ConnectMe - August 2017

11 August 2017

The full version of ConnectMe can be read by clicking on the Download PDF button to the right.

Commentary:

Immigration Changes

Since our last Connect Me, where we discussed the need to have addressing skill shortages for productive industries and manufacturing at the heart of any immigration policy, there have been some adjustments to the Government’s proposed changes to the Essential Skills visa category.

Changes to immigration policies proposed earlier in the year meant that salary level would be introduced as a core factor as to whether a migrant would be defined as low, medium or highly skilled.  Before the recent changes, for the Essential Skills visa category these thresholds were originally proposed to be set at: low-skilled, full-time income up to $48,859, mid-skilled, full-time income between $48,859 and $73,299, and highly-skilled, with a full-time income over $73,299.  

These initial changes received a mixed response by our manufacturing members.  Some saw the introduction of salary thresholds as being a positive move to reduce reliance on the relativity arbitrary measure of skill level that was used, based on the ANZSCO list.  This was largely by companies who are seeking to fill skill shortages at higher salary levels.

In contrast, a number of issues were also identified, one of the largest being the mandatory stand-down period for those in the low skilled salary category – requiring them the reapply every year for the visa, and after three years requiring that the migrant leave New Zealand for at least one year. 

Despite these changes appearing to be coming from pressure largely from low-wage and primary areas of the economy, they do address some concerns manufacturers had.

The recent adjustments to these proposed policies mean that the salary levels for the Essential Skills visa category will now be: low-skilled, full-time income up to $41,538, mid-skilled, full-time income between $41,538 and $73,299, and high-skilled at $73,299 and above.

With the adjustments to the medium skilled salary threshold, the majority of skill shortages felt in the manufacturing industry will now be covered as medium skilled.  This will help alleviate some of the perceived issues with the previous proposals, especially the 12 month stand-down period after 3 years in the low skilled category. 

Some issues still remain, such as how setting one rate for all parts of the economy will affect the regions.  Wages differ across the country, even within very similar occupations.  There is some concern that national salary rates without differentiation for regional salary rates may effectively set national minimum rates, and potentially exaggerate some skill shortages in the regions. 

While immigration continues to be discussed, we need to keep in mind the core need to create a system where we get the right type of skilled immigration into New Zealand. We need to address the skill shortages that hold our manufacturers and productive businesses back from expanding and contributing to higher exports and incomes. 

Student work visa and lower-skilled migration predominantly supplies workers to the lower-paid and low-value sectors like tourism and related hospitality industries. As Sir Paul Callaghan taught us, we need steer our economy to where high-value and complex productive growth leads the way – increasing GDP per capita is a core path to prosperity for all in New Zealand. Part of achieving this requires ensuring we have the skills and talent such industries need to grow and innovate, through improving our education system to train New Zealanders and having effective immigration settings.

 

Continually relying on growth of low-value industries for our future can actually take us backwards on this pathways to creating wealth, higher incomes and GDP per capita growth.  Manufacturing and our high-value productive industries, on the other hand, have the potential to lead the way in this area. 

 

By Dr Dieter Adam, CE of the NZMEA