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The New Zealand Government’s new KiwiBuild scheme will see changes to immigration settings in order to help the construction and housing sector to attract overseas skilled workers.

The government’s response to New Zealand’s shortage of affordable housing is the new KiwiBuild scheme which will see the construction of 100,000 starter homes for first home buyers over the next ten years, with half of those new houses earmarked for the Auckland region.

The Ministry for Business, Innovation and Employment (MBIE) projected in late 2017 that there could be a potential shortfall of approximately 30,000 workers to meet increasing demand in housing and infrastructure, with this number likely to rise as a result of the KiwiBuild initiative. The shortage affects all skills categories in the construction sector but particular growth is expected in the demand for plumbers, electricians, builders, civil engineers and project managers.

The proposed changes, which are expected to come in to force late 2018 or early 2019, include three key components.

The first is a dedicated KiwiBuild Skills Shortage List. This list will identify specific roles for which the immigration process will be streamlined. The list will expand on the innovations introduced in the Canterbury Skills Shortage List, which was brought in after the Christchurch earthquake to help with the city’s rebuild.

For roles included on the KiwiBuild Skills Shortage List, an employer may not need to prove to Immigration New Zealand that they have made a genuine attempt to employ a New Zealand citizen or resident visa holder for the position.

The second component of the change will provide advantages for companies who have proven standards as good employers in the construction sector. Employer accreditation or pre-approval should see faster processing and greater simplicity in visa applications.

Employers will be able to benefit from this streamlined process if they reach high standards of health and safety, have good business practices and can demonstrate good employment conditions, pay, training, skills development and pastoral care.

For employers who comply with the pre-approval criteria this will offer greater opportunities to plan their workforce and hire overseas workers to meet the expected demand.

During periods of skills shortage there is often concern around the risk of exploitation of migrant workers through lower wages and poor working conditions. The third component of the proposed changes will put in place steps to minimise that risk by introducing specific requirements for labour hire companies, establishing a mandatory accreditation scheme to cover third party arrangements.

This Immigration New Zealand accreditation is likely to require labour hire companies to pay workers at least the market rate and offer terms and conditions equivalent to the hire company’s other employees, as well as ensuring equity across all employees’ terms and conditions. The accreditation may also see hire companies having to meet the upfront costs of worker recruitment.

Hire companies will also likely be responsible for ensuring that contracted third parties uphold good practices in the workplace.  Failure to comply with this and any of the new proposed changes could mean that Immigration New Zealand could cancel the hire company’s accreditation and the benefits that go with it.

The Government may also consider the option that work visas issued under the KiwiBuild Skills Shortage list may have more flexible conditions and could, for example, require the worker just to work in their specific role and not restrict the worker to a particular employer or location.

Recruiting to meet periods of high demand and maintaining legal and ethical obligations in employing migrant staff can be complex. We recommend that employers begin this process with the benefit of professional advice and assistance on visa matters from an experienced Licenced Immigration Adviser or Immigration Lawyer.

The Pathways New Zealand team will be monitoring progress on these proposals and will confirm the final details of the changes once they are announced.

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.