Employer revolt forces Govt to lower migrant wage threshold

Michael Woodhouse announced a lowering of the wage threshold that decides whether temporary work visa holders can stay longer than three years. Photo by Lynn Grieveson.

The Government has watered down its plans to tighten rules for temporary work visas, but dairy farmers remain unhappy because 60 percent of their migrant workers will still have to leave after three years and can't bring their families with them, Bernard Hickey reports.

The Government announced on Thursday it would lower the wage threshold that defines work visas as unskilled from $23.50 an hour to $19.97 an hour after protests from over 170 employers and industry groups. However, employers are hoping for even more concessions in a 'phase two' of the reforms later this year with dairy farmers saying they were disappointed the Government had only 'fiddled' with the proposals.

Immigration Minister Michael Woodhouse proposed in April that those with temporary work visas who were earning less than the median wage ($23.50 an hour or $48,859 per annum) would have to leave after three years. But employers in hospitality, aged care, tourism, dairying and horticulture protested these plans would make New Zealand much less attractive for migrants as they removed the prospects of permanent residency for those on incomes below $23 per hour.

Prime Minister Bill English flagged the Government would respond to those concerns earlier this week, saying any alterations would not be 'wholesale changes'.

That was reflected in Woodhouse's announcement on Thursday, which introduced a new lower 'mid-skilled' threshold set at $19.97 per hour or $41,538 per year. Temporary workers earning over that threshold won't have to leave after three years, but will still have to prove there is not a New Zealander available to do the job every year. They will then be in a position to apply for permanent residency. Temporary workers earning more than $73,299 (1.5 times the median income) will be automatically categorised as higher skilled and will also be able to apply for permanent residency.

"We've taken a pragmatic approach by reducing that threshold and that will mean a few more people will have a pathway to residence if that's what they want," Woodhouse said.

He said the changes would mean an extra 6,000 to 7,000 workers a year would have a pathway to residence, which included workers in farming, construction, chefs and retail managers. However, not all of those would be over the new threshold. He estimated the lower threshold meant only 40 percent of dairy herd managers would qualify to stay on beyond three years, which was up from 20 percent with the higher threshold.

He said the new lower threshold gave certainty to those workers able to improve their skills and salaries over the three years to be lifted up into the higher skilled categories, "so I think it's a sensible compromise."

Woodhouse denied the moves would increase net migration and said that the residency target of 85,000 to 95,000 every two years remained in place.

"The last thing we want to do is to choke off those number of people to fill those 10,000 or 11,000 new jobs that are being created (every month), but I do stress that we want to make sure that all organisations and all sectors are working hard to make sure Kiwis get those jobs," he said.

Woodhouse denied the Government had got its original proposal wrong and said he had always been open to a consultation and the potential for changes. He said it could even increase wages as employers paying less than $20 an hour increased their wages to ensure workers were above the threshold and would be able to stay for longer than three years.

Woodhouse said there were around 38,500 people in New Zealand on essential skills work visas. The Government's initial modelling with data from more than two years ago estimated around half of people on essential skills visas would fall into the lower skilled category (below $23.50 per hour).

"In fact, when we re-ran the numbers it was much higher than that. It was about 75 to 80 percent. That was not what the Government intended, so I think this is a helpful compromise," he said.

The Government retained its initial proposal to require the partners and children of lower skilled visa holders (who must leave after three years) to meet visa conditions in their own right. This had the effect of making it much more difficult for lower skilled workers to bring their families, which farmers in particular were concerned about, given many workers in Southland and Canterbury from the Philippinos had bought their families and settled in New Zealand.

Another chance in 'Phase Two'

Woodhouse also announced there would be a 'Phase Two' of the changes to the skilled worked visas regime that would look at targeted visas for regions and revisit the official skills categories in the ANZSCO classification system, which is used to assess skill levels for work visas and permanent residency applications.

"These include developing a framework for further targeting of immigration settings by sectors and regions, developing proposals to incentivise and reward good employer behaviour, and ensuring that seasonal work visas reflect seasonal work," he said.

"Phase Two will also address concerns raised by primary industries that the current ANZSCO lacks classifications for some jobs and therefore disadvantages workers whose occupations are classed at a lower-level by default."

Employer reaction to the changes was mixed. Business New Zealand said the changes struck a balance between ensuring jobs for locals and allow businesses to find the workers they needed.

"New Zealand businesses need access to both skilled and unskilled labour to be internationally competitive. It’s good that Government has listened to business and industry while developing these changes," Business New Zealand CEO Kirk Hope said.

He said employers would look for the Government to further improve the arrangements in the Phase Two consultation, including potentially changing the three year limit to a five year limit. "That might be a particular area where they could tweak it," he said,

Farmer were less sanguine. Federated Farmers' Immigration and Dairy spokesman Chris Lewis described the changes as fiddling and that calls to address significant labour shortages had fallen on deaf ears.

"The entire sector, and in particular the dairy industry, called for the government’s proposal to be amended to provide a framework for employers to attract and retain quality, motivated highly capable migrant employees and to help them develop their skills in the industry. Unfortunately, none of the changes proposed in the document released today will do that," he said.

The changes restricted the vast majority of workers to staying for only three years and meant they could not bring their partners and children, he said.

"This will reduce the competitiveness of New Zealand as a destination for motivated and qualified dairy farm workers, and take the heart out of rural communities relying on the families of migrants to provide critical mass to schools, social groups and community organisations," he said.

Labour Immigration spokesman Iain Lees-Galloway said the Government was "tinkering with a bad half-baked policy in the first place."

"It has the potential to drive down wages. Using wages as a proxy for skill is a poor approach anyway. What we should be doing is focusing on high skill immigration and filling the genuine skill shortages that do exist in New Zealand," he said.