Immigration data

MBIE does a pretty good job of releasing annual immigration data, albeit with quite a long lag.   Their Migration Trends and Outlook publication is full of interesting charts, and the accompanying spreadsheets have a rich array of data about people applying for visas to live in New Zealand, temporarily or permanently.     But the 2015/16 issue, covering the year to June 2016, was released in late November last year.    But it is now late April 2017 and we won’t have any official data made generally available until, presumably, late November this year.   Given the significance of immigration in the New Zealand economy, let alone in the political and social debate, it is staggering that only annual data are available, and even then with quite a long lag.     I’m surprised that, for example, Statistics New Zealand does not put more pressure on MBIE to bring its immigration statistics up to the sort of standard we expect in other areas of the economy.  Apart from anything else, nature abhors a vacuum, and in the absence of good timely (readily useable) immigration approvals data, people fall back on using the Statistics New Zealand permanent and long-term migration numbers, which (a) aren’t that accurate, as SNZ research itself has found, and (b) aren’t a good basis for analysing immigration policy developments (immigration policy affecting only non New Zealanders).

And in this day and age, the data must be quite readily available internally –  it isn’t, presumably, as if they are using paper-based systems and only compile the aggregates once a year.   I’d urge MBIE to look at upgrading their publication of statistics.    Key data –  approvals under each visa stream and main category –  should be able to be made available monthly, within days of the end of the month, and should (as relevant) be published on a seasonally adjusted basis (as most other official economic data are).   The sorts of detailed tables published with Migration Trends and Outlook should be published quarterly, and again it is difficult to see why we should expect, or tolerate, a lag of more than four weeks after the end of the relevant quarter.  It takes SNZ much longer than that to calculate GDP, of course, but immigration approvals data is all generated inside MBIE.    All this data should, in turn, be made available on the Statistics New Zealand platform  Infoshare.    To the usual complaint, when better data is sought, that “there is no money” my response is twofold: first, this is a really major component of New Zealand and social life, and timely information would inform a better debate and analysis, and second, immigration (including the associated research and analysis) is supposed to be self-funding.  If the fees aren’t quite high enough to cover the regular production of good data (all from internal systems) put them up (a very little surely).    In the meantime, it is tempting (but would be tedious) to lodge an OIA request for the data on the last day of each month, which would at least ensure it was available 20 working days later.

As an inadequate, but perhaps convenient for them, substitute for good generally-available data, MBIE does seem from time to time to provide bits and pieces of data to selected journalists.   That is no way to run a democracy.

A small example leapt out at me as I read today’s Herald over lunch.   In an article on yesterday’s announcement we find that:

In figures released exclusively to the Herald, a Ministry of Business Innovation and Employment sample of more than 600 skilled migrant category applications being considered as at March 1 found more than two in five would not have met the new income threshold.

Just 42.5 per cent of applicants earned over the New Zealand median income of $48,859 per year and 14 per cent earned over $75,000.

The figures are staggering.  Recall that skilled migrant principal applicants make up only about half of those granted approvals for residence.  These are (the bulk of) the “best and brightest” of those we bring here –  others are partners, children, family members, refugees, and Pacific Access people, who themselves wouldn’t get over the Skilled Migrant category thresholds.

Now, sure, it is a small sample (600 of the SMC applications being considered) –   and there seems to be a potential contradiction between the two sentences in that paragraph –  but at best it seems that only around half of the skilled migrant applicants earned more than the new, quite modest, income threshold.   Sure, the median income numbers cover people of all ages, and most SMC principal applicants are between 20 and 40, but….these have been the transformative skilled migrants MBIE and successive governments have been counting on to help transform the economy, and lift our dismal productivity, and that is all they can command in the labour market?  Really?

I suspect the Reserve Bank and Treasury are now paying freshly minted 21 year old economists, with just an honours degree, at least that $48,859 per annum by now.  And those people will achieve significant pay rises in the following few years.   In fact, on checking teacher salaries, a primary school teacher with a BA starts on $48165 per annum.     These will all be able people, but they are 21 or 22.   How can it make sense –  if our immigration programme is really skill-focused –  to be letting in as residents so many people who at, say, an average age of 30 can’t even command what a starting primary teacher makes?

Even though the official rhetoric has long been skills-focused, it increasingly looks as though we’ve actually been somewhat closer to lower-skills end of the immigration spectrum.   There hasn’t been anything much in the way of productivity spillover –  which could really only come from the very able and innovative, and we’ve not attracted many of them –  and the evidence suggests that the low-skilled migration hasn’t done much for us either.  Recall that the advocates of high immigration both argue that high immigration of relatively low-skilled people hasn’t dampened native wages and that we benefit economically from low-skilled migration.   But if wages haven’t been dampened, it can’t –  under the totally orthodox neoclassical economic model –  have done any good for New Zealanders as a whole either.  And if they have….well, we know that despite all those inflows business investment has been weak (share of GDP) relative to population growth, the tradables sector has been weak, and we’ve seen little sign of any other sorts of gains.

Perhaps the data MBIE provided the Herald aren’t quite as bad as they look.  But we can’t tell, because MBIE provided the information simply to one media outlet and we rely on what their journalists made of it.   As a material piece of background to a major government policy announcement, that really isn’t good enough.

UPDATE: This article, informed by MBIE, adds a bit of detail

An Immigration NZ spokesman told that the department undertook a random sample of more than 600 live SMC applications on 1 March. All applicants were claiming for employment at skill levels 1, 2 or 3 under New Zealand and Australian classifications (ANZSCO).

Of the sample, 57.5% were for roles offering less than the new threshold of New Zealand’s median wage, the spokesman said. That meant 42.5% were for roles with wages above $48,859. Meanwhile, 14% earned above $75,000. The results were given a margin of error of plus or minus 5%, the spokesman said.


Further thoughts on the immigration policy changes

Having had some more time to look at the details of the government’s announced changes to the Skilled Migrant category (the main stream under which residence approvals are granted) and the proposals they are consulting on for changes to the Essential Skills (temporary work) visas, I’m perhaps slightly more positive than I was yesterday.   Within the government’s overall vision of what immigration can offer New Zealand –  one that I think is profoundly incorrect, based not on a hunch about what might be,  but on decades of New Zealand’s actual experience with large scale immigration programmes – the changes look as though they will represent an improvement.    Even if one is sceptical about the overall vision, the changes (actual and proposed) are likely to modestly reduce the damage that high levels of non-citizen immigration is doing (holding back real productivity and earnings growth) to the material living standards of New Zealanders.   That is welcome.

What is there to like?     Take the Skilled Migrant category changes first (which are definite, not just proposals for consultation)

In future, applicants with jobs at ANZSCO skill levels 1, 2 and 3 (currently regarded as highly-skilled) will only be awarded points for their employment if they are paid at or above NZ$48,859 per year (or NZ$23.49 per hour).

Bonus points will be awarded for remuneration at or above NZ$97,718.00 per year (or NZ$46.98 per hour)

and, straight from the government’s document,

Work experience

  • More points will be available for work experience.
  • Points will be awarded for skilled work experience in ANZSCO skill level 1, 2 and 3 occupations.
  • Points will be awarded for skilled New Zealand work experience of 12 months or more. There will be no additional points for work experience of two years or more.

Qualifications, age and partner’s qualifications

  • Points available for recognised level 9 or 10 post-graduate qualifications (Master’s degrees and Doctorates) will increase.
  • Points for people aged 30 – 39 years will increase.
  • Partner’s qualifications will only be awarded points if they are a recognised Bachelor’s level degree or higher or a recognised post-graduate (level 9 or higher) qualification.

Which factors will applicants no longer be able to gain points for?

Points for the following factors will be removed:

  • qualifications in an area of absolute skills shortage
  • skilled employment, work experience and qualifications in Identified Future Growth Areas
  • close family support in New Zealand

The document is light on detail.  There is no sign of how many more points will be available for things like higher level qualifications,  but as I noted recently it did seem absurd that if one needed 160 points for residence, there was only 5 points difference between what was on offer for a basic qualification (in an age when bachelors degree are a dime a dozen) and those for masters or doctorates.  Academic qualifications aren’t everything –  I always remember a school teacher advising us of his view that “the PhDs are the plodders” –  but if we are aiming for skilled and innovative people, we probably should be more strongly differentiating between higher and lower level qualifications.   Similarly, I like the idea of more points for more highly paid jobs.

And if we considering giving people permanent rights to live here –  which is what the Skilled Migrant category is about –  we shouldn’t be preferencing people who happen to fit current shortages as judged by Cabinet ministers and MBIE officials.  We are taking people who, we hope, will contribute strongly over 30 or 40 years.

On the other hand:

  • the additional points on offer for jobs outside Auckland, added in last year, remain.   One understands the politics of those points, but they simply have the effect of lowering the average quality of the people who are granted residence (as people with lower skills etc who can get a job outside Auckland will beat out higher-skilled people with a job in Auckland,
  • the minimum wage in New Zealand is now $15.75 an hour.   I reckon that is too high –  it is one of the highest relative to median wages anywhere in the OECD –  but it is the government’s own choice, and they keep increasing it.    But to be regarded as doing highly-skilled work, under the changes announced yesterday, people will only have to be earning $23.49 per hour, or just under 50 per cent more than the minimum wage.    It is good that they have put a threshold in but it is a pretty undemanding one.  Of course, we don’t know how many people it will catch –  and neither apparently does the government –  but if it is many, the system to now has been working even more badly than most have realised.
  • relatedly, I’m not really sure why we are giving residence points to anyone with an skill level 4 or 5 occupation.  In fact, if one looks carefully at the ANZSCO skills lists (here – I suggest Table 5 on the first spreadsheet) it isn’t clear why many of the occupations in the skills levels 2 and 3 qualify for points.    Here is just one subset of the level 2 skilled occupations
Hospitality, Retail and Service Managers
141 Accommodation and Hospitality Managers
1411 Cafe and Restaurant Managers
141111 Cafe or Restaurant Manager 2
1412 Caravan Park and Camping Ground Managers
141211 Caravan Park and Camping Ground Manager 2
1413 Hotel and Motel Managers
141311 Hotel or Motel Manager 2
1414 Licensed Club Managers
141411 Licensed Club Manager 2
1419 Other Accommodation and Hospitality Managers
141911 Bed and Breakfast Operator 2
141912 Retirement Village Manager 2
141999 Accommodation and Hospitality Managers nec 2
142 Retail Managers
1421 Retail Managers
142111 Retail Manager (General) 2
142112 Antique Dealer 2
142113 Betting Agency Manager 2
142114 Hair or Beauty Salon Manager 2
142115 Post Office Manager 2
142116 Travel Agency Manager 2
149 Miscellaneous Hospitality, Retail and Service Managers
1491 Amusement, Fitness and Sports Centre Managers
149111 Amusement Centre Manager 2
149112 Fitness Centre Manager 2
149113 Sports Centre Manager 2
1492 Call or Contact Centre and Customer Service Managers
149211 Call or Contact Centre Manager 2
149212 Customer Service Manager 2
1493 Conference and Event Organisers
149311 Conference and Event Organiser 2
1494 Transport Services Managers
149411 Fleet Manager 2
149412 Railway Station Manager 2
149413 Transport Company Manager 2
1499 Other Hospitality, Retail and Service Managers
149911 Boarding Kennel or Cattery Operator 2
149912 Cinema or Theatre Manager 2
149913 Facilities Manager 2
149914 Financial Institution Branch Manager 2
149915 Equipment Hire Manager 2
149999 Hospitality, Retail and Service Managers nec 2

Plenty of good people do those jobs, no doubt. Such roles all have their place in a modern economy.  But this programme is supposed to be bringing in highly-skilled, able and innovative people who can help lift the overall productivity of the New Zealand economy.  If we were simply interested in getting ever more people then a coarse sifting like this might be fine, but the goal of the programme –  and this is the residence programme, not a short-term skill shortages programme –  is more ambitious, and supposedly transformative, than that.    Simply requiring a beauty salon manager to earn more than 1.5 times the average wage bears no relation to that ambition.

In a sense, the problem with the programme is that New Zealand just isn’t that attractive to very many of the sorts of people who might genuinely make a difference.  It is a nice place to live –  if you don’t mind being far from anywhere else –  and the living standards aren’t bad, but if you are young, energetic, innovative, and genuinely highly-qualified you are more likely to be interested in a lot of other places before New Zealand –  all the other Anglo countries (including Ireland) for a start, and probably most of Europe too (some places in Asia –  Singapore, Dubai – probably attract some too).  Mostly they are richer than we are, mostly they have bigger domestic markets, and all of them are closer to other places (home, other countries, other markets etc).    It is part of the reason why I argue for markedly pulling down our residence approvals target, because it would then help us focus on attracting the small number of people who might really benefit New Zealanders.

What of the proposed changes to the Essential Skills temporary work visa (details at the link above)?

They are a modest step in the right direction.   But –  seasonal roles aside perhaps –  it isn’t clear to me why we continue to grant “Essential Skills” visas for any one in any occupation at levels 4 and 5 on the ANZSCO list?    Perhaps people will be less inclined to come in future, especially if they have partners/spouses who themselves can’t qualify for a work visa.  Perhaps, but New Zealand wages are still well above those in –  say –  the Philippines, and there is a huge number of Filipino workers in a various advanced economies (eg Hong Kong, and various Middle East countries) doing relatively unskilled roles, even though they’ve had to leave families behind.   The proposed three year limit (at any one time) on how long people in these occupation groups could stay in New Zealand seems appropriate, to minimise the risk of people living here long term with no plausible path to residency.   But three years is a reasonable chunk of time for a short-term relocation (in my own career, I did three temporary roles abroad, each for two years at a time).    I’d also be more comfortable if even people in higher-skilled roles were only eligible for three year visas (instead of five years).  I’d happily allow a single three year extension for, say, jobs in skill level 1, but after that either the person should settle here permanently, or return home.

Sadly, there is also no sign of any real change in how the so-called labour market test is operated.   The most compelling labour market test isn’t that “an employer satisfy an immigration officer that they have made genuine attempts to recruit or train domestic workers” (or even that they have advertised at WINZ), but what has happened to the relative price paid for that sort of role.     If wages for a particular type of skill have risen, say, 10 percentage points more than the market average across the economy in the previous two years, it might be a pointer towards some sort of genuine “skill shortage”.  But in the whole immigration system, and particularly in the Essential Skills category, there is no hint that changes in wage rates should be a material indicator.   We should ue market price indicators more, and bureaucratic judgement (and the employer’s persuasive gift of the gab) less.

I noted yesterday that this announcement made no attempt to deal with the rort that is much of the student visa system.    That still appears to be true, but there might be some beneficial effects  nonetheless.   It may well be that foreign students, using the extensive right to work provisions the government introduced a few years ago,  may be  heavily represented among those doing notionally level 1,2 or 3 jobs are yet getting paid quite low wages (below than 1.5 times minimum wage threshold).  If so, you would expect that this package –  under which such jobs don’t count towards residence points –  might diminish the attractiveness of New Zealand PTEs.     Cutting back export subsidies is always a good thing.

Overall, I think my assessment yesterday was right.  This is a fairly modest unambitious package, that (deliberately) doesn’t attempt to seriously reduce the typical level of non-citizen immigration to New Zealand.  But it does take some steps that will help modestly raise the average skill level of those coming to New Zealand.  But the changes are small, and don’t address the medium-term challenges around non-citizen immigration to New Zealand.   Even given the desire to continue with large-scale non-citizen immigration, the government could easily have gone much further in increasing the focus on the really skilled and able people whom we might be able to attract.      I’m not sure why they won’t.  Probably they are too influenced by short-term employer pressures –  which are real, but which change if overall immigration policy is changed enough (because overall demand abates too) –  and by the siren call of high headline GDP growth.  All while the tradables sector, productivity, and per capita living standards do badly, and –  since the government refuses to do anything serious about freeing up land supply for housing, even when the votes are on offer  – the house price pressures just get worse.  It all works most against the younger and poorer New Zealanders, but isn’t helping most of the rest of us either.