Opinion: Migration threats and opportunities

Source: ANZ and Mbie

For the convenience of subscribers, here's my weekend column in which I say New Zealand should encourage and welcome high-skilled migrants, and not treat students and temporary workers as commodities to be exploited.

Three news items this week highlighted some of big economic and social risks and opportunities posed by New Zealand's current migration settings.

Firstly, there was the case of the Indian student who came forward and told TVNZ about how an Auckland employer offered her as little as NZ$9 an hour to work as a receptionist for up to 60 hours a week, even though her temporary visa only entitled her to work 20 hours a week. This came as the Labour Inspectorate noted it had prosecuted 54 employers for migrant abuse over the last two years, and many others believe this is the tip of the iceberg.

Reports have escalated this year about how foreign students in particular have been taken advantage of and are being paid below the NZ$15.25 an hour minimum wage in all sorts of low skilled jobs. Some are being forced into prostitution and crime to repay debts. An Auckland University survey of nearly 900 temporary migrants in October and November last year found over 40% worked in hotels, food service (cafes, restaurants and fast -food outlets) and shops. It also found 20% were being paid less than the minimum wage.

International student and temporary work visa migrant numbers have jumped 27% in the last two years to 71,762 in the 12 months to the end of August, with most coming to Auckland and looking for jobs in relatively low-skilled areas such as fast food, hotels and retail. Unaware of the law's protections and wary of authorities in a foreign land, many face exploitation or worse.

Secondly this week, the New Zealand Institute of Economic Research (NZIER) published its September Quarter Survey of Business Opinion (QSBO), which found 27% of businesses wanted to take on staff in the next three months. This was the highest level since September 1973. The survey also found 41% of employers nationwide said it was difficult to find skilled labour, the tightest the market has been in a decade.

However, fewer employers (14%) said it was difficult to find unskilled labour and in Auckland the proportion who said it was difficult to find unskilled labour actually fell to 21% from 25% the previous quarter. The surge of low-skilled temporary and student migrants into Auckland has helped employers find low-skilled workers on often below-minimum wages, but it hasn't helped them find skilled workers. The survey found 47% of Auckland employers said they were finding it difficult to find skilled workers, up from 43% in the June quarter.

This tallies with the call in August from Auckland Chamber of Commerce Head Michael Barnett for a review of migration settings to better calibrate the migrant skill levels to the jobs available. Unlike Winston Peters, who wants to slam the door shut and just cut the number of arrivals, businesses actually want more and and higher-skilled migrants. Essentially, Auckland needs a lot more engineers, project managers and truck drivers, and not so many cleaners and fast food workers. Treasury and MBIE have also worried over the last year about too many low-skilled workers dragging on wages and making it harder for beneficiaries to move into work. Treasury would like to encourage many more higher skilled and entrepreneurial types to settle here.

"It's not about the number. It's about the matching," said Barnett of the disconnect between migrant arrivals and jobs on offer.

ANZ Chief Economist Cameron Bagrie also noted the apparent gap between the skills of Auckland's migrants and the skills employers are short of, as shown in the QSBO.

"That points to a mismatch over what New Zealand needs versus what is coming in," Bagrie said.

Thirdly, the post-Brexit announcement this week by British Home Secretary Amber Rudd of a crackdown on low-skilled foreign students and migrants with temporary work visas looks set to make it much harder for New Zealanders wanting a traditional OE in London. Just as Australia's relative economic slowdown drove a significant part of New Zealand's record net migration surge over the last three years, a British crackdown could turbo-charge that net migration by discouraging New Zealanders from leaving and bringing many home early. This is both a threat and an opportunity, as Xero CEO Rod Drury highlighted with a tweet within a couple of hours of Rudd's announcement.

"UK should totally send all software developers and technology leaders back home," he said, pointing to Xero's page for job openings.

This week's events show the debate about migration New Zealand is going to have ahead of the 2017 election should be much more sophisticated than just a contest about the overall number. It should also be about the types of skills we are welcoming in, and about being a welcoming society that treats its new arrivals as valued new citizens, rather than just another resource to be exploited.