Time to draw the line on rising number of foreign workers?
Visa-holders may be getting a raw deal — and so may NZ economy
Immigration policy needs a reset. Heavy reliance on people with temporary work visas is giving many of them a raw deal, while masking longterm challenges in the labour market and undermining social cohesion.
At least that is the thesis cogently argued by Maxim Institute economist Julian Wood in a policy paper released yesterday.
First, some numbers. In the June 2017/18 year, 230,000 temporary work visas were issued. Typically about a third are for working holidaymakers who generally spend only a fraction of their time here working.
At any given time, about 170,000 people are living and working in New Zealand on a temporary work visa, officials reckoned in a Cabinet paper presented in December 2018.
They represent more than 6 per cent of the total labour force but as the Cabinet paper notes, they are particularly to be found in a few lower-wage and lowerproductivity sectors, where their share of employment is closer to 20 per cent: accommodation and food services; agriculture, forestry and fishing; and one called “administrative and support services”, which includes such things as cleaning, pest control, gardening and packaging products.
The number of people on temporary work visas has almost doubled since 2011/12 and has risen six-fold from the early 1990s with, Wood points out, little debate.
“We have been happy to leave recommendations around the numbers and types of visas as almost the exclusive domain of officials and regulators who finetune the points system in response to shortterm economic, political or lobby-group needs,” he says.
But the over-reliance on temporary work visas carries socio-political risks, especially where there can be a dampening effect on wages and on the employment of young people and beneficiaries. The report points to signs of an emerging polarisation between urban and rural areas in how migration is viewed.
Although Ministry of Business, Innovation and Employment (MBIE) research in 2018 found no overall negative effects in the aggregate data, they did detect negative effects on hiring of beneficiaries in horticultural regions, and on hiring of youth from the Study to Work visa and on hiring of New Zealanders as whole from the Essential Skills visa.
Meanwhile, Wood argues, industries can become dependent on temporary, low-wage workers from overseas and as a result under-invest in solutions that would lift productivity.
About a fifth of the temporary work visas issued are employer-assisted, tying the immigrant to a particular employer, with an associate risk of exploitation, especially given a laissez-faire official approach to ensuring they are aware of their rights.
One of the Maxim Institute report’s recommendations is to allow temporary migrants to seek alternative employment within the same industry and location.
Many of those coming to New Zealand on temporary work visas may have an inflated notion of the prospects of transitioning to permanent residency. The odds of that are less than 50:50, even after excluding working holidaymakers, who are
assumed to have no such intention.
“We are in danger of creating a two-tier labour market and society,” Wood says, “whereby low-skilled migrants are seen simply as labour supply to be discarded should we met economic headwinds or should they get sick.”
Like a beagle, which has an extraordinarily acute sense of smell but poor eyesight, we are almost blind to the dangers downwind but almost in front of us, he says.
So another recommendation is to freeze the number of temporary work visa approvals at their current level, and shift towards a focus on better migration solutions for workers who would wish to live here permanently.
“We need to empower our communities to welcome [newcomers] well,” Wood says.
That would include having personalised settlement plans to ensure immigrants are aware of assistance options, and allowing local policy variation so that communities can allocate points towards what they see as most valuable to their community.
International experience shows the value
of civics courses, which would benefit from local and Ma¯ori input, and the use of sports programmes as a positive way for migrants and communities to interact.
Wood also calls for more resources for the two-year-old Welcoming Communities pilot programme.
In short, the report calls for treating immigrants as potential Kiwis rather than disposable band-aids, a stop-gap solution to labour market failure.
Wood warns against complacency about the country’s capacity to attract and retain the kind of immigrants we value.
New Zealand does not rank nearly as high as we might think in international surveys of attractiveness. In a world Gallup poll, only 1 per cent of respondents named New Zealand as the country they would most like to move to (the same share as China and Russia), whereas 5 per cent favoured Australia.
“This relative desirability gap is important to keep in mind, especially with the potential for New Zealand permanent residency to be seen as a back-door entry to more desirable countries,” Wood says.
“At the moment, we are able to attract a range of skilled and unskilled migrants with relative ease. In the future it is likely we will face increasing competition from a range of developed countries as their population ages and they choose to move toward a more skills-based targeted migration.”
Then there is the problem of retaining skilled migrants. Research undertaken for MBIE in 2013 found that roughly a quarter of skilled migrants would leave within five years, with a spike just after two years.
“This two-year point is significant because after two years of residing in New Zealand (with certain conditions) migrants earn an indefinite right to return to New Zealand should they remigrate to another country.” That indefinite right of return is unique and lowers the opportunity cost of remigration and encourages people to see New Zealand as a back-up plan once they achieve permanent resident status.
The report recommends tightening up on that.
At any given time about 170,000 people are living and working in New Zealand on a temporary work visa, officials reckoned