Will NZ's low productivity will be solved by cutting the temporary migrant count? Photo / Warren Buckland
Will NZ's low productivity will be solved by cutting the temporary migrant count? Photo / Warren Buckland
OPINION:
Five per cent of New Zealand's workforce is made up of temporary migrants, and the Government wants us to know that's an extraordinarily high proportion.
Economic Development Minister Stuart Nash drove the point home in a much-anticipated speech on immigration policy last week (he was filling in for ImmigrationMinister Kris Faafoi). It's "the highest share ... by a significant margin" he emphasised, comparing New Zealand to its OECD peers.
Prime Minister Jacinda Ardern reiterated the view the next day: on temporary migrant labour New Zealand is the highest in the OECD. And the same data was trotted out in a recent report on New Zealand migrant labour by economic research institute NZIER (the figures are all pre-Covid-19).
Highlighting New Zealand's anomalously large proportion of temporary and seasonal workers serves the Government's current agenda. The border closure has presented an opportunity to rethink immigration policy overall. And the hope is that cutting back low-skilled and temporary migrant numbers particularly, will help to boost Kiwi employment and wages, and or mechanisation.
The first outcome would be good for workers, while greater mechanisation would drive higher productivity, which, in turn, helps us all to better living standards. The problem is that the policy picture that actually produces these circumstances is extraordinarily muddy. And the potential for damage to New Zealand businesses which currently rely on this labour is great, all the more so since unemployment is under five per cent.
In recent decades our productivity has been sliding relative to our peers. This trend is at least partly coincident with especially large increases in the number of temporary workers; over the past decade, the number of people in New Zealand on these visas (including Recognised Seasonal Employer scheme workers, working holiday-makers and foreign students) has more than doubled from fewer than 100,000 to over 200,000.
Could it be that even as we've been shipping in boatloads of low-skilled, temporary migrants to keep our apples picked, our ski lifts operating, and our coffee brewed we've been sinking our own economy? Figuratively speaking. Because boatloads of migrants don't actually reach our shores. We're very hard to get to. Which, in turn, makes you wonder if we really are so anomalous among our OECD fellows.
The group is dominated by the countries of the European Union, with a total population of some half a billion people. And among the supranational provisions of the group is the visa-free movement of labour (this provision is also largely mirrored by Switzerland, Norway, Liechtenstein and Iceland). That total, incidentally, accounts for two thirds of the OECD and includes the UK since the data cited by both the Government and NZIER is for 2019.
Immigration Minister Kris Faafoi. Photo / Mark Mitchell
For decades, a marked feature of the bloc has been the migration of workers from the relatively poorer countries of Central and Eastern Europe to fill jobs--often but not always low-skilled or otherwise considered menial by the locals--in western European economies. Germans don't harvest their own spargel and Brits don't pick their own strawberries, Romanians and Slovaks do it for them. Polish builders, Bulgarian baristas, Romanian lorry drivers, Slovakian field hands fan out across Euope. Some stay. Many come and go, taking their higher wages earned and saved in the west and buying cheaper land, homes and goods in the east.
Critically, none of these people are counted by the OECD as migrant workers. This is important for New Zealand for several reasons. First, it is very unlikely that our proportion of migrant workers is particularly anomalous anywhere but on paper. All the more so when you consider the problem of undocumented workers elsewhere.
In the US, another of our OECD peers, an estimated four to five per cent of the labour force is comprised of low-skilled, illegal migrants. Some slip back and forth across the Mexican border seasonally, or at erratic intervals. Some settle down. There are millions of them: picking fruit, flipping burgers, cleaning houses, and mowing lawns. By comparison, New Zealand has an estimated 13,000 to 14,000 "overstayers" fewer than 0.1 per cent of the labour market.
This matters in our current immigration rethink, because many of these countries, with high, real, low-skill migration also manage to achieve exceptionally high productivity. One simple measure of this is the value of an hour worked, measured through purchasing power parity.
According to the OECD's 2019 data, the US achieved US$71.8 of GDP per hour worked. In Norway the figure was US$84. In Germany it was US$66.4. In the UK it was US$58.4. All performed vastly better than New Zealand's US$41.9.
Moated, bottom-of-the-world Australia is a better comparator for our labour market than most. Three per cent of the workforce across the ditch is on temporary visas. That's the third highest by the OECD's blinkered count (Poland is second).
But there again, Australia has a pressure valve that's invisible in this data: New Zealanders themselves. We have a penchant for seeking higher wages across the ditch, and currently more than half a million of us live there, where productivity is significantly higher at GDP US$55.1 for an hour worked.
None of that is to say that further study of New Zealand's immigration settings - as the Government has now asked the Productivity Commission to undertake - isn't warranted. It is, in fact, long overdue. But we shouldn't mask the fact that rising numbers of low-skilled migrant workers is a conundrum most advanced economies are grappling with. Even, and perhaps especially, the most productive ones.
