11,000 employers desperate to import 53,000 migrant workers as the labour drought hits business growth
Friday, 16 September 2022
Hamilton businessman David Hallett prides himself on paying well, but he could not match the six-figure pay rises offered by overseas headhunters who picked off some of his top people.
The co-founder of software developer Company-X says growing acceptance of remote workers has created a hugely competitive global job market, and Kiwis poached by wealthy United States businesses can continue working from home in New Zealand.
“My joke is, they go to bed one night and wake up the next day with a new employer, working from the same desk in their office, and just getting paid twice as much.”
The struggle to find and keep staff is repeated all over the country in many industries, and just under 11,000 employers have applied for accreditation to bring in almost 53,000 migrant workers.
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The battle for bodies
A recent survey of Employers and Manufacturers Association members showed about 65% regard lack of labour, skilled or not, as the single biggest handbrake on growth, and head of advocacy Alan McDonald says an influx of migrant labour to counter our low unemployment rate can’t happen fast enough.
“We’re seeing shortages everywhere, in all sectors, and at all levels. We know of factories running one shift instead of two because they can’t get people. We’re 1200 truck drivers short in Auckland alone, and the ag sector is screaming out for people.”
Hospitality can fill gaps with relatively unskilled labour, witness school students as young as 12 waiting tables and washing dishes in Queenstown, but that is not an option for many other sectors.
The Infrastructure Commission estimates that by 2024, New Zealand will need about 118,500 more construction workers to tackle $64 billion worth of infrastructure projects planned over the next five years, and it says we face stiff competition from Australia where weekly wages are on average $500 higher.
Civil Contractors New Zealand represents more than 700 businesses, and the vast majority of those surveyed in August were hiring. A fifth would recruit 10-plus staff if right away they could, and 10% would hire more than 20.
Civil Contractors chief executive Alan Pollard says employers would not go to the considerable expense of bringing in overseas labour if there were sufficient candidates here, and they are prepared to train up less skilled people up if necessary.
Poaching has been rife in the tech industry, but Hallett is loath to go there, and rather than hire experienced staff from other New Zealand companies, he has set up a team of four in Melbourne which he plans to expand.
Most of the Company-X team of 56 are in Hamilton, but a good portion are remote workers scattered from Queenstown to Auckland, with a couple of “digital nomads” based in Asia, and two in the US.
Hallett says building a culture where remote workers feel connected to their colleagues makes them less likely to be lured away by the promise of a bigger pay packet.
“If you don’t actually meet anybody who’s in your company and don’t develop relationships, if somebody does try to attract you to their business … well it’s a pretty simple decision if you’re just looking at the dollars.”
The cost of vacancies
MHM Automation (formerly Mercer Group) grew 30% last year and has $60m worth of orders; everything from cheese-making equipment for Brazil, to large chillers for American meat companies.
But chief executive Richard Rookes says their biggest challenge is a lack of highly skilled fabricators, project managers and software engineers.
The company has 180 staff across three sites in Christchurch, Hawke’s Bay and Brisbane. It already outsources some manufacturing in the US, and Rookes says may have to look at extending that.
“On the chilling and freezing side of our business we’re telling customers that we won’t be able to start looking at any work for them until well into next year.”
Stats NZ reported a net migration loss of 12,400 for the year ended July, and Rookes says highly skilled young people kept here by the border closure are now heading overseas.
“There’s a bow wave of them that have not gone in the past few years, and we’re certainly not seeing the immigration coming into the country to soften the blow and fill up that gap.”
Smaller businesses, such as Christchurch engineering firm Lowes Industries, are suffering too.
The company services cranes and builds hazardous goods tankers, and general manager Stuart Metcalf says the fact that its current workforce of 32 is about 10 people short has significantly affected revenue.
Lowes competes with the likes of boat builders for aluminium fabricators, and Metcalf says six of the skilled roles they need to fill are not on the “green list” that gives migrants a pathway to residency.
“For anybody wanting to shift their family over here, that’s a fair bit more certainty.”
Chronic labour shortages are taking a toll on worker wellbeing, according to Francois Barton, executive director of the Business Leaders’ Health and Safety Forum.
In the last week, heads of construction, transport, utility and food companies have told him they are 25% short of people, and one chief executive feared fatigue would “lead to injuries or worse, either at work or on the way home.”
A meat company at least 500 workers down on its usual workforce reported that animal welfare and farmer demands made it difficult to drop production.
“The net result is that some workers are volunteering for extra shifts that have seen some work more than 30 days straight, with little light on the horizon that things will get better,” says Barton.
“Despite good fatigue management, good safety systems, and best endeavours to source workers in New Zealand, the pressure on these workers isn’t diminishing.”
Screening out ratbags
Immigration Minister Michael Wood says the Government’s immigration reset is designed to address immediate skill shortages, while moving away from the old system which relied on large volumes of low wage labour, and led to unacceptably high levels of migrant exploitation.
The new accredited employer work visa is supposed to streamline the process of attracting candidates on temporary work visas for skilled hard-to-fill occupations, and screen out ratbag operators.
Getting the tick is not difficult – an employer declares that the company and its managers comply with New Zealand laws, and anyone involved in recruitment decisions has to complete online employer training modules.
The total number of accredited employers is eventually expected to surpass 36,000, and there is currently no publicly available list of who has made the cut (Stuff was told it would have to apply for the list under the Official Information Act).
The new rules are capturing a lot of “newbies,” and almost 80% of the 10,439 approved to date had not previously been accredited.
Only one employer, a franchisee operating less than the mandatory 12 months, has been declined out of the 10,439 accredited so far.
That includes 34 who have served stand down periods imposed by the Labour Inspectorate for breaching employment standards, such as failing to pay minimum wage.
There are 619 companies currently on the stand-down list, which prevents them from hiring migrant workers, but Immigration says they can be accredited as soon as the stand-downs are completed.
In the case of stand downs for immigration offences, employers must demonstrate they have rectified any issues and taken sufficient steps to prevent them happening again, and officials are considering extending this approach to breaches of employment standards.
The job check process requires accredited employers to show they cannot find New Zealanders to fill vacancies, and they have to pay at least median wage of $27.76 an hour, unless the job is in an exempt sector, such as construction, aged care, tourism, and meat processing.
Since late May, Immigration has approved 6834 job checks for 45,488 positions, and since work visa applications opened on July 4, about 40% of the 6051 visa applications from migrants have been approved.
Is the immigration “reset” working?
The green list of 85 jobs gives skilled migrants a “straight to residence pathway” after two years working here, and this also applies to migrants earning twice the median wage.
Wood has committed to reopening the skilled migrant visa category, but he has not put a date on it.
In response to complaints that the settings don’t do enough to fill many unskilled positions, he argues that lower skilled, lower paid job vacancies can be filled by working holidaymakers, students and partners of migrant workers.
Employers have criticised the narrowness of the green list, and say Immigration’s slow processing is a big issue.
Rocket Lab expects to recruit 50 workers for the New Zealand end of the aerospace business and communications director Morgan Bailey says the job check process can take up to 10 working days.
In the current labour market top international talent usually has multiple offers, and to secure these people, she says they need to be able to confirm a job offer in 24 hours.
McDonald says the green list creates “winners and losers” and he is unhappy it will be reviewed in 12 months before being set in stone for three years.
“That’s far too long because things shift fast in business, and immigration needs to keep up with business and not the other way around.”
Labour hire company ELE Group was an accredited employer long before the latest changes made it compulsory, and chief operations officer Alan Roberts says demand is so high they plan to bring in 400 construction workers by the end of March.
Separate job checks for each role are required if locations, titles or terms of work vary, with each check carrying a $610 fee.
Roberts says that landed the company with a $61,000 bill when it set out to recruit 100 carpenters for 10 different regions, and he is not impressed that employers previously caught breaking the rules have been accredited.
“It beggars belief if you think about the black list that’s paraded around by the Government, if you get onto it, it should be difficult to get off.”
Helping new arrivals
Accredited employers are also expected to provide more support for migrant workers, giving them information about finding accommodation, accessing health care, and using public transport.
Mikee Santos chairs Migrante Aotearoa, a non-profit organisation supporting Filipino workers, and he is concerned about difficulties accommodating migrants flooding into the country at a time when housing is tight.
Pre-Covid, there were instances of migrants being ripped off by so-called “pastoral care” providers, and herded into substandard accommodation, such as the 22 cabins housing up to 60 workers in a former south Auckland bingo hall.
Roberts says his company leases properties to house workers for three to six months until they find their feet, and has its own team to manage migrant worker assistance.
Pastoral care contractors had been a “blight” in the past, and he says the industry has raised this with Immigration as an area of concern.
Santos says skilled migrant carpenters paid $23 per hour before Covid-19 hit are now earning more than $30, and the labour shortage incentivised employers to treat their staff well.
It bothers him that construction workers are exempt from the median wage threshold, and he worries the $25 per hour minimum pay rate will see wages stall, or even go backwards when a “tsunami” of migrants arrives next year.
Our scruffy welcome mat
McDonald claims New Zealand has been caught napping by Australia which has announced it is issuing an extra 35,000 permanent visas this year, and spending an extra $36m to speed up visa processing.
“They’re plucking people out of our immigration queue and saying ‘if you really want to go to New Zealand, come to Australia first, and in five years from now, you can get into New Zealand.’
“That’s crazy, they were accusing us of being a back door [to Australia] a few years ago.”
McDonald says lack of certainty about residency is a major deterrent for prospective migrants considering uprooting their families to shift here, and he gives the example of a recruiter who used to fill several hundred jobs at a job fair in the UK.
“They went there not so long ago for the first time in three years looking for 300 [people], they got 30 applicants, and only eight came through.”
Immigration lawyer Aaron Martin agrees New Zealand looks way less attractive than our trans-Tasman neighbours.
“Australia is rolling out the red carpet to skilled migrants, while New Zealand has put out a dusty old doormat.
“Australia outlined a pathway to residency and made it easier to get a visa, plus it also offers better pay, cheaper house prices and a lower cost of living.”
Martin says our Government appears stuck in the mindset that employers should be reducing their reliance on migrant workers, and talent will be snapped up by countries taking a more progressive approach.
“The philosophy of Australia is completely different. For them, it’s not about reducing reliance, it’s about the very realistic approach of understanding what resources are needed to help their economy grow.”