Work visas for shop managers

We learned yesterday that the firm that owns Burger King in New Zealand has been banned from using migrant labour (ie people on work visas, not resident non-citizens) for a year.

The penalty was imposed on Burger King not, it is reported, because of a migration-related offence, but because the company was founding guilty of breaches of the minimum wage laws in respect of someone (reportedly not on a work visa) working as a store manager.  A company that can’t be relied on to follow some aspects of labour law probably isn’t the sort of firm that should be counted on to treat short-term migrant labour well.  So even though I think our minimum wage is (relative to nationwide productivity and median earnings) too high, I’m not bothered at all by the ban.

But surely the bigger question that should be addressed to the government is why companies are able to use “migrant labour” in such modestly-skilled low-paying roles at all.   As a reminder (and complaining again about the inordinate delays in MBIE releasing timely data), in 2016/17 these were the top four occupations for the principal applicants in the Skilled Migrant category of our residence approvals programme  (in other words, the cream of the crop).

Main occupations for Skilled Migrant Category principal applicants, 2016/17  
Occupation 2016/17
Number %
Chef 684 5.7%
Registered Nurse (Aged Care) 559 4.6%
Retail Manager (General) 503 4.2%
Cafe or Restaurant Manager 452 3.7%

 

And among those who got (so-called) Essential Skills work visas

Number of people granted Essential Skills work visas by main occupations, 2016/17
Occupation Number %
Chef 2,178 6.6%
Dairy Cattle Farm Worker 1,617 4.9%
Carpenter 1,478 4.5%
Retail Supervisor 961 2.9%
Cafe or Restaurant Manager 942 2.9%
Retail Manager (General) 767 2.3%
Aged or Disabled Carer 748 2.3%

Large numbers of people who appear to have no particular qualifications or specialist expertise, doing jobs that often don’t seem to pay much more than the minimum wage (when the law is being followed at all –  and it is widely known that there are much more egregious cases than the Burger King example, where migrant workers are required to pay back, under the table, much of any salary as a ‘fee’ for getting them into New Zealand.)

There is an argument that some economists make that we can gain economically by letting in lots of quite unskilled people.  Even economists think such an approach is likely to leave lower-skilled natives worse off.

igm lowskilled

As I noted last year, commenting on one UK academic who celebrated the possibilities of lots of low-skilled migrants (lowering the costs of cleaning, childcare and so on)

What Bateman is in fact arguing for is a policy designed to explicitly help people like her, at the expense of poorer less highly-skilled Britons (in fact, in the roles she talks of typically poorer relatively unskilled British women).  No one person is ever an exact substitute for another, but there is a great deal of overlap.    Even though she never says it, what Bateman is arguing for is a policy designed to increase the differences in incomes between the highly-skilled and the less-skilled –  for the comfort of the highly-skilled (women and their spouses).

Many advocates of a fairly liberal approach to immigration like to downplay the possibility of any costs to low-skilled natives of the recipient country, but Bateman’s argument relies almost entirely on those costs.  Reasonable people can debate how large the actual adverse effects are, but Bateman clearly believes they are large –  that is why, in her view, immigration makes things so much easier for people like her.     And she can’t even be arguing  –  as some might –  that it is just a transitional effect, or otherwise the possibility of outsourcing domestic duties cheaply would soon go away again.  So it seems to be a vision of society that involves repeatedly importing new waves of lowly-skilled immigrants to keep the relative returns to low-skilled labour sufficiently low to make life comfortable for the professional classes.

Whatever the other arguments for and against immigration, it is hardly surprising that citizens might rebel against a proposal to bring in lots of foreigners to widen the income gaps in society –  not just those between nationals and non-citizen foreigners, but those between skilled and unskilled nationals.   Sceptics of other economic reforms will argue that some of those changes also had that effect, but even if so (which I mostly dispute) it was never the intention, or the envisaged long-term effect.  By contrast, Bateman’s argument is in effect for using immigration to maintain a permanent class of helots –  not always the same specific people, but a constantly refreshed pool of people able to earn relatively little, because of the direct competition fron unskilled new arrivals.

Of course, this isn’t the (avowed) approach of the New Zealand immigration programme, which is supposedly mostly about skills –  highly able and talented people, building on what is already here (inadequate as the advocates believe that is) to lift the productivity and incomes of us all.

But that story has long been threadbare.  The evidence for the productivity gains is non-existent (in a country whose productivity continues to drift further behind that of other advanced countries) and instead we import large numbers people with few very obvious skills, too often doing jobs which appear to pay not a lot more than the minimum wage.  It is a rort against New Zealanders.

Now that the government is falling over itself to pander to business interests on anything not central to its own (mostly economically damaging) agenda, there is clearly no chance of any sensible immigration reform under this government (any more than under its predecessor). If anything, talk of regionalising immigration policy would make things even worse.  But for what it is worth I repeat my suggestion around short-term work visas, which would get bureaucrats out of the rationing business, and rely more heavily on the market.

Institute work visa provisions that are:

a. Capped in length of time (a single maximum term of three years, with at least a year overseas before any return on a subsequent work visa).

b. Subject to a fee, of perhaps $20000 per annum or 20 per cent of the employee’s annual income (whichever is greater).

If it is really worth it to a firm to pay a $20000 annual fee on top of a salary to have someone on a work visa, well and good.  But that doesn’t seem likely for very many of the sorts of jobs that top the work visa occupational list.

And recall that markets can and will adjust.  The Canadian federal Minister of Immigration spoke at Victoria University the other day (I hope to come back to his address in greater length later): Canada is in the process of over-leaping New Zealand to claim the dubious crown of largest (per capita) planned migration programme in the advanced world.  The Minister told us lots of stories about skills shortages, and “desperate” needs for workers (in a country with an unemployment rate of 5.8 per cent) –  we heard several times about an apparently desperate need for “50000 truck drivers right now”, and yet never once did the Minister address or even mention the typical market adjustment mechanism: when demand for a resource is scarce, the price will tend to rise to encourage resources to move to meet the demand.      If it is hard to staff fast-food restaurants, or dairy farms, or rest homes, it is a sign –  in an economy that is, at best, only sitting around the NAIRU – that workers in those roles aren’t being paid enough.  It really is (almost) as simple as that.

26 thoughts on “Work visas for shop managers

  1. Spot on as usual, Michael!

    One of the most important lessons I learned at engineering school is that “there is no free lunch”.

    One of the consequences of having a high rate of immigration is that our infrastructure – particularly roading – gets overwhelmed. In Auckland at least, the resultant congestion has caused productivity to be considerably worse than it would have been had there been only minimal immigration — of really highly skilled people only. Traffic congestion has caused those of us already here, or born here, to be significantly less productive than we would otherwise have been.

    Liked by 3 people

    • Immigration is typically pointed at migrants as the culprit but the reality is the anti-migrant sentiment is the result of the extremely poor guidance from our economists. Unfortunately our economy is pointed towards services rather than manufacturing. A Services economy require more low skilled people than manufacturing industries which can be mostly automated these days.

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      • The government is trying to balance their budget with an aging population that increasingly requires more and more care. They need foreign currency export GDP that translates to taxable dollars that they can spend. Unfortunately tourism and International students are a $15 billion export GDP industry that readily translates to Domestic GDP in several multiples which translates to GST and PAYE in the hands of the government. 70% of the governments revenue will come from GST and PAYE to cover Health and Social Welfare that is now 41% of the governments expenditure.

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  2. What about business investment class: Owns Mercedes Sprinter Van/ owns coffee shop in mall/ owns motels.
    In tourism Chinese and Korean speaking drivers have found efficiencies at the expense of those born to an English speaking environment? Not once have I heard Paul Spoonley mention the tourist industry other than: “how will businesses in Queenstown get staff?”. He mentioned golf in relation to Koreans, but what is golf in comparison to our tourism industry?

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    • Prof Spoonley does know many facts about immigration. He disagrees with you and I suspect most Kiwis (both native and immigrant) on where the quota for immigrants should be set. He prefers high volume and most of us prefer more caution.
      However having attended one of his lectures a few years ago I can assure you he knows little about sport. Prof Spoonley said Maori don’t play golf when our only recent winner of a golf major was Michael Campbell who according to Wikipedia “”Ethnically, he is predominantly Māori, from the Ngati Ruanui (father’s side) and Nga Rauru (mother’s side) iwi. “” He then went on to tell us that Asians will never play rugby league and every follower of the game knows rugby league’s most famous Kiwi player is Shaun Johnson. According to Wikipedia “”Johnson’s mother is Laotian and his father is a Pākehā New Zealander “”.

      This ethnic stereotyping is just embarassing. Although Prof Spoonley’s being pro-ethnic diversity is not directly dangerous whereas stereotyping is dangerous in some of the anti-immigration parties in Europe with their fringe of outright racist supporters. I prefer this blog where immigrants are treated as economic units and the pros and cons of immigration are discussed without ethnic grouping which invariably lead to categories with so many exceptions as to be meaningless. For those who like ethnic categories it was interesting to learn in an earlier post that if you join the Reserve Bank of NZ you will be assigned to a unique ethnicity. It will stop Shaun Johnson applying for a position if he has to decide who he identifies with most: his mother or his father.

      From yesterday’s NZ Herald: “”Korea has become attractive in a broader cultural sense, Spoonley said.””. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12114853
      He didn’t explain how South Korea managed to be cool and successful with minimal immigration but NZ desperately needed diversity.

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      • To quote Paul Spoonley

        The thing which really annoys me at the moment is the way immigration is framed as a problem.It goes to Alis point [the arguments against immigration are unsustainable] It’s a very simple and inaccurate response to what’s happening in the world. We are globalising; we are part of a new era of globalisation and this country is actually transitioned into that, particularly with it’s connections to the Pacific and Asia in a way that is quite impressive in many, many ways but at the same time we really need to reframe what is happening or provide an understanding and that’s what frustrates me at the moment.

        http://www.radionz.co.nz/national/programmes/smarttalk/20170813

        notice how he avoids saying that globalisation is beneficial instead he uses impressive.

        As Spoonley notes, “The dominance of British colonial links saw explicit ideologies concerning ruler and ruled reproduced in the New Zealand context.” Spoonley sees these as focussed in part on British notions of superiority and the right to rule over others, which had relevance in the New Zealand context as the local elite had visions of their own colonial empire in the southern Pacific. Ideologies centred on ‘race’ “were critical to the political agenda (in New Zealand) from the 1870s. . . through to the Second World War.”[49] Indeed he argues that racism against groups such as the Chinese “dominated national politics at various points” and were bound up with “petty-bourgeois beliefs that ‘race’ was a key variable in political and economic relations.”[50]

        Analysing the White New Zealand policy: developing a theoretical framework. Marxism. Immigratiom.

        http://rdln.wordpress.com/2013/12/17/analysing-the-white-new-zealand-policy-developing-a-theoretical-framework/
        by Philip Ferguson

        There is your argument against nationalism human nature. As David Goodhart pointed out we are “anywheres” (Spoonley said he recently had a job offer with very good superannuation in Melbourne) and “somewheres”, those to whom to whom people and place aren’t fungible.

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      • You can have globalisation with minimal permanent immigration (eg South Korea). There are good reasons for families to be better than communes; kibbutz tend to fail. Similarly the nation state still works better than alternatives. Maybe something to do with knowing who is responsible and being able to act on that knowledge.

        The idea of globalisation with state boundaries dissolving is an attack on the welfare state. However right wing or conservative most of the contributors to this blog site are they generally approve of free schools for their kids, free hospitals when they are ill, adequate transport facilities, honest police and honest legal systems. All of these are features of a welfare state. Without a family to protect you and a nation state to defend you it is a dog eat dog existence.

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  3. “”we import large numbers people with few very obvious skills, too often doing jobs which appear to pay not a lot more than the minimum wage. It is a rort against New Zealanders.””

    That says it all. Clearly there are talented immigrants who add value to NZ. The question is are they out numbered by those of ‘few obvious skills’. Surely the simple answer would be to compare IRD annual earnings with work visa and summarise the results. If immigration is doing NZ good then the average immigrant would be earning well above the average Kiwi.

    Liked by 1 person

    • Kiwis only work if the wage in substantially more than the social welfare payments. Otherwise might as well head up north where there is no work available and Social Welfare can’t find you a job, sit all day on a beach fishing and surfing when the waves are up.

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      • You have a point. A couple of years after I arrived I noticed that with working for families and I think it was student allowances my effective rate of tax on each extra dollar earned as a self-employed programmer was taxed at over 65%. Didn’t make me rush out and print business cards and search for more work. Something similar applies to one of my children today. Their partner is looking after the baby and working 10 hours per week; I do not know their precise circumstances but WFF and the cost of quality child care does seem to be a disincentive to getting more work. Checking the family allowance calculator the entire family would be better off if our children and grandchildren moved out of our house. Fortunately we can afford to keep our family together but the some families poorer than us are probably being broken up by the nature of our benefit system.
        When I was young in the UK they had universal child benefit and I think both parents getting a tax credit for each child. That does seem more rational but presumably would require a significant increase in tax rates and now most voters don’t have children to support it is unlikely to ever return. So the new normal is ever more under-employed Kiwis, fewer children especially for the middle classes and lots of immigrants.

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    • In the services industry, the latest DARPA robot competition shows how inadequate service robots still are. Opening a door with a round handle still takes a million dollar robot to struggle to achieve.

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      • Putting tablets on tables so customers can place orders themselves and less waiters are needed is the sort of thing I’m thinking about.

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      • I guess when you do that to a top restaurant, you call it a Macdonalds? Would a tablet clean the tables and wipe the floors after a spill? I was in Disneyworld in Japan and there were 5 people in attendance of every beverage spill. 3 security guards and 2 wiping the floor. For a country that leads the world in service robots, they still depend largely on people for the cleanup. The singing and dancing entertainment that needed white caucasian actors were fully automated though.

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  4. getgreatstuff wrote “The government is trying to balance their budget with an aging population that increasingly requires more and more care. They need foreign currency export GDP that translates to taxable dollars that they can spend. Unfortunately tourism and International students are a $15 billion export GDP industry that readily translates to Domestic GDP in several multiples which translates to GST and PAYE in the hands of the government. 70% of the governments revenue will come from GST and PAYE to cover Health and Social Welfare that is now 41% of the governments expenditure.”

    It is noteworthy that inowhere in yesterday’s Croaking Cassandra blog, “A country is not a company”, did anybody mention the most fundamental difference between a sovereign country and a company is that a sovereign country can issue its own currency. This negates the very idea that a sovereign country has to balance its budget. The sensible upper limit to a sovereign country’s currency (money) creation is the availability of physical resources, including labour, materials and capital equipment.

    Given that banks create money ex nihilo when they grant loans, it makes no sense for a sovereign government — or for that matter any local government in a sovereign country such as New Zealand — to ‘balance its budget’ by borrowing from trading banks rather than ‘borrowing’ from the country’s very own central bank. The hard part for the sovereign country’s people (if only they understood economics properly — and neither Jacinda Ardern nor Grant Robertson does) is that we have to pay tax so that our government can pay interest to the trading banks, whereas had our government ‘borrowed’ from our central bank, there would, in effect, be no interest to pay. When new money creation causes competition for resources, the inflationary effect is the same whether the new money is loaned into existence by trading banks or spent into existence by a sovereign government.

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    • There is nothing stopping a company from also issuing their own currency. If you stop by Showgirls or the Penthouse or The Whitehouse strip clubs you can only use currency issued by those clubs. In fact as the girls do work and frequent these same clubs they would accept the different currencies of each of those clubs. Similarly Skycity casino issues its own currency, ie the gambling chip which can be used as tips or to purchase food and drinks or even to pay the hotel accommodation.

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    • I am always surprised that the quote “banks create money ex nihilo when they grant loans” comes up in economists warped view of the world of finance. I do not disagree that banks will write up loan contracts with their customers and therefore in effect create money but they also have to balance that with the savings deposits that they receive from savers whether it is local savers or offshore savers. Finance is always ultimately a zero sum game. If it is not then usually it is called fraud and someone inevitable ends up in jail. A bank operates more like a warehouse where it collects savings from numerous savers bundle it and lend it out. Two separate contracts are drawn up in the exchange. You can liken a bank to a warehouse and distribution company where you have a a sales team write up sale contracts separately from the warehouse that buys product from suppliers. A distribution company can write up as many sales contracts as it likes but the expectation is that you will need to have a warehouse full of that stock to deliver at some time. The books must always balance. There may be lag times but delivery is always expected. Failure to deliver leads to fraud.

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      • That’s why when a bank goes belly up they do not call economists, they call in accountants. Most economists can’t even read a Balance Sheet or even understand the fundamentals of finance and put out one sided literature. Finance is always a zero sum game or as Lehman Brothers found out that if you push the money creation contracts too far and are not able to meet your obligations because your deposit warehouse is empty it is called fraud(or in nicer terms overextended trading obligations) the authorities will shut you down.

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  5. The low wage immigrant can really suffer. See https://www.tvnz.co.nz/one-news/new-zealand/filipino-worker-came-christchurch-better-life-but-alleges-abuse-exploitation-speaks

    In PNG some Filipino workers were superb and some dreadful (result of shady recruitment agencies). If we need Filipino builders in Christchurch and I expect we do, then ensure they are well paid. If you pay somewhere near the going rate for an experienced builder that might be $40ph; earn that and you will be respected not ill-treated. It is easy for INZ to match IRD returns with visa approvals.

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