102 days after 'rebalancing' its migration settings to squeeze skills and wages higher, Minister loosens settings to ease worker shortages and wage inflation

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.