Last year some 24,000 work visas were approved for a wide range of migrant trades workers. The demand for skilled workers from overseas to fill New Zealand’s skill shortages, and the forthcoming KiwiBuild requirements, is growing. However, while the numbers of work visas is increasing the pathway for these work visa holders to live and work permanently in New Zealand is getting harder. There are challenges ahead for employers to attract and retain their migrant workers.

In the most recent immigration year to June 2018, some 24,000 overseas workers were approved for work visas under the general category of Technicians and Trades Workers. This number is a 6,000, or 33%, increase over the previous year.

While there were 230,000 work visas approved in total during this year, only 4,000 more than in the previous year, some 145,000 of these work visa approvals were not recorded against any particular occupation. These work visas most likely relate to working holiday, graduate student and various partnership categories which all result in the issue of (open) work visas allowing work in any occupation.

Within the Technicians and Trade Workers category the following occupations had most visas issued last year – carpenter/joiner (2850), motor/diesel mechanic (1050), telecommunications technician (850), scaffolder (700), metal fabricator (675), fitter/turner and fitter/welder (650), steel fixer (575), electrician (460), welder (380), mechanical engineering technician (340), plasterer (300), painter (290), panelbeater (270), sheet metal trades worker (220), brick layer (200), plumber (190) and metal machinist (165).

A number of the open work visa holders will also work in the trade sector so the above figures are indicative only. This situation will become more unclear if the current Government proposal to provide graduating international students with 3 year open work visas is implemented, and if work visas issued under the KiwiBuild programme only designate an occupation and not a specific employer (which may happen). In such instances, the holders of these particular work visas will potentially be more transient as their visas will not tie them to any specific employer. The move towards more accommodating work visas is partly promulgated by the Government’s concern with migrant exploitation and wanting migrant workers to be “less obligated” to some employers.

It is interesting to note that only 1,967 Skilled Migrant Category (SMC) residence applications were approved for Technicians and Trade Workers which is less than half the 4,090 approved in the previous year. When compared to the total number of work visas holders, the small number who have successfully transitioned to SMC residence may be surprising given the skilled employment roles these people have. However this reduction is a direct consequence of the changes made by the previous Government in 2017 which introduced an English test requirement and an arbitrary pay threshold (currently $24.29 ph) for SMC residence applicants. Previously SMC applicants could meet the English requirement through being employed in New Zealand for 12 months and there was no mandatory pay threshold. Although it is understood the current Government is “unconvinced” that the pay threshold is an appropriate mechanism for SMC residence, there is no current priority to effect any change in this regard.

These policy changes have seen the total number of SMC residence approvals reduce from 12,106 applications in the previous year to 8,419 last year (representing 17,000 people). The Skilled Migrant Category is the main category within the New Zealand Residence Programme with around 60% of all residence applicants coming from this and the business categories. The Residence Programme is set every two years and in the two year period to 30 June 2018 the programme was set at between 85,000 and 95,000 people. In fact, only 38,000 people were actually approved for residence in the 2017/2018 year, down on the 47,600 people approved the year before.

To meet the SMC English requirement, applicants’ must achieve an IELTS score of 6.5, or the equivalent in one of the other acceptable English tests. This is a high standard given that the same score, in the IELTS academic version, is required for international students to enter into postgraduate study in New Zealand.

Those workers who cannot meet the English requirement are still able, currently, to transition to residence if they hold a work-to-residence work visa under the Long Term Skills Shortage (LTSSL) policy or are working for an Immigration New Zealand accredited employer. These work visas are issued for 30 months and enable the holder to apply for residence after working in a specified role for a designated employer after 24 months. The catch is the pay rate for the accredited employer role must be at least $55,000 pa based on a 40 hour work week ($26.45 ph). The Government is now reviewing the accredited employer policy with the likely outcome that the pay threshold will be significantly increased – potentially to around $70,000 pa ($33.65 ph). If this happens it will mean that this pathway to residence for many skilled trades workers will be lost and the reason for many employers to become INZ accredited will be negated. Given the current Government’s focus on the regions and attracting migrants to work and settle out of Auckland there is a case to be made for the pay threshold applying to work-to-residence applicants under the accredited employer policy to be lower in the regions so that this pathway to residence can still be viable to attract and retain workers – perhaps $70,000 in Auckland and $60,000 out of Auckland?

There is still an option for those workers holding a work visa issued under the LTSSL work-to-residence instructions to later obtain residence as the current pay threshold for this remains at $45,000 pa. However, most of the roles on the LTSSL require applicants to hold qualifications which are assessed as equivalent to particular New Zealand qualifications and this is often not the case, or the process to establish such equivalence is expensive and time consuming. In reality these qualifications can be quite old and of little current relevance and it is the more recent, relevant, work experience which is of primary interest to the New Zealand employer and the basis on which they are generally offered their trade-related work role. It would be helpful if the LTSSL was revised to place greater emphasis on recent work experience rather than on qualifications as this is really what, in most cases, matters to employers.

The accredited employer and the LTSSL work-to-residence policies do not have any English language requirement.

The situation now is that, of the 24,000 people approved for work visas as Technicians and Trades Workers in the past year, together with those previously approved and still holding work visas, the majority are now (or will soon be) unlikely to have any immediate pathway to residence. This situation has implications for those employers with a significant, or key migrant workforce as they will need to carefully consider how this will impact on their ability to attract and retain such migrant employees. It can be an expensive and time-consuming process to firstly identify, and then facilitate workers to travel from across the world to come and work in New Zealand. Many workers will, understandably, only make this commitment if they can have security about their long term future here. If employers cannot provide this long term security, the reality is that their migrant workers may become unsettled and be more easily motivated to move to higher paying employers or leave New Zealand for other work opportunities offshore or back in their home country.

While a number of migrant workers do move between countries for work, many (if not most) will have considered the potential to obtain New Zealand residence as one of factors which influenced their decision to come to New Zealand. For these workers, employers can consider several options to help keep these workers motivated and retain their services for the long(er) term if they do not have a current pathway to residence.

Firstly, there is the option of providing English language assistance and support. This will enable workers to improve their language skills, make any communications more efficient, reduce misunderstanding and mistakes in the workplace, and help develop their self-confidence and social networks. Progressing migrant workers English skills can lead them to achieving the English language requirement to apply for residence under the Skilled Migrant residence category and will genuinely help with their successful integration into New Zealand society.

Secondly, employers can assist and support their workers to achieve recognised New Zealand qualifications. This can enable them to become eligible for Skilled Migrant Category qualification points, which may also open the option for a work-to-residence work visa under LTSSL instructions. Supporting migrant workers to attain New Zealand qualifications can also promote greater employer loyalty and commitment to the employer.

Workers who are accompanied to New Zealand by their family are generally more settled and better placed to manage the transition – although care is needed that any expectation they may have about what is possible for their future in New Zealand is feasible and well founded.

With continuing skills shortages and KiwiBuild on the horizon, New Zealand employers need to be increasingly aware of what motivates their migrant workers to come and stay. Employers would be wise to think about what they can do to secure their services, and commitment, for the long term, ensuring their investment in their migrant workforce is maximised. It is always helpful to begin this process with the benefit of professional advice and assistance on visa matters from an experienced Licenced Immigration Adviser or Immigration Lawyer.

Article provided by Richard Howard, Managing Director of Pathways to New Zealand Ltd – New Zealand’s second largest immigration consultancy business with 13 Licenced Immigration Advisers based in its Hamilton and Wellington Offices.

During June the Government opened up consultation on proposed changes to post-study work visa categories. Immigration Minister Iain Lees-Galloway intends that the proposed changes will help eliminate or reduce migrant exploitation and will encourage international students to study higher quality courses and courses which will lead to employment roles in the areas which New Zealand needs.

If introduced, the proposed changes would see the removal of the post-study employer-assisted 2 year work visa and the introduction of a three-year post-study open work visa for degree level 7 and higher qualifications. All students studying below Level 7 would only be entitled to a one-year post-study open work visa and only if their qualification required at least 2 years of study. In addition, visa eligibility for accompanying families of students would be tightened with only partners and children of students studying level 8 or 9 qualifications in an area of long term skill shortage being entitled to partner work, and dependent child student, visas.

The Government is right to focus on student worker and migrant exploitation as such exploitation is now endemic in New Zealand – however the proposed changes, in our view, would do little to remedy this situation. The pathway many international students take to study in New Zealand is fraught with exploitation, largely due to dishonest Education Agents not acting in the best interests of their student clients and misleading students as to their course and future visa entitlements. Agents often enrol students in low level and inappropriate courses, and at particular institutions, based on the commissions they can earn and with little regard to the student’s best interests and long term future. This is where many problems begin and the Government must now look closely at requiring all student visa advisers to be licensed and regulated by the Immigration Advisers Authority.

Once a student has completed their course and gained their post-study work visa, they currently face the challenge of obtaining employment relevant to their qualification within a 12 month period. For many such visa holders, securing relevant employment can also create a pathway to residency. This pressure to find suitable employment to extend their visa can often lead to a person being forced to take up an employment role on terms dictated by the employer and which have little regard to New Zealand employment law. Currently, the only practical option for a migrant worker in an exploitative situation like this is to find new employment and then to change their visa to this new employment. However, the reality is that very often in these situations the visa holder is unable to find new employment and has no choice but to remain being exploited in their existing role. Additionally, migrants are often fearful of reporting unscrupulous employers to Immigration New Zealand as this will directly impact their work situation and can lead to losing their job and work visa and place them in a very difficult situation having no job and no visa to allow work. These people and their families have invested many tens of thousands of dollars in their education in New Zealand and need to work to repay this debt.

If the Government is serious about stamping out migrant exploitation it must introduce more effective processes to identify exploitative employers and take proactive action against these employers. A constructive first step would be to introduce a suitable interim “visa solution” for visa holders who were being exploited so they can be more willing to speak out and to provide key employer information without having the worry of their own visa situation to protect.

While the proposal for a 3 year open work visa after graduation will take initial pressure off the requirement to obtain employment for visa purposes the potential effect will be that many of these visa holders will resort to self-employment (eg; Uber drivers) and undertaking cash work as there is no immediate compunction on them to enter into lawful, documented, employment. In fact there is a real prospect that their visa situation will directly lead to greater exploitation due to the lack of oversight of what they will be doing and what any employer is requiring of them.

The pressure will go on again when it comes to the end of the open work visa term when the visa holder does require a particular employment role to support a new work visa or a residence application. Due to the extended passing of time to get to this juncture the likelihood is that these people will be subjected to, and open to, a much greater level of potential exploitation that what otherwise would be the case.

In addition the 3 year work visa will provide the time and opportunity for visa holders to pursue other avenues to stay in New Zealand including establishing their own businesses and forming partnership relationships, and to focus on these avenues to obtain residence. We do not believe these outcomes provide the best benefit to New Zealand and do not make use of their New Zealand qualifications.

Our view is that is that consideration should be given to the introduction of a work-to-residence pathway for student graduates. This could work similar to the existing WTR schemes whereby an applicant must work in a certain job for 2 years and can then directly apply for residence. This scheme would operate like an internship and would encourage both graduate students and employers to invest in a longer term employment relationship – and would see graduate students appropriately motivated to progress their careers rather than sitting around for 3 years until they have to do something.

It would be naive to believe that many international students coming to study here are not significantly motivated by the prospect of working in New Zealand and gaining residence in the future. Of the two main student markets, India and China, the vast majority choose New Zealand to study because of the prospect to pathway to residence. This motivation of immigration policy settings cannot be downplayed or ignored as without it the international education industry, New Zealand’s 5th biggest export earner,  will stall and likely retreat.

The reality of this situation must be accepted, and students should be encouraged by policy settings to study in the courses that will lead to employment in roles which will benefit New Zealand and which will deliver the residence outcome to the student. Any changes to the existing post-study visas should therefore seek to protect students from exploitation, whilst enabling and pro-actively encouraging them to seek career focused employment roles which are in demand in New Zealand and which can advance their future residence eligibility. This begins with the student choosing better-quality and focused courses which can then lead to better quality student outcomes and employment prospects.

There is nothing at all wrong with the existence of a study-to-residence pathway. Such a pathway enables relatively young, New Zealand qualified people who have good English and local friends and connections, and who have already assimilated to New Zealand, to build upon this very sound foundation and to become the New Zealanders of the future. We just need the immigration settings that will first attract the students we want, and which will protect them from exploitation, and then encourage them to stay and to provide the skills New Zealand needs so we can realise this future together. Our view is that the proposed policy changes correctly identify the issues but are very much formulated in reaction to the current situation and do not recognise the consequences of what the changes will promulgate. Our preference is for more forward thinking and constructive policies that will deliver the preferred long term outcomes for the benefit of New Zealand, and of the student.

There is general apprehension in the market regarding the stance of the new Labour-led Government, and the influence the coalition partner New Zealand First will have given its public stance against general immigration.

However, early signs are reassuring with Prime Minister Jacinda Ardern quickly moving to confirm the Labour immigration policy will hold sway over that of New Zealand First. Fundamentally, this means the main focus will be on reducing the current annual net migration of just over 70,000 to between 40,000 and 50,000 people.

Net migration is currently a simple measure arising from information obtained from the airport arrival and departure cards for travellers who are either departing for 12 months or longer or intending to stay for 12 months or longer. It is not a measure of people obtaining residence to live permanently in New Zealand.

It is quite possible that the new Government will be able to achieve the required reduction in net migration without any major policy changes.

The current net migration is already trending downwards and this trend will very likely continue more strongly in the coming years for the following reasons:

  • The resetting of the Skilled Migrant Category (the main residence category) in August, has significantly raised the qualifying threshold with the number of eligible applicants reducing by 40%. This higher threshold will see less people coming to New Zealand with the expectation they can qualify for residence.
  • Less NZers returning home – this group of people are typically motivated by economic outlook and stability, and they may now choose to remain where they are for the time being.
  • More NZers will now consider relocating to Australia – historically, this has always been a popular option for NZers, but the comparative economic performance of the two countries has seen this trend reversed in recent years. This trend now looks like it will slowly return to normal.
  • The new Government has signalled a crackdown on education institutions offering low quality courses to attract international students and has also signalled that policy changes will be made to restrict some work rights for particular international students. Providing the agent networks accurately convey these “signals”, the outcome will be a significant reduction in students coming to New Zealand, and in particular those from India. The Government’s plans to remove points within the Skilled Migrant residence category for applicants who have studied or worked in New Zealand will further “dis-incentivise” international students to choose studying in New Zealand as a pathway to residence.
  • Lastly, the perception that the new Government is getting tough on immigration will naturally influence the decision making of prospective workers, students and migrants who will now consider alternative countries that they perceive as being more “immigration friendly”.

The above factors alone are expected to directly lead to the reduction in the net migration the new Government has indicated – and this may happen a lot quicker than expected. There will also be ramifications arising from these factors, including a huge shakedown of the international education sector, which may well lead to school closures and job losses. The Auckland property market may also be influenced, particularly by reduced demand from returning NZers and those NZers selling to relocate to Australia.

It appears that work visas for low-skilled workers will be most at risk under the new Government. However, the NZ First Leader and now Deputy Prime Minister Winston Peters, has clearly indicated that employers in the regions requiring workers who contribute to “productive industries’ will still be able to rely on work visa holders for these roles – such as farm workers.

There were indications in the lead up to the election that the Labour Government will re-open the parent residence category in some form, but this would seem completely contrary to the stance of NZ First on parent immigration. Parent residence policy settings are a particularly difficult challenge and it will be very interesting to see how the coalition partners deal with this challenge.

The Government also plans to introduce an Exceptional Skills visa for “people with exceptional skills and talents that will enrich New Zealand society (not just the economy) to gain residency”. This appears to be a very niche policy and it is unclear whether this will replace the existing Global Impact Visa which seems to share a similar objective.

For business investors, the new Government has signalled an intention to increase the minimum investment required from $3 million to $5 million for the Investor Visa, and from $10 million to $15 million for the Investor Plus visa. The required investment terms will also be doubled to 6 and 8 years respectively, and applicants will be denied residence until completion of their investment term – contrary to the current situation. Given the fact that the current investor policy is relatively new and is already performing poorly (compared with the previous policy) the raising of the thresholds as proposed will effectively kill off the investor policies. On the other hand the additional proposal to establish a Government-sponsored infrastructure bond investment for investor applicants has considerable merit – but only if the underlying investor immigration policies are conducive to actually attracting investors in the first place!

There are early signs that the new Government may take a more empathetic and humane approach than the previous Government when considering individual immigration situations and the difficult circumstances people and families can find themselves in. Such an approach should be welcomed as the existing regime has become overly bureaucratic and inwards-facing, and has lost the ability to assess, comprehend and properly value the human context of immigration.

Having been in the immigration industry for 25 years, we at Pathways have seen many Governments and immigration policies (and Immigration Ministers!) come and go and we are very much looking forward to the challenges that will be presented by the new Government. Ultimately, quality immigration advice, gained from many years of experience, will be the key to understanding and overcoming these challenges.

For applicants who wish to establish, or purchase, and operate a business in New Zealand the Entrepreneur Work Visa (EWV) is the appropriate visa. This visa enables an applicant to be self- employed in a specific business and can provide a future pathway to residence under the Entrepreneur Residence Visa (ERV).

Applicants should only consider the Entrepreneur visa pathway if they have a successful business, or high level management background, and if their planned business is one which can contribute to New Zealand’s economic growth through innovation, export development or high growth. A business which cannot evidence these outcomes is unlikely to satisfy the policy criteria.

Applications require a detailed, well researched and viable business plan and a minimum business investment of NZ$100,000 is required, although this may be waived for certain businesses in science, ICT or some other high value, high growth sectors. The business objectives set out in the plan must be achieved in order for an applicant to later be eligible for residence.

The EWV is points based with points awarded under a range of criteria including for age, business experience, new employment creation, capital investment, business location etc and a minimum of 120 points must be achieved. From 1 November 2015 the following policy changes apply:

• The points for businesses located outside of Auckland will increase from 20 to 40 points, and
• The required business investment will be able to include funds for working capital to be used within the business

These are both significant and welcomed policy changes. The NZ Government has signaled that it wishes to attract more migrants to settle outside of Auckland, mainly because of the pressure on Auckland housing. The increase in points for a business to be located outside of Auckland equates to an applicant having to invest $200,000 less, or to create 2 fewer jobs, than what previously would have been required. We believe this change will certainly encourage prospective EWV applicants to consider business opportunities outside of Auckland.

Also, previously EWV applicants could only claim points for actual business capital investment (ie; fixed assets) with no recognition of the additional working capital needed to be invested for the business to actually operate. Pathways, together with other industry leaders, made representations to Immigration NZ at the time the policy was introduced in March 2014 to point out this significant and unreasonable policy shortcoming. While it is pleasing to see this change has now been effected it is disappointing that it has taken so long. However there are still a number of other “shortcomings” with the Entrepreneur policies which are of concern, such as the definition of business profitability and the transition of existing business visa holders to residence, which remain to be addressed.

The Entrepreneur visa remains the most challenging of all New Zealand visa categories and prospective applicants are strongly encouraged to seek professional guidance before deciding on this option.