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.