Work Visa Updates (Vol…?)

Change is constant - never a truer word has been said in terms of the New Zealand immigration process and this week has seen more changes announced, which will take effect in March (just a couple of weeks away). These updates were foreshadowed in previous announcements so don’t come as a significant surprise, but of course it is always interesting to see the details when they finally land.

So, this week we will be taking a look at the key changes being released, what they mean for applicants and how this might all develop in terms of some of our other immigration policies, particularly as it applies to Residence. Considering the bulk of these changes are in relation to Work Visa policy, which has a natural link to Residence, there are some clues to be extracted here - and we shall take a look.

The Details

Most of the changes released this week revolve around the Accredited Employer Work Visa system, and the biggest of them is the removal of the median wage (currently $29.66) for Work Visa applications. The median wage (or the earlier version of it) was used as a minimum threshold for Work Visa applications, meaning that regardless of the role, and unless exempt all applicants had to be paid this amount per hour.

Median Wage Abandoned

Median wage requirements will no longer apply to AEWV applications, instead the assessment will be based on a market rate.

Instead of median wage requirements, employers will now need to be able to demonstrate (if asked) that the rate of pay is at a fair “market rate”. This means a rate of pay that is consistent with the type of job, level of skill involved and comparable to rates of pay for other roles in the same field.

This is quite significant because it means that where previously employers may have to raise the hourly rate to meet this threshold, they no longer need to do that and can offer what they feel is fair and reasonable (and at or above minimum wage). This is a good thing, in my view, because using the median rate up until now has caused wage inflation, particularly during the period when we imported a very high number of AEWV applicants.

Applicants will still need to prove that they earn at least $25.29 to support a partner and AEWV’s issued under certain specific categories will also impose different thresholds in order for partners to secure a Work Visa, so there are still some conditions.

The minimum skills threshold for AEWV’s will also fall from three years of relevant work experience to two, which will make life easier for lower skilled applicants and employers no longer have to provide evidence of engaging with Work and Income, even though they might have to do, depending on the role on offer.

In addition to the above the minimum duration for an AEWV based on a lower skilled role will increase from two years to three, giving these applicants some more certainty and there will also be specific roles currently considered Skill Level 4 or 5 that will be increased to Skill Level 3 to give those applicants the ability to secure five year visas.

So a suite of overall very positive changes that improve the potential longevity of visas, unshackle them from the median wage and make for a slightly more compelling proposition for both employers and applicants.

Good News or Bad?

Change can often bring uncertainty and we are already fielding queries from people as to how these fairly broad set of changes might impact on them, however the reality is that for most Work Visa holders already in NZ, these changes wont make any difference. For those, yet to arrive, these changes will open up more opportunities.

Change is Inevitable

So are these changes expected and do they represent good or bad news for future applicants?

The bigger winners in this announcement are employers who will no longer have to be bound to the median wage threshold and can now offer salaries, particularly for those lower skilled level jobs that are at a fair market rate.

The interesting thing however is that the AEWV system has had a median rate threshold applied for so long, that the market rates for many skillsets have potentially been adjusted with those earlier settings. We know that wage rate pressure has been on the Government’s radar and so this is one way to gradually adjust that. For those employers who hire a lot of Work Visa holders, in those lower skill brackets who then don’t have to be paid $29.66 per hour any longer, there could be some challenges, when they hire new Work Visa applicants, to work alongside those arrived under the median wage threshold.

Employers could potentially face situations where portions of their workforce are on a higher rate than others, for doing the same job, under the same conditions, with the same experience and qualification requirements.

However, letting the market decide what salaries to offer, is ultimately the best option and whilst the median wage threshold was designed to create a proxy for skill and to ensure all migrants earned a sufficient income, it actually created nothing more than a line to cross and not every employer ticking that box was paying that hourly rate anyway (thankfully those sorts of employers are few and far between).

More To Come?

One really interesting point in all of this and something I have discussed in previous articles is the connection between the AEWV hourly rate and then the Skilled Migrant Category median wage threshold, which are actually two different numbers. To qualify for Residence under the SMC pathway, you often need work experience and depending on when you started in your role, that rate might be higher than the one you required for your Work Visa.

What Does The Future Hold?

The Government has already signaled changes to Skilled Migrant Policy, which should follow the general path of these recent moves.

This difference in rates is potentially going to cause some people to miscalculate their eligibility, and obviously signal disappointment and/or disaster for a number of potential applicants.

The Government really does need to fix that and to be fair the calculation of the median rates required over that period of New Zealand work experience is diabolically confusing. I suspect that this will be under consideration when the SMC system is reviewed, particularly now, given median wage rates have been dropped for the AEWV scheme.

There will still need to be some wage thresholds, particularly for those at the higher skill levels, and to create income based pathways to Residence, but you can’t really operate a broad SMC policy, which encompasses roles at all skill and salary levels, with one rate and then have people working towards them on a Work Visa that requires no set minimum rate.

There are a lot of other changes that need to be considered in that process as well, because the SMC system as it stands works for those at the higher skill levels, but creates somewhat of a challenge at the lower levels, with the need to work here for up to three years first. It has always been my view that we need to level the field a bit and recognise that skills coming in to the country, are skills all the same - regardless of the level of your qualification, income or training, if you work in a skilled position here, then that is worth recognising - let’s see what the Government thinks of that.

Need Some Help?

If you are considering the move and it would be likely that a Work Visa is going to be a part of that plan, then understanding how all of the above works for you and also the longer term goal of securing Residence (for those that qualify) is a great first step. Our team will work through that process with you, establish the pathways available and explain how each step can be achieved.

If you are in New Zealand on a Work Visa and think these changes might impact you, then reach out for a brief, confidential chat with us as well.

Until next week.