Work Visa Updates - The Detail

The week before Christmas and all through the house, not a creature was stirring, not even a …. well okay, a few things were stirring, including policy makers within the halls of Immigration New Zealand. On Tuesday of this week, the Government rolled out a second round of changes to the Accredited Employer Work Visa (AEWV) system. The changes feel a a bit like the ghosts of Christmas past, with echoes of previous policy floating around and hints that we might be dropping some of the more rigid and almost unnecessary parts of the Accreditation process for employers, harking back to the old Essential Skills system.

The changes also come hot on the heels of some our most interesting net migration numbers, and whether that was a coincidence or possibly a little of bit of clever timing, is something to consider. Either way, the Government is clearly trying to steady the ship and rolling back aspects of the AEWV to policy settings of the past, without fully dismantling the system (a system that has cost a significant amount to implement).

We take a look at what is changing, why and what further changes might come about in the year ahead.

So What’s Changing?

Whilst the announcement was tagged as “Work Visa Reforms”, the changes were more like tweaks and adjustments around the edges. Most were relatively minor, but there were a few standouts that will have a more significant impact longer term. Bear in mind that we dont have the actual rule changes in final form yet, so the below does come with a few caveats in terms of what final details we might see.

Median Wage Removed - This is probably the most significant of all the changes announced, and it will see a return to more relevant “Market Rate” wage and salary assessments. The problem with using a minimum median wage threshold is that it doesn’t accurately reflect skill (as the previous Government intended it to) and creates potential wage rate inflation as well as wage inequality - migrants being paid the median to secure the visa, whilst locals might earn lower, to reflect the actual work involved. However, the alternative to this, which we will see in the new year, is the use of “market rates” (along with minimum wage) which does mean officers will have to consider whether the salary being paid is fair and reasonable for the work on offer. This essentially takes us back to the way salary was assessed under previous Work Visa rules.

New Earning Threshold - There already exists an absolute minimum salary required for an eligible Work Visa holder to support their children, which hasn’t been reviewed since 2019. This will be increased to $55,844.00 per year, which makes sense. This ensures that Work Visa holders, regardless of their role here, are earning enough to cover the basics, to support their children. This equates to about $27 per hour, so not unreasonable at all.

Reducing Work Experience Requirements - To slow down low-skilled migrants from pouring in to New Zealand, the Government introduced minimum skill thresholds for applicants, including a three year work experience requirement (where there was no suitable qualification, along with a minimum English standard. The English requirement appears to be staying, which makes sense, but the three years is being reduced to two years. Not a major change, but does allow for industries such as hospitality and agriculture to select from a bigger pool of potential applicants. Given most skilled applicants need to have relevant quals, registration or experience, this doesn’t really have any impact on those looking to come here for Residence.

New Seasonal Worker Pathways - From November 2025, there will be two new pathways for seasonal workers, which will offer a three year or seven month visa for those who work on this specific industries. This will potentially tidy up the seasonal pathways that exist now, and give some employers in those sectors a lot more certainty over having staff longer term. Clearly this one hasn’t been fully thought through, given the delayed roll out date.

Visa Duration Increases - Currently lower skilled applicants are given a two year Work Visa, with the option to then renew for a further year. In the future, these visas will simply be issued to a maximum of three years, which tidies up an unnecessary splitting of that visa duration. Again this is just giving those employers and candidates a bit more security and potentially saving INZ a bit of time in the process. Visa lengths for higher skilled roles or those on the Green List, remain at five years.

Work and Income Engagement - Currently for roles that are lower skilled, employers need to advertise through usual channels and then formally engage with Work and Income (our employment and benefit agency) to try and find local candidates. Given the Work and Income process very rarely results in a local candidate being hired, INZ will in the future rely on a simple declaration from the employer that they have done this, rather than needing formal proof. The 21 day advertising requirement for these roles will also be removed.

Greater Work Rights for Interim Visas - This is a more significant change, because for many applicants currently, moving between Student Visas and Work Visas or even between different Work Visas, who end up on an interim visa in the middle, there are no work rights issued. This will allow applicants to maintain their employment pending a Work Visa decision and also removes some employment law issues at the same time.

Employment Modules for Employers - When employers sign on to the Accredited Employer scheme, they are required to undertake very simple employment law modules as part of their compliance process. This has always been seen as a bit of a waste of time, because most employers already know this stuff or can get easy access to the information.

Reducing Domestic Workforce Threshold - The requirement for the domestic workforce in certain construction roles to be at 35% will be reduced to 15%, which means a greater number of migrants can be employed in those roles. This reflects the potential need for those applicants as some very large infrastructure projects slowly come online and avoid the potential panic recruitment process in that sector.

Labour Market Test Changes - Something that wasn’t specified in the announcement, but is in under consideration is a redesign of the Job Check process for “low-risk” employers. This suggests that in the future a low-risk employer (we have yet to see how that is defined) may not have to jump through the current hoops to bring in staff. This is akin to the previous Accredited Employer scheme, which didn’t have that Job Check step, where the employer had proven to be genuine and established.

Why The Updates?

The timing of these announcements was interesting, most notably because they aren’t all being rolled out at once. Some changes are being introduced early in the new year, others follow a few months later and some are even scheduled for near the end of 2025. So this was an announcement of things to come.

Planning Ahead

These changes come hot on the heels of weak net migration figures, suggesting we might be planning for future skill shortages.

There is a good chance that some of the more meaty changes (particularly the new Seasonal Worker Pathways) haven’t been fully designed yet and so this was simply a way to let those industries know that change was coming and to quell a few concerns along the way.

While the economic signals here, paint a difficult picture, the reality is that there are plenty of sectors who continue to struggle in filling vacancies and so the migration system needs to be ready to address those challenges. Also, given very recent, weak net migration data, that shows new arrivals falling and exports (Kiwis leaving) on the rise, I suspect the Government is very aware of how that might look for employers as we work towards a positive bounce in the economy.

The timing of these changes, which are effectively all geared towards loosening up the system, tie in very nicely with that weaker net migration data, and send a signal that the process for employers and applicants alike is about to get a bit easier, without opening the flood gates to too many lower skilled workers. There are still enough barriers in place to ensure we get a better mix of skills, but taking out some of the silly stuff.

It also feels very much like the Government caught between a bit of a rock and a hard place. Ideally, you would dismantle the AEWV system in full, and then rebuild it, using a combination of current and past criteria. Cut out the immigration waffle and have a simplified system that allows employers to hire effectively, without removing opportunities for locals and keeping exploitation at a minimum.

However, given the enormous investment in the tech that sits being the AEWV system, the money already spent by employers to become Accredited and the fact that a rebuild would require more investment and more human resource than INZ has available, these tweaks and adjustments are the only real option.

Where To From Here?

It is becoming harder to predict with each new set of rules, where this is all going, but there are a few clues in this recent announcement as to what we could see happening in 2025.

The first is in relation to the median wage, which will be dumped for Work Visas. The current coalition (particularly the ACT party) have always maintained that the median wage is a poor proxy for skill levels and it is. However while the Work Visa settings will be changed, nothing has been mentioned in terms of the Skilled Migrant Category (SMC). The irony is that the SMC system uses a different median wage and there are going to be a fair few people, tripped up by that different (between current Work Visa settings and SMC) when they eventually go to apply for Residence.

So the SMC wage requirements would be the next logical thing to fix. I suspect we might see some wage limits remain for roles on the Green List, which act as more of a volume/quality control, but for the points based SMC, a move to market rates would make sense and ultimately make that policy a lot easier to assess and manage.

The current work to residence system that the points based SMC uses could also be changed, because it removes the certainty that the previous SMC system provided. It also is unbalanced because some occupations that are highly skilled, have to work for longer to secure Residence than others that might be considered less value add.

Changes will come to the Accreditation system and my pick is a move towards a less onerous more “trust-driven” set of policies that enable more established employers with a good track record to manage their own processes and enjoy a faster, more simplified visa system. This makes a lot of sense because currently all employers are treated with the same degree of suspicion and that creates an awful lot of unnecessary work. Removing the modules, making the process more declaration based, is a small but steady move towards that.

There could be a lot more in Santa’s sack for 2025, but for now we can at least be encouraged that these recent changes will make life a bit easier for most applicants and employers and potentially signal more easing to come.

For now however we are all looking forward to the end of the year and the holiday season. The Turner Hopkins team will be taking a break from Friday 20 December 2024, through to 13 January 2025.

We would like to wish all our readers and clients a very safe and happy holiday season, no matter where you are or how you celebrate; and remember if your new years resolution is to plan a move to New Zealand, then we will be here to assist.

Until next year!