Reading time
10 min read
I was recently asked by a political party to provide my view on a long-term policy proposal for addressing a difficult structural problem: how can New Zealand prevent low-quality jobs becoming permanently dependent on low- and semi-skilled temporary migrant workers?
The question is important because the usual political debate begins in the wrong place. It focuses on how many migrants should be admitted in the next economic cycle. It rarely asks why some industries have become dependent on a continuously replenished supply of workers whose immigration status gives them less security and bargaining power than the rest of the workforce.
My starting point is that neither Labour nor the current National-led Government has addressed that underlying problem successfully.
| CENTRAL PROPOSITION The objective should be to restrict the continual reproduction of temporary status—not to punish the migrants who already possess it. |
Political discussion about immigration is usually framed around highly skilled migrants: medical specialists, engineers, technology professionals and others bringing scarce expertise. Those migrants are economically important, but they are not the principal subject of this policy problem.
The more difficult issue concerns workers commonly described as low- or semi-skilled. They are concentrated in sectors such as aged care, hospitality, food production, cleaning, processing, construction and parts of transport and logistics. Their work is often essential, yet their place within immigration policy is treated as temporary and contingent.
When vacancies increase, policy settings can be altered quickly to facilitate recruitment. When economic growth weakens or immigration becomes politically contentious, access can be restricted just as quickly. This “tap on, tap off” approach treats labour supply as a short-term macroeconomic variable while overlooking the institutional dependency it creates within particular industries.
Temporary migration can legitimately address a genuine short-term shortage. The problem arises when repeated access to migrant recruitment changes the behaviour of an industry.
Employers adapt their business models to the availability of overseas labour. The pressure to improve wages, redesign unattractive jobs, create career pathways, retain existing workers or invest in labour-saving capital is reduced. Domestic recruitment and training weaken. Local workers increasingly avoid the occupation. The resulting shortage is then cited as justification for further migrant recruitment.
The cycle is self-reinforcing: labour shortage leads to migrant recruitment; migrant recruitment reduces the pressure for structural reform; weak job quality and training sustain the shortage; and the continuing shortage produces a demand for more migration.
At that point, immigration policy is no longer merely responding to a labour shortage. It has become one of the mechanisms through which the shortage is reproduced.
This is the economic attraction of the immigration “sugar rush”. Labour can be added quickly, vacancies are filled and production expands. Government and industry avoid the slower work of productivity investment, workforce development and job redesign. The immediate benefit is real, but so is the longer-term cost.
The corresponding labour-market outcome is a permanently temporary cohort: workers who remain in New Zealand for extended periods and perform ongoing rather than genuinely temporary functions, but whose legal status remains insecure.
The distinction matters economically. Immigration controls do not only regulate the number of workers available; they also influence workers’ bargaining power. A person whose continued presence depends on maintaining a particular form of employment is less able to leave a poor employer, challenge unlawful practices or report exploitation.
This can make temporary migrant labour attractive even when it is not cheaper in formal wage terms. The employer may obtain a more constrained and compliant workforce. A legal minimum or median-wage threshold does not remove that institutional imbalance.
The New Zealand Productivity Commission recognised this point in 2022. It found that immigration overall was neither the cause nor the solution to New Zealand’s productivity problems, but warned that labour-market tests, shortage lists and visas tying migrants to individual employers could suppress wages and productivity. It recommended reducing reliance on shortage lists and ceasing to tie migrants to a single employer.
The Labour Government’s implementation of the Accredited Employer Work Visa scheme demonstrates the risks of treating migrant recruitment as an easily expandable source of labour.
The scheme was intended to enable accredited employers to recruit workers for genuine vacancies. In practice, weak risk assessment, inadequate verification and insufficient monitoring created opportunities for the wholesale sale of job offers. Migrants paid substantial sums for access to employment that sometimes did not exist, offered fewer hours than promised or left workers carrying debts that increased their dependence on the employer or recruiter.
The independent review of the AEWV scheme identified serious failures in its design and implementation. These were not merely administrative defects. Once a New Zealand job offer became the gateway to a valuable visa, insufficient control over that gateway created a market in which access to work and immigration status could be sold.
Labour therefore produced two interconnected outcomes: a rapid increase in labour supply and an unprecedented opportunity for exploitation. The economic benefit of filling vacancies was obtained without the institutional safeguards necessary to protect the workers recruited or to require dependent sectors to improve their underlying employment models.
The current National-led Government has moved in the opposite direction, but it has not solved the structural problem. Considerable administrative and enforcement resources are being directed towards declining applications, tightening eligibility and removing or requiring the departure of migrants who entered during the earlier expansion.
At the same time, residence policy continues to rely heavily on occupational classifications, time requirements and wage thresholds. This assumes that higher recorded wages provide an adequate proxy for skill, productivity and acceptable employment conditions.
They do not. A wage threshold can alter the figure recorded through payroll without changing the worker’s underlying dependence. Where the threshold is unrealistically high but residence is exceptionally valuable, policy creates an incentive for wage recycling: the required wage is paid formally and some portion is returned through cash payments, sham fees, inflated accommodation charges or related arrangements.
Government policy papers have themselves recognised fraud, job-purchase arrangements, wage recycling and exploitation as risks. Yet increasingly difficult residence thresholds can intensify those risks by increasing the value of formal compliance and the cost to the worker of reporting abuse.
A worker who reports an employer may lose the employment required for a visa or residence pathway. The more precarious the pathway, the greater the disincentive to report. Formal wage regulation may therefore coexist with entrenched servitude in practice.
National’s approach is consequently not a complete alternative to Labour’s. Labour expanded access without adequate safeguards. National is attempting to control the consequences through restriction, wage proxies and removal activity while leaving the basic dependence of temporary workers substantially intact. Both approaches treat the migrant population as the variable to be adjusted. Neither sufficiently reforms the industries that repeatedly demand temporary migrant labour.
Three conventional tools recur in immigration policy: wage thresholds, labour-market tests and shortage lists.
Wage thresholds are administratively convenient but incomplete. They do not measure retention, training, career progression, job quality, productivity or the worker’s freedom to change employers. They are also vulnerable to artificial compliance where the immigration benefit attached to the threshold is sufficiently valuable.
Labour-market tests can become circular. Employers demonstrate that New Zealanders will not accept a job at the wages and conditions offered; government treats this as proof of shortage; and further recruitment allows those wages and conditions to remain unchanged.
Shortage lists can turn a transitional problem into a permanent concession. If an occupation remains in shortage year after year, the policy question should not simply be whether recruitment should continue. It should be why the shortage persists and what the industry is doing to reduce it.
None of these tools addresses the central issue unless access to migrant labour is connected to a wider strategy for workforce development and productivity.
A credible policy should pursue two objectives simultaneously.
First, it should progressively reduce industries’ structural dependence on a continuous supply of temporary migrant workers. Secondly, it should improve the security and labour-market mobility of migrants who have already made sustained contributions in New Zealand.
These objectives are complementary. Greater freedom to change employers reduces the vulnerability that can make temporary migrants especially attractive. More conditional access to replacement workers then requires employers to compete for labour on more equal terms.
The transition could be implemented over five to ten years through the following measures:
This approach allocates responsibility more fairly.
Government should accept responsibility for the incentives created by immigration policy and for maintaining adequate monitoring and enforcement. Industries should accept that access to temporary migrant labour carries an obligation to invest in a more sustainable workforce model. Employers should compete for workers rather than derive advantage from immigration-related dependency.
Migrants who were recruited under settings designed to meet New Zealand’s labour demand should not be blamed for the predictable consequences of those settings. The policy response should focus on changing future incentives and employment structures, rather than repeatedly admitting and removing cohorts according to the economic cycle.
The long-term goal is not a labour market with fewer migrants for its own sake. It is a labour market in which migration supplements a functioning employment system instead of sustaining low-quality employment that would not be viable without a permanently replenished temporary workforce.
That requires moving beyond the immigration tap. The real policy question is not simply when to turn it on or off, but how to ensure that industries no longer depend upon it remaining open.
New Zealand Productivity Commission, Immigration: Fit for the Future (2022):
https://www.treasury.govt.nz/publications/immigration-settings-productivity-commission-inquiry-material-2021-2022
Independent Review into the Accredited Employer Work Visa (2024):
https://www.mbie.govt.nz/about/open-government-and-official-information/release-of-information/independent-review-into-the-accredited-employer-work-visa-aewv
Cabinet material on the future of the Skilled Migrant Category, including recognised risks of job-purchase arrangements and wage recycling (2024):
https://www.mbie.govt.nz/dmsdocument/27978-future-of-the-skilled-migrant-category-final-decisions-cabinet-paper-for-ministerial-consultation-proactiverelease
Bridget Anderson, “Migration, immigration controls and the fashioning of precarious workers” (2010):
https://journals.sagepub.com/doi/10.1177/0950017010362141
Nationality is how New Zealand’s immigration system talks about ethnicity. The data tells a different story. A familiar...
New Zealand already accepts a simple principle. Some visa applicants deserve closer scrutiny than others. That is not...
Recently, Prime Minister Chris Luxon and Immigration Minister Erica Stanford took questions from the media about the direction...
