Mon. Nov 28th, 2022

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Government should restrict migrant workers to boost productivity – NZIER study

3 min read

The Government needs to restrict the entry of low-wage, low-skill workers on short-term visas if it wants to boost economic productivity, according to a new study by the NZ Institute of Economic Research.

That would mean being less reliant on short-term visa workers to fill low-wage positions – like those that the horticultural sector.

The NZIER has produced the report, “Migration and New Zealand’s Frontier Firms”, for the Productivity Commission as part of its ongoing work to improve the country’s economic output.

“Migration policies that allow all New Zealand firms access to low-cost foreign labour are likely to inhibit many of those firms from moving closer to the domestic productivity frontier,” the report concludes.

Frontier firms are ones who are world leaders in what they do or are as productive as they can be, report co author and NZIER economist Peter Wilson says.

“We were asked to look at whether the migration policy could be used to boost growth in those firms.”

The research found we already had “gold standard” rules for attracting that kind of talent, Wilson said.

“But we need to be a bit realistic about the numbers of those people we can attract because we are a long way from the global centres.”

“But for firms in general, we think migration settings in general are hampering our ability to innovate.”

The report cites the starkly different Covid responses of the horticultural sector in the United Kingdom and New Zealand.

“On the first of July this year, the Financial Times reported that UK firms were accelerating
work on robotic harvesters to pick fruit because of Covid-19 restrictions on labour
movements into the UK.

“Two weeks later, Radio New Zealand’s Morning Report ran a story on how the New Zealand apple industry was seeking an extension of short-term visas to allow stranded foreigners to pick the New Zealand crop.”

In fact, the Government last week moved to allow 2000 Recognised Seasonal Employer (RSE) workers across the border from January, to help with he fruit harvest.

“We’re continuing to support business models that are low-wage, low-skill endeavours,” Wilson said.

“That’s probably been good for the workers and its probably good for the employers, but it is cementing in the idea that picking fruit is a horrible job no one wants to do so you have to go to the Pacific Islands to get people.”

They were great people and did a good job but “this was really not supporting a move to an innovative high-tech industry”, he said.

If employers were required to pay more for workers they would have to find ways to get more productivity out of them and that would mean a lift in the capital investment in tools and technology, he said.

One of the long-term arguments against a change to immigration settings was that we couldn’t just turn the tap off, he said.

Now, because of Covid, the tap had been turned off.

“Little good has come out of Covid, let’s be clear, but it has given us a once-in-a-generation to reset the dial,” Wilson said.

“We’ve seen hundreds of Kiwi firms adapt to a new normal since the lockdown. We can do it. Let’s keep doing it.”

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