January 4, 2023

How Is the Government Addressing the Labour Shortages?

New Zealand's labour shortage isn't a new issue, it has worsened across the country due to the impact of Covid-19. What is the Government doing to address it?
How Is the Government Addressing the Labour Shortages?

New Zealand's labour shortage isn't a foreign issue to the Government, but it has worsened across the country and globally due to the impact of Covid-19. With many concerns and struggles to find employees, the Government is taking steps to address the worsening situation.

The Government wants to help the New Zealand immigration system align with a national goal of increasing NZ business productivity and supporting economic growth. The Government has already made changes in an attempt to rebalance the NZ immigration system, aiming to fill the skill shortages after the pandemic led to NZ's closed borders.

What Is Happening In the New Zealand Labour Market?

"Help wanted, inquire within!” – words that New Zealanders are now seeing so frequently across the nation.

Job ads show demand for labour is at record highs. This, combined with a record low number of people out of work (3.3% in June 2022), means it is getting increasingly harder to find workers.

The NZIER’s Quarterly Survey of Business Opinion shows firms are finding it very hard to recruit (hardest on record), and lack of labour is the biggest constraint to growing their business (meaning they cannot make or sell more products without more workers, which is a limit to business and thus economic growth).

This isn’t just a NZ issue, it’s been seen everywhere around the world because of the issues listed below….

The Shortage of Workers Around the World

As markets begin to stabilise and production levels are slowly rebounding to pre-pandemic levels, companies from around the world have yet another challenge to navigate: the ongoing labour shortage. In fact, there is estimated to be a shortage of 85 million workers around the globe by 2030. 

These are acute skill shortages and also a generalised labour shortage across skill and income brackets.

For New Zealand specifically we are finding reasons such as…

Mismatched Skills 

NZ Employers are reporting a mismatch in the skills advertised when applicants are applying for jobs, with a high proportion of applicants deemed to have a ‘lower skill level’ than the job advertised.

With fewer people to choose from, and only immigration now restarting, employers need to be resourceful. Possible solutions suggested are for companies to look at upskilling and implementing in-house training programmes to counteract this issue. However, this adds to the extra cost of onboarding new employees and is a longer-term solution rather than an immediate fix. 

Recovering From the Pandemic

Generally, there has been a labour shortage in New Zealand for quite some time.  However, due to travel restrictions implemented during the first stages of the pandemic and the resulting closure of New Zealand's borders in March 2020, this problem has compounded for New Zealand employers. ‍

Several industries are recovering to pre-pandemic levels. However, manufacturing companies are not working at full capacity. The manufacturing industry suffered a shortage before the hit of the pandemic. There were studies that predicted globally there will be 8 million jobs that could go unfilled by 2030.

Labour shortages, specifically due to the closure of our borders for two years, have reduced our pool of immigrants who have been supporting our businesses, which in turn significantly reduced our workforce.‍

New Zealand's workforce before 2020 had been topped up with migrant workers entering on visas such as the skilled migrant visa NZ. However, coupled with the after-effects of the closure, we are still seeing major employment gaps across the board and new immigration policies that have caused further delays for New Zealand employers, which are not expected to improve until 2023. ‍

New Zealand's economy desperately needs more people from overseas to fill vacancies. Immigration NZ introduced a Green List occupation list to prioritise some specific skilled labour roles. However, this is not a quick road to recovery for our Kiwi companies.

Worker Population Decline

Declining fertility rates will add to labour shortages over time, but the most recent factor has been the “Great Retirement”. There was a spike in most countries of what is referred to as “excess retirements” – the numbers retiring from the workforce at a higher rate than expected – during COVID.

How Has the Government Responded?

The Government is rebalancing New Zealand's immigration system to increase New Zealand's business productivity and increase the amount of highly skilled workers to support our economy's growth. 

The Government hears the concerns of businesses as they continue to find it challenging to recruit internationally in this constrained labour market. The cry for help to attract more highly skilled applicants to relieve labour shortages, is guiding the Government’s decisions to ensure they respond with a more competitive edge to attract talent to New Zealand.

What Is NZ Doing to Help Fix the Problem?

NZ immigration policy changes focus on reducing critical skill shortages and boosting the economy, which is approached through various work, investment and residency visa changes.

Reopening Key Categories

Skilled Migrant Category

“We are resuming the Skilled Migrant Category under the current settings to help attract more workers. The first selection will be at 160 points, and subsequent selections at an increased threshold of 180 points, to better align with the future direction of the category and our rebalance goals. 

The Skilled Migrant Category (SMC) visa was reopened and resumed (under the same settings previous to April 2020) on 9 November 2022. However, new and continuous changes are expected, as the Government's proposal has been submitted for consultation before it is implemented.

The October 2022 announcement included an increase in the points threshold from 160 to 180 from 18 January 2023.

INZ has proposed a simplified points system that sets a clear, fair, and transparent eligibility threshold for skilled residence.

Working Holiday Makers

In August 2022, the Government announced changes to increase access to working holiday makers, meaning more people can visit and work in New Zealand.

Capped schemes not yet filled had their cap doubled on 8 September 2022 and remain open.

The Government also announced that the closed schemes have specific re-opening dates, as listed below.

  • Malaysia - 8 September 2022
  • Uruguay - 13 September 2022
  • Argentina - 15 September 2022
  • Chile - 22 September 2022
  • Taiwan - 29 September 2022
  • China - 11 October 2022
  • Hong Kong - 18 October 2022
  • Brazil - 20 October 2022
  • Vietnam - 25 October 2022
  • Mexico - 27 October 2022
  • Philippines - 1 November 2022
  • Hungary - 3 November 2022
  • Slovakia - 8 November 2022
  • Austria - 10 November 2022
  • Poland - 15 November 2022
  • Lithuania - 17 November 2022
  • Peru - 22 November 2022
  • Turkey - 24 November 2022
  • Portugal - 1 December 2022

There are extra places for working visas added (and for schemes that are currently closed, extra places that will be added in the near future) for different working holiday schemes for various countries and territories, as listed below.

  • 3000 - Korea
  • 1200 - Czech
  • 1150 - Malaysia
  • 1000 - Argentina, China
  • 940 - Chile
  • 600 - Taiwan
  • 400 - Hong Kong
  • 300 - Brazil, Singapore
  • 200 - Israel, Mexico, Uruguay
  • 100 - Austria, Croatia, Estonia, Hungary, Latvia, Lithuania, Peru, Philippines, Poland, Slovakia, Slovenia, Thailand, Turkey, Vietnam
  • 50 - Malta, Luxembourg, Portugal

Parent Visas

The Parent Resident Visa restarted on 12 October 2022 and resumed selecting existing expressions of interest (EOIs) on 14 November 2022. 

From May 2023, EOIs can be submitted online on the Immigration New Zealand website.

Any EOIs INZ received from 12 October 2022 went into a ballot, with the first random selection from the ballot in August 2023, then every three months after that.

Introducing Streamlined Visa Processes

Accredited Employer Work Visa

The most common work visa, it replaces 6 previous work visas. The streamlining introduces more criteria that the employer must follow to show a commitment to hiring New Zealanders first, and ensuring their migrant workers are looked after and settled well into this country.   

As a part of the Government's rebalance announcement, the new Accredited Employer Work Visa (AEWV NZ) was introduced and requires employers to be accredited if they want to promote job vacancies overseas and hire migrants.

The Green List

The Green List Immigration NZ prioritises key roles needed to ensure the smooth running of the country. Attracting Medical professionals like nurses and doctors to grow the workforce alongside local graduates. However, this is not a quick road to recovery for our healthcare system. 

The Green List makes it easier for employers to attract globally in-demand workers to New Zealand, but it is not the only pathway. Employers can still attract skilled migrants through a pathway to residence under the Skilled Migrant Category.

Applying for a New Zealand visa doesn't have to be overwhelming. Reach out to our experienced immigration advisers for advice and guidance on the process.

Median Wage Exemptions

For an interim period, the Government has also implemented sector agreements to help employers fill skill gaps. These agreements allow some exemptions to the median wage requirements for hiring migrant workers under the AEWV guidelines for specific occupations and sectors. This allows employers in the specific sectors an extension of time in order to make changes.

The AEWV scheme requires employers to pay a median wage of NZ$27.76 for migrant workers to qualify for an NZ working visa. The median wage will increase to NZ$29.66 in April 2023.

IT Improvements

The Government's immigration rebalance strategy aims to increase New Zealand's productivity and value by advocating for businesses to increase their investment in new business models and labour-saving technology, where appropriate. As they limit the low skilled permanent workforce businesses will need to adapt if this workforce is their main source of productivity output. 

Support With Healthcare

There are several ways that the Government aims to improve the healthcare system and support New Zealand's growing and aging population. All of the health reform changes are designed to reduce the pressure on specialist and hospital care.

The Government has increased the budget for 3000 nurses and an additional 1000 healthcare places over a period of four years. They are also investing NZ$76 million to develop a primary healthcare workforce, including 1,500 training places for nursing, physiotherapy and pharmacy. 

Read more about how the Government is supporting the future of New Zealand’s healthcare system here.

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