Mon. May 23rd, 2022


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Phil O’Reilly: Why our immigration reset doesn’t stack up

3 min read


There has been a lot of debate recently about the Government’s immigration reset.

According to ministers, some skilled migration will be good for New Zealand as we start to open our borders. However, low skilled migrants will find it much harder to come to New Zealand. New Zealand will feel closed to them.

Regrettably, this “high-skilled good” and “low-skilled bad” thinking lacks any solid evidence and it has the capacity to damage the interests of the very workers the Government says it is trying to protect.

The proposed immigration reset and a return to National Award bargaining in all but name (Fair Pay Agreements) are two critical features of this new approach.

The logic appears to be that if New Zealand workers are paid more, they will do many of the “low-skilled” jobs that migrants currently do. Pay, in other words, is the only reason New Zealanders don’t want to do these jobs.

This thinking also holds that if worker pay is increased, employers will be forced to adopt new technologies, displacing low-skilled labour and improving our productivity.

On closer examination, neither of those two arguments withstand very close scrutiny.

It is certainly possible that increasing pay rates will attract more New Zealanders to work in some sectors. But the reality is that for much of the work – for example, seasonal and regional work – increasing pay won’t necessarily attract New Zealanders to those jobs.

The second argument doesn’t stack up either. The idea that increasing labour costs will force businesses to use technology suggests that such technology is available, affordable, and deployable.

This is often not the case.

The scale of most New Zealand enterprises and the size of the markets they serve, domestically and overseas, means that technology won’t be affordable or available to them any time soon.

It is more likely that instead of investing in new technology, over time businesses will simply stop doing the work or do less of it. In doing so, they will damage the very interests of the workers the Government says they are trying to protect.

The Government’s policy prescription might be a little more robust if it were to really support businesses to invest in technology. For example, aggressive tax write-offs for new technology investments. The fact that they do not, speaks volumes.

Global evidence suggests that immigration is actually very good for countries’ growth and productivity. A study by the International Monetary Fund in 2016 indicated that immigration – both high-skilled and low-skilled – is good for economies as it leads to productivity gains. Bringing in new workers to support those retiring and leaving the workforce is especially important for countries with ageing workforces like ours.

Critically, this report suggested that both higher- and lower-skilled migration was good for all workers and productivity growth in many circumstances. Many employers and communities across New Zealand will know this to be true from their own observation and experience.

Instead of focusing on the skills of potential migrants, we should instead be focussing on migration for the benefit of New Zealand workers. Migration should focus on enabling employment of more New Zealanders into good, high-quality jobs. Some migrants will be highly skilled. Others may do low-skilled work that enables Kiwis to do higher-skilled work elsewhere in the business, supply chain and community.

We should also do more to enable companies to invest in new technologies and markets to upskill their New Zealand workforce and take advantage of new opportunities.

An approach based on a simplistic skills framework damages the interests of those whose circumstances we most need to improve. Our immigration policy needs to be evidence-based and work for the good of all New Zealanders.

• Phil O’Reilly is managing director of Iron Duke

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