Skills-based immigration – B

Not so many people came in with “letter B” occupations, but again the list of occupations with more than 100 approvals wasn’t a great advert for the transformational productivity-enhancing possibilities of our immigration policy.

work visas b

I won’t get into debates about the possible role of temporary migration in dealing with Canterbury rebuild pressures –  but really, builder’s labourers?  But even setting construction-related roles to one side for now, a list that has the top four places taken by beauty therapists, bar attendants, bus drivers, and baristas isn’t a great advert for the  productivity (and wage) possibilities this programme creates for New Zealanders.

Frankly, I’m surprised by how few of these work visa approvals seem to have been for genuinely highly-skilled roles.  But I led a sheltered life –  the Reserve Bank used to periodically recruit foreign PhD economists.   Then again, even in the Treasury papers I noticed reference to the declining average quality of migrants.

The Treasury papers also note (p 52) that

from a dynamic productivity perspective, we consider that migration shouldn’t provide a “path of least resistance” for growth in certain sectors of the economy.  By this we mean that temporary migration shouldn’t act as a lever that keeps labour costs in certain industries down to the extent that it dulls incentives to invest in capital or increase working conditions to attract local labour.

Perhaps they had the aged-care sector in mind? Or the dairy industry?

10 thoughts on “Skills-based immigration – B

  1. I think that you are writing about a very important issue. I think that reforms must begin by depoliticizing immigration policy. Take it out of the government. Make immigration policy independent, and run by technocrats not bureaucrats.

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  2. Happy to have technocrats administer the policy (which they do now), but the big policy parameters have to be set by politicians in my view. But working my way through this data does leave me more sympathetic to auctioning a fixed quota of residency permits. If we aren’t getting seriously high-skilled people, and for some reason we still think a large amount of immigration is good, we might as well at least collect money from those who come (subject to basic min, stds).

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  3. Why shouldn’t this statement:

    from a dynamic productivity perspective, we consider that migration shouldn’t provide a “path of least resistance” for growth in certain sectors of the economy. By this we mean that temporary migration shouldn’t act as a lever that keeps labour costs in certain industries down to the extent that it dulls incentives to invest in capital or increase working conditions to attract local labour.

    also apply to high minimum wages or strong regulations on business?

    Prosperity is based on using lowest cost resources in the production of goods and services. Why would we artificially restrict access to lowest cost labour resource?

    We could equally put a tax on any machine not powered by electricity so that the ability to use that machine does not “dull incentives to invest in capital”. Hey look! Now they have to use higher tech! Productivity!

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    • From an individual employer perspective that makes a lot of sense. But as a sovereign nation we determine how many people, and who, we’ll let migrate here. If, as governments have argued, immigration is an “economic lever” we should be reasonably confident that NZers as a whole are better off from whatever level of immigration we permit.

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      • Or you could reverse the phrasing: as a sovereign nation we determine how many people, and who, we’ll exclude from entry.

        On that basis, why would we artificially restrict low-cost labour that allows the production and consumption of goods and services at lower costs, all in the name of “productivity” that comes from burdening ourselves.

        I (think I) understand that your main thesis is a more sophisticated macroeconomic story about investment and real interest rates, but the microeconomics (to me), all point in one way – low skilled immigrants benefit New Zealanders overall. ‘

        Yes distribution matters, yes house prices might be affected, but I think we should separate all of these and look at them individually, and then as a whole. I worry that the excerpt from the paper above is just plain wrong, but that it gets support because of the other, better, reasons to be sceptical of immigration.

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  4. Yes, entirely happy with that ordering. (and yes, my main argument has been a macro-oriented one)

    I guess I’m posing the issue in the govt’s own terms – as an “economic lever” it doesn’t look to have been a terribly effective one. The gains from trade are pretty apparent to the immigrants (or they wouldn’t come) and perhaps even to some owners of capital in NZ, but less clearly for NZers as a whole. From memory that was the Aus Productivity Commission 2006 conclusion about immigration to Australia.

    I also agree that we need to keep the various arguments analytically separate. The house price concern is resolvable in other (probably better) ways. Having said that, in the end the migration policy programme is a political decision, and a whole variety of arguments will factor into those decisions.

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    • I wonder what you would have thought if the Treasury text had said:

      from a dynamic productivity perspective, we consider that [offshoring] shouldn’t provide a “path of least resistance” for growth in certain sectors of the economy. By this we mean that [offshoring] shouldn’t act as a lever that keeps labour costs in certain industries down to the extent that it dulls incentives to invest in capital or increase working conditions to attract local labour.

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      • I’d probably have considered offshoring wasn’t a matter for public policy to concern itself with.

        But I take your point, and I wouldn’t want to put much weight on the Treasury line – which did surprise me, as being quite different in tone than the Secretary’s approach.

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  5. Or do low skilled migrants displace a low skilled New Zealand citizen that then goes on the unemployment benefit which is a burden to the taxpayer but good for the employer? If true low skill immigrants do not benefit NZ Inc but only individual employers.

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  6. That could, in principle, be a risk, although NZ’s unemployment rate has typically been low by OECD standards. It could, temporarily, be an issue at present when the unemployment has lingered at uncomfortably high levels following the recession.

    In general, Reserve Bank research (and other NZ macro work) suggests that immigration boosts demand more than supply in the short-term, so if anything surprise boosts to immigration probably boost overall employment prospects in the short-term (which is why the RB tends to raise interest rates when immigration is strong).

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