no cheap labour and look where we are
That has more to do with the mainstay industries of our economy that are struggling the most and their inability to function without cheap workers.
Sure the likes of the US, Germany and UK enjoy access to cheap labour but their prosperity can mostly be credited to their frontier firms and high-ranked universities attracting top talent from around the world to gain the upper edge in hi-value exports.
To compare, check out NZ's immigration stats for the last 10 years or so and you will see hospitality, tourism and aged-care occupations appear in 8 out of 10 resident visa applications.
You miss the point Advisor. Access to cheap labour keeps the hospitality, travel, construction, agriculture industries all well serviced and delivers low low inflation. We have seen what happens when that supply of labour is disrupted - soaring inflation and a collapse in living standards. In theory, it grows skilled labour to focus on higher value creating activity.
So, going by your argument, living standards in NZ would have improved and costs stayed low for nearly a decade, over John Key's last 2 terms and Jacinda's first term, when net migration was running at record-breaking levels.
However, RBNZ's inflation breakdown shows non-tradable inflation averaging 2.7% in that period (Mar 2013-Mar 2020), while poverty and homelessness soared. Also, the gap between median and minimum wage reduced in the same period.
It's not clear that you get more people working in A&E - just different people. Because being able to bring in more workers from overseas means less pressure to improve wages and conditions. Which leads to the people already working in A&E buggering off to Australia.
What about this? Google" Slavery court cases in New Zealand last decade" and be amazed how many different cases! More work for the labor inspectorate; More work for our courts; More work for insolvency practioners chasing up debt/fines from those employers; more people seeking health care, see the recent cases in Blenheim due to substandard housing; Only to benefit a part of New Zealand employers who are greedy and maybe too lazy.
It's good to see the government finally pulling its weight in the fight against inflation. We will all have to pay much higher prices for fruits and veges for the rest of the year as a result of no foreign workers but prices of fresh food should come down as a result of having more people available to pick fruit and veges and not having to let a good harvest perish because of the lack of workers.
Yvil, this won't be helpful with inflation in long term. With more cheap labour and less skilled labour, our productivity will continue to fall which means more imports and less exports. Government will need to borrow more to keep up with infrastructure development and continue to push cost of building material to go higher.
There's a misunderstanding from some people. A crop of fruits or veges needs to be picked very quickly, these crops typically have a very short time frame when they are finally ripe and before they turn bad. Growers currently don't have enough pickers to collect all their crops before the food goes bad, its a terrible sitiluation where entire fields of crop of perfectly good fruit and veges are left to rot.
This has terrible consequences of:
Waste of good food
Shortage of food in the supermarkets
Large increase of price of fruits and vegetables
Growers of food and vegetables losing money and some going bust
Let me share a story of how to increase productivity in Primary industries from The Netherlands. Also The Netherlands experienced lockdowns meaning cheap(isch) labour was not available from Poland, Romania, Lithuania and so on. So when asparagus growers were confronted with this they did not moan about the absence of their cheap labour but developed their own asparagus harvest robot in 2021. (see https://www.hollandrobotics.com/nieuws/agrifood/zonder-een-centje-pijn-…. )
The link is in the Dutch language but at the right top of your screen there is an icon for the English lesson. There are reasons why The Netherlands with a land area not much bigger than Canterbury and Otago combined is worlds 2nd largest exporter, IN VALUE, of agricultural products. GDP is 5 times New Zealands one and the average wage is 30% higher. When are New Zealand growers stop whining and start developing and innovating!!!
So what do we need to offer you Murray. Early starts, mud, cold, rain, heat, sun, portaloos, back breaking, repetitive, 7days a week, short term/casual, no Cafe, gym, wifi nearby, sound like every kiwis dream job? They can't even get staff to make coffees. I guess we could always fly our produce in from overseas.
Not only that, it's in extremely specific regions of the country, which may mean travel costs and childcare arrangements to be made and paid for, for a temporary seasonal job that murray86 points out, may not even cover the cost of being there.
I can entirely understand why this doesn't seem like the deal of the century to Kiwis.
Probably going to need to provide accommodation solutions too. When one of my family members was a picker in earlier decades they were paid the equivalent of $28 per hour and received free accommodation because the orchards knew it was unrealistic for them to rent in the area.
Why don't the farmers have kids to pick it as free labour or sell their land to young people who would love to get into farming?
Mass importation of cheap workers is a subsidy to the land owning aristocrat class, just as it was with the slaves imported into Rome.
They can sell their land and more small farmers can farm their own land instead.
Actually no Yvil - speaking with an orchardist recently he's just stopped exporting due to the cost of shipping containers, so he's sending more product to supermarkets. Rules of supply and demand mean this could actually be suppressing prices in NZ.
There was a lot of fruit on the ground at the orchard. The RSE workers coming in is a good thing - good for us, and a form of foreign aid for them - the harder they work, the more they're paid. The exemptions for other classes of labour though, not so much - suppresses wages and working conditions.
No, you are the one that misunderstands. Here is horticulture surplus earnings per employee:
https://substackcdn.com/image/fetch/w_600,c_limit,f_webp,q_auto:good,fl…
you paint this as “if the horticulture industry can’t get people to work for minimum wage they will go out of business!!”
The truth is they just want to retain the excessive profitability of recent years by keeping wages low.
Here is the simple truth: if you are offering short term work, that involves hard labour, with no chance of career progression, in an inconvenient location, you HAVE to offer well above minimum wage to attract workers.
If I want to hire a full time IT staff and I’m in a central location, with good career progression, I can afford to offer an average salary. But if it’s a short term contract, I need to bump up the salary. It’s there is no career advancement, I need to bump up the salary. If the job requires relocation, I need to bump up the salary etc
1. this whackamole approach by the govt will be outdated before it starts. One feels there will be a glut of construction workers in the next 6 to 12 months as the building boom scales back.
2. suppression of wages for aged care workers is insane, they deserve so much more! but instead the likes of Ryman's and similar must extend their profits by using immigrants as slaves
3. we need a sustainable long term approach that has kiwis at the centre of our thinking. I heard yesterday that we had a net loss of working age productive people and a net gain of retiree aged people over the last year. With an aging population that is the last thing we need! Policy must encourage kiwis to stay and be productive here. That means better wages, lower housing costs and a higher standard of living. Suppressing wage growth is adding to the exodis!
Maintaining living standards in a modern economy entails consuming more hi-tech items such as computers, machinery, software, cars, medicines and medical devices, etc.
Very few of those items are produced locally and even our low-value commodity exports have been falling away as % of GDP for almost a decade. As we import more permanent consumers who do not participate in hi-value production or exports, we reduce our ability to pay for those imports and as a result will likely see a sharp drop in our living standards in the foreseeable future.
It really requires a multi pronged redesign. We need to help fund future productive enterprises, but those future productive enterprises are almost always as a result of R&D, often through Uni's. So we need to really ramp up funding for R&D in this country and encourage people to get educated in those sectors where we earmark for R&D and/or get migrant students to fill the gaps. But our primary/high school level education is going backwards, so we need real changes to the education system to make this a reality. Once we have these productive startups then we need to be able to fund them in their early stages companies until they become productive. But instead, like you allude to, we put all our money into housing instead of capital markets, so all our future productive companies head overseas at the first possible oppourtunity, chasing capital investment.
I am feeling conflicted about this. On the one hand wasting food by not harvesting it seems criminal to me. Let alone what it does to the price of local food for the citizen. Also enough labour to keep our agricultural output high to earn some export dollars. Versus accomodating those people somehow and the extra strains on our national infrastructure. As a nation we don’t seem to be able to get ahead of the game by having the infrastructure and housing available before any influx of population. Probably the top priority as a nation is to keep food prices down and the export dollars flowing.
No one is going to come here when they have to wear masks all day/night to work and go into isolation every time someone they know gets covid. They will go to Australia/UK/USA (and practically everywhere else) where they can work in comfort and mask free. Until the Govt drops all Covid restrictions and rejoins the rest of the world, we are going to be seen as the Hermit Kingdom and avoided.
The masking policy is also the reason why employees can't get local workers. For those for whom working is optional (casual, part time, retired workers), they are not going to rush back into the work force if forced to wear a mask all day. Its a huge impediment, and a pointless one at that seeing as how Australia is mask free and still has a lower Covid case count than NZ.
Creating a tiered wage system effectively based on residency status is outrageous.
When my partner mentioned this to me yesterday, I thought she was joking and said to her there is no way a left-wing Govt would be so stupid as to play into the hands of industry lobbyists looking to suppress wages when they didn’t need to.
More the fool me!
... the current government are not deep thinkers , anything but ... and they have zero ability to foresee the consequences of their actions ...
Hence , they've lurched from one crisis to another since 2017 : mandates , marches & protests , strikes , rogue MP's , hospitals in crisis , ram raids , Rotorua's motel shambles , job seeker numbers , debt blown out ...
... never ever witnessed such a dysfunctional govt .... Amazing , really ...
Low unemployment, used to mean not just higher wages, but higher wages that gave you a better than average lifestyle.
But now all it means is you are only slightly less worse off than you were previously, but still below what is needed to live the NZ dream.
None of this discussion about who is getting what and if it's enough would be needed if we had Govt. land and housing policies that kept the median income multiple at 3x, as is used to be up until the 1990s.
If house prices were half the cost, that would mean for most a present mortgage debt of between zero to 50% less than they have now.
We created a housing problem, which created a wage problem, etc.
The solution to most of our economic problems is to fix the housing problem, ie implement policies that restore a lower median multiple.
I have said this many times, and I will say it again.
Modern NZ has run an immigration economy since introducing a merit-based immigration system. As long as Kiwis can emigrate freely, a working force capacity and capability shortfall will require immigration to balance. The problem is not immigration but the planning for immigration.
This government had a chance to plan immigration for the following decades strategically, but they blew it, just like many other things like Kiwibuild. It seems that they ignored basics and ran stuff from the Lala land.
They are now back to short-term adaption, and openly admit that immigration includes exploitations such as lower wages.
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