Immigration Update - A tough road ahead
Rachael Mason from Lane Neave explains that, with the pending go-live of the new Accredited Employer Work Visa (AEWV) system, the government’s ‘Immigration Rebalance’ is upon us. For some employers, it will be brutal.
On 4 July, the new AEWV system will go live. The finer details have now been released. The new system is based on government objectives to reduce exploitation of migrant workers and to address a perceived over-reliance by employers on migrant workers to fill low-skilled and low-paid positions that should be able to be filled by Kiwis.
High minimum income requirement
The most significant and challenging component of the new system for many employers will be the minimum income requirements. Employers will only be able to sponsor migrant workers who are paid at least the appropriate minimum pay rate for that role. For most roles, the pay rate will be set at the median wage ($27.76 per hour, or $57,750 per year based on a 40-hour week). However, some concessions will be available where lower minimum pay rates will apply:
- certain roles in tourism and hospitality, and construction and infrastructure industries: $25 per hour
- certain roles in the care industry: $25.39 per hour.
The lower pay rate for these sectors is a temporary measure only and is in place until April 2023. New sector agreements will also be in place later in 2022, allowing for temporary reduced minimum pay rate levels for work visas issued in the care, tourism and hospitality, meat and seafood processing, construction and infrastructure, seasonal snow and adventure tourism sectors. This will support the transition to the new system for employers in these sectors where, traditionally, it has been difficult to recruit New Zealanders and employers have relied heavily on migrants. The intent is to allow these employers time to improve working conditions and put significant effort into recruiting, training and upskilling New Zealanders.
The new minimum pay rates will pose significant challenges for many employers, even those who have been the beneficiaries of the so-called ‘concessions’. If an employer needs to access migrant workers to plug gaps in its workforce, the only way to do that will be to pay that worker the relevant minimum income for that role. Put simply, no minimum pay rate = no work visa.
For many employers, paying $27.76 per hour is not a viable option. Even the lower $25 per hour rate for some sectors will not be a realistic possibility in many cases. Employers will also need to be careful to ensure consistency across job roles, for migrants and Kiwis alike. Hiking pay rates to these levels will be a deal-breaker for many businesses that rely on migrant workers in their hard-to-fill roles.
Working holiday visa hopes
The government has reopened working holidaymakers visa programmes, with the expectation that this group may be able to help fill workforce shortages for these lower-paid roles. These visa holders sit outside the new system, so the minimum pay rates don’t apply. They just need to be paid market rates for the work they do, making them a valid alternative source of labour. In pre-COVID-19 times up to 50,000 working holidaymakers came to New Zealand annually. However, at the time of writing, only a smattering of working holidaymakers have actually travelled into the country, leaving an increasingly growing gap in the labour market.
As things currently stand, there is a lot of pain ahead for employers who have roles that pay below the minimum pay rates and who have been struggling to find enough staff to fill them. There are no easy answers here.
Get informed early
Even for employers who are fortunate enough to operate in more highly paid industries where the pay rates sit above the minimum levels, the costs of employing migrant workers will be fairly significant in terms of the application fees, but, more importantly, in the time and effort that will need to be invested in managing the process. The new process is likely to be complex, at least initially, until it is bedded down. As well as fees to become ‘accredited’, employers will now be required to pay for a component of each migrant’s visa process (the ‘job check’), with a cost of $610. Depending on the number of migrants in your business, it’s not hard to imagine how these costs will quickly add up.
With all these changes and escalating costs, it will be essential for HR professionals to have a good understanding of the new rules and their likely impact on their organisation, to help manage the expectations of internal stakeholders and candidates when it comes to workforce planning. There are also opportunities to take steps before the new system comes in, to ease the transition and reduce the financial costs. Readers are encouraged to seek expert advice to ensure they make the most of these opportunities while they still can.
About the Author
Rachael Mason is a partner at Lane Neave. She has has practiced exclusively in the area of immigration law in both the UK and New Zealand for a number of years. Rachael is highly regarded for her expertise in advising New Zealand employers on both transactional and strategic immigration and visa matters. She regularly presents to HR and other professionals regarding key immigration policy changes and issues related to recruiting and maintaining an immigration-compliant workforce.