Jacinda Ardern slams door on wage crushing immigration

A fortnight ago, Jacinda Ardern’s Labour Government tasked the New Zealand Productivity Commission (PC) with undertaking a system-wide review of the nation’s immigration program, with particular focus on the “impact of immigration on the labour market, housing and associated infrastructure, and the natural environment”.

The goal of the inquiry is to “enable New Zealand to strategically optimise its immigration settings” so that it maximises community wellbeing and living standards.

The terms-of-reference for the inquiry is especially interested in labour market outcomes arising from immigration:

The Commission should aim to provide concrete advice on how immigration affects labour market outcomes and the overall wellbeing of New Zealanders, including through productivity growth, the development of skills, levels of capital investment and labour market opportunities among different groups. It should assess evidence on the impact of low-skilled migration on wages, working conditions and business models in relevant sectors, and consider the impact on those sectors of reduced access to migrant labour, including any lessons learned from border closures due to COVID-19.

Shortly afterwards, the New Zealand PC released a report, entitled “New Zealand firms: Reaching for the frontier”, which explicitly noted that successive governments had enabled high levels of immigration without targeting this to close the skills gap of New Zealand workers. This mass immigration program had, in turn, resulted in high levels of labour force participation but poor productivity and low wages. It had also disincentivised firms from undertaking productivity-enhancing investment.

As such, the PC recommended the Ardern Government wean New Zealand firms off their heavy reliance on migrant workers:

Aggregate data (Figure 2.2) show that New Zealand businesses are typically capital-shallow (ie, workers have limited equipment and other capital goods to work with). Capital shallowness holds down labour productivity…

The ready availability of labour at modest or low wages (eg, through immigration policies that allow high levels of low-skill migration) has not helped either, because it has reduced firms’ incentives to invest in labour-saving and productivity-enhancing equipment…

On Friday. Prime Minister Jacinda Ardern flagged that the government would shift the nation’s immigration program away from low-skilled temporary visas [my emphasis]:

“In terms of immigration going forward, last week we announced that the Productivity Commission will hold an inquiry into New Zealand’s immigration settings. The inquiry will focus on immigration policy as a means of improving productivity in a way that better supports the overall well-being of New Zealanders.

“The inquiry will enable us to optimise our immigration settings by taking a system-wide view, including the impact of immigration on the labour market, housing and associated infrastructure, and the natural environment.

“This will sit aside existing work being led by the immigration minister around reforms to temporary work visas and a review of the Skilled Migrant Category visa…

“But let me be clear. The government is looking to shift the balance away from low-skilled work, towards attracting high-skilled migrants and addressing genuine skills shortages in order to improve productivity.”

Yesterday, the Ardern Government officially announced a “once-in-a generation” immigration reset for New Zealand that will shift away from high volume, low skilled migration:

“As we focus on re-opening New Zealand’s borders, we are determined not to return to the pre-COVID status quo,” [Minister] Nash said.

“The pressure we have seen on housing and infrastructure in recent years means we need to get ahead of population growth.”

The government would strengthen employer requirements and labour market tests before a migrant could be hired so temporary workers were only recruited for genuine job shortages. The skilled migrant category would also be reviewed, he said…

“The exploitation of temporary migrant workers – such as paying less than the minimum wage or making people work excessive hours – is unacceptable and breaches New Zealand law,” Nash said…

“High levels of migration have contributed to 30 percent of New Zealand’s total population growth since the early 1990s … this has been fuelled, in particular, by increasing numbers of temporary migrant workers and students”…

He said temporary work visa holders made up nearly 5 percent of New Zealand’s labour force. “That is the highest share – by a significant margin – compared to other OECD countries. Poland is next with almost 4 percent.”

“This means businesses have been able to rely on lower-skilled labour and suppress wages rather than investing capital in productivity-enhancing plant and machinery, or employing and upskilling New Zealanders into work”…

He quoted the OECD which has said: “The employer-assisted temporary work visa system is not limiting recruitment of migrants to resolving genuine skills and labour shortages, is attracting too many low-skilled migrants and may be weakening incentives for employers to employ and train New Zealanders. This has limited our ability to create jobs and improve productivity.”

Bravo New Zealand.

Exactly the same criticisms could be levelled at Australia where labour productivity (and wages) collapsed during the past 15 years of low-skilled mass immigration:

Australian labour productivity growth

Australia’s labour productivity has collapsed since 2005.

The Morrison Government should initiate a similar review by our Productivity Commission, rather than kowtowing to its business lobbyist mates and declaring open immigration war on Australian workers.

By the same token, Anthony Albanese’s Labor should copy the Ardern Government’s immigration policy platform and take it to the upcoming federal election.

Unconventional Economist
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Comments

  1. reusachtigeMEMBER

    This is very different to Australia as our immigration only targets skilled workers so as to fill chronic shortages!

    • blacktwin997MEMBER

      He sure could do with some Osteolin therapy. Maybe if they sponsor him he can wear a black t-shirt with the fluorescent ribs and spine painted on, and they can install some black lights for question time?

  2. Narapoia451MEMBER

    We will see. What she says and does have proved to be very different things so far.

    • Ardern has certainly gotten braver since gaining a stomping election majority (she was a minority government in her first term). Just look at housing.

      I can see her following through this time. COVID provides the perfect cover.

      • You just could be right, LVO. Whereas it might take several more pandemics, and several more prime ministers, before our LibLab champs would even consider changing course: In the meantime, maybe we could bring back the baby bonus.

      • Narapoia451MEMBER

        I truly hope so. My friends in real estate in NZ say the housing changes are already biting in the apartment market which is the bellweather over there and it’s definitely a move in the right direction.

        The significant ramp up of immigration after promising to reduce it after the first election win counts against here – esp given the coalition partner had not been sympathetic to immigration as a rule.But if she follows through that will be amazing. There will be a lot of bleating from the business interests for wage slaves and there seem to be genuine issues around getting locals to work in agriculture over there (as opposed to the straight up exploitation that happens here).

        Will be interesting to see how it plays out – will we see a country with a left leaning govt take this stance without hysterical accusations of racism?

        • I grew up in rural NZ, there is no shortages of potential workers, just huge shortages of workers to do difficult work for minimum wage in crap conditions. Additionally growing up many of the other kids had dreams of owning their own farms. These days farm prices are so phenomenally high that there is no chance of a farm worker ever becoming a farm owner and hence there is no reason to remain in the industry.

  3. Jeepers, if Albo doesn;t adopt this he obviously would rather be a virtue signalling social justice warrior on the cross bench.

    Wow.

    • happy valleyMEMBER

      You could do worse than earning a minimum $200k (+$20k pa per committee membership) a year as a backbencher in opposition, for turning up every so often?

    • Cynical snake

      We already HAVE THIS, at least on paper.
      Lets see what skilled actually means over in k1w1 land…

  4. Uranium GeoMEMBER

    Innes Bollocks must be sweating on this. I wonder how much would impact back door immigration into Australia?

  5. Arthur Schopenhauer

    If implemented, this is great news. What New Zealand projects, is not on the whole, what New Zealand done.

  6. Patrick Swanson

    She should go even further with proper diversity and equality requirements.

    Mandate that a maximum of 10% of the intake can come from any one country, and maximum 49% male from any one country.

    Waive the country requirement for Aus,UK,USA,Canada.

    Its pointless having diversity and equality targets at the corporation level when they should just be applied at the base immigration level (then companies can just focus on merit).

    • Amazing isn’t it. The same individuals that aggressively argue for mandated cultural, racial and gender diversity at every level of society (down to the colour of of pedestrian signs) have no such inclination when it comes to deciding on the actual diversity of the population? (I won’t mandate how many Indian women are included in the intake but I will complain that too many men are in IT services…..)

      We can use nice explanations like ‘cognitive dissonance’ but at some point that is simply to generous a description.

  7. Just another example of the pure hypocrisy that exists within the ranks of so called “progressives”.

    They cheer every time a progressive icon sheds a tear on television or executes a photo worthy hug…. but when that same individual/party announces actual policy initiatives that don’t rely on a culture marxist narrative to generate attention….. crickets from their global counterparts that were fanning at their feet just one news cycle ago?

    The ALP is well aware of what the Arden govt is apparently pursuing, at the vey least, the current rhetoric from NZ is clear and a total departure from local party lines. According to most polls in the western world…. likely to be a clear vote winner for the general populous as well, ESPECIALLY when it’s pitched by a non ‘right wing’ party.

    Any side of politics can own the MB/Ardern policy position and narrative, but we know each chooses not too for their own reasons. For the LNP we know exactly why that is…… given its arguably easier for so called progressive parties…..WTF is the ALP’s excuse?

    Lets be fair and give them some time to absorb it…… but 3 months from now, there can be no reasonable justification for the ALP to continuing targeting ‘pink budget’ BS when their progressive folk hero across the ditch is attempting (or at least signalling) actual labour policies.

  8. Unlike NZ, I think we need more PhD Uber drivers, they are essential to our economical growth.

    • Cynical snake

      NO, NZ has realised it needs PhD uber drivers, not unqualified ones…
      hence the change to a “skilled migrant” program that targets skills shortages much like our own here in australia

  9. Dem Kiwi pollies is a lot smarter than ours (assuming they can implement it, & not fail as with affordable housing, as now majority)

  10. kiwikarynMEMBER

    Since Jacinda is responsible for a 25% increase in immigrants entering NZ each year since she’s been in Govt, any “reduction” will probably mean a slight decrease, perhaps back to the same (already high) levels as under the last National Govt. Its all smoke and mirrors. Besides, if she cuts immigration too hard she won’t be able to hide the fact that New Zealanders are fleeing the country to Australia.

    • SchillersMEMBER

      “…to hide the fact that New Zealanders are fleeing the country to Australia.”

      Too right they are. Despite the pandemic there are almost 600,000 of them in Australia, including many that were not born in New Zealand. All with unlimited work rights.

      • Narapoia451MEMBER

        Paying taxes without any of the social supports extended to Australians living in NZ.

        • 640,000+ ‘New Zealanders’ in Australia on a SCv.
          About one third or 210,000 are the early 1980/90’s wave of genuine New Zealand born & educated.
          Reducing. They are old now, in their 50’s & 60’s – cashing in their Australian super & going back as NZ has better welfare.

          And then a small trickle of genuine NZ born educated & skilled since then, plus their Maori & white trash criminal population.
          (Ask yourself, when was the last time you saw of heard a genuine NZ born young couple – fresh off the plane, their dulcet mangled vowels, mullet hair cuts & 20th century clothing? You just don’t see or hear any genuine NZ born coming into Australia now.
          Go check out arrivals at Sydney or immigration and see what really comes in).

          And then nearly half or 330,000 of the rest of the ‘NZ SCV’ are not even New Zealanders.

          They are Third world detritus taking advantage of the NZ / Australia SCV loophole.

          Indians, Asians, Bangladeshi, , Africans, Middle Eastern etc who used NZ as a transit stop to gain access into Australia.

          NZ is an inlet for the real bottom of the barrel third works swill who can’t get into Australia or got kicked out.
          And Australia is then the NZ ‘outlet’.

          So in via NZ, get the passport stamp and then into Australia with permanent stay & full work rights.

          An entire Chinese and south East Asian criminal class.

          The scrapings of the Mumbai slums or Punjabi rurals.

          The African war criminals who bribed their way to the front of the UNHCR queue, finally joining their clan gangs in Melbourne or Sydney.

          Misfit unskilled or antisocial Euros.

          UK welfare refugees.

          At least half of Fiji Nandi Indian slum peasantry.

          Many who can’t speak English, are old, sick, useless, have zero skills.
          And once in Australia immediately join the foreign criminal run black market or vice industry.
          They aren’t paying any tax.

          👉🏾The Australian NZ SCV should only be for genuine Australian or NZ BORN citizens.

          Right now it’s just yet another visa category exploited as a third world migrant guestworker intake.

          • Narapoia451MEMBER

            Your prejudices are showing. Personally I know at least a dozen NZ born kiwis that have lived for a time or have settled here on the SCV. Most of them went back to NZ for various reasons.

            I’m not saying that this is the case for all SCV holders but your hyperbole is ridiculous.

    • Fabian AlderseyMEMBER

      If immigration is cut, and if that results in wage rises (two big ifs, granted) that might reduce the flow from NZ to Australia?

  11. Can anyone imagine Australia even discussing a system-wide review of our immigration program, with particular focus on the “impact of immigration on the labour market, housing and associated infrastructure, and the natural environment”.

    LOL. Peace in the middle-East would certainly come sooner

    • kiwikarynMEMBER

      All you need is daily news stories of the tens of thousands of homeless people being put up at taxpayer expense in nice motels, where they promptly trash the place and turn the area into the set of Once Were Warriors. (google Rotorua Emergency Housing). Since Jacinda is too stupid to understand that all her housing policies result in more homeless people, she thinks reducing immigration might solve the housing problem. But its not immigrants that are being put up in emergency housing. We’re not allowed to say who is being put up in emergency housing because that would be hate speech or something, but we now have the Govt looking to introduce apartheid as well to solve “the problem”.

  12. Jumping jack flash

    There is no need to suppress CPI anymore using slave labour. Wage theft has proven to be inadequate to grow CPI and wages sufficiently. The banks will not worry about CPI except for maybe a few isolated hand-wringers. The path forward for the New Economy is that of high CPI, and high wages growth. It is the only way to expand the economy’s debt capacity and expand the debt at the correct rate to power our economic growth to infinity and beyond.

  13. But-but-but NZ is so politically progressive.

    Oh right, yeah, I get it, politically progressive towards its own population. Protecting the working-class inhabitants.

    LABOUR RENAISSANCE

  14. MathiasMEMBER

    Apparently, a few people I know are toying with the idea of moving to New Zealand. One person I know already has.

    I’ve always been of the opinion that ‘smart countrys’ will eventually figure this corruption out and start ‘Young Friendly Countrys’ where you actually get to live a proper life. Sounds like New Zealand already has. This is great news.

    New Zealands a beautiful country. Mostly agriculture ( dairy, farming, wood ). The only problem with it, is its hard to get jobs. If they have jobs and cheap real estate then I cant imagine who wouldnt move there.

    If Australias Young leaves for elsewhere, then you wont have many people left in Australia paying the bills anymore. You’ll just have a grumpy bunch of Boomers screaming at the wall that everyones found another Country to go to. Nobody will care because nobody will be left to listen to them. The only people left will be the odd migrant and they wont listen either.

    If my understanding of migration is correct, then people go where the money goes. If migrants are coming to Australia then they are following the trail of money. Once that money dries up, Im thinking your about to see a huge wave of emmigration. Its probably why Labor wants to give them free houses, as a sweetener to keep them here. When there’s no money left in Australia to exploit, then who’s going to want to stay here?

    Sounds like the tables starting to turn.