National Immigration U-Turn Condemns New Zealand to a Low Wage Economy

This morning National signaled a u-turn on their proposed changes to immigration. Even Winston seems to have backpedalled to kowtow to the farming lobby. This back down is yet more proof that the Government’s real agenda here is to keep wages down at the bottom end of the job market. Looks like the low wage economy is here to stay. 

What is a “Skilled Worker”?

For many years both Labour and National governments have tried to get our immigration system to attract skilled people into the country. The system they set up tried to pick the occupations that were defined as “skilled”. People in those occupations had an easier path to residency.

Of course the downfall to this approach was that those crafty employers simply retitled their jobs. All of a sudden there was a flood of “retail managers” and restaurant managers”, even if all these managers were in charge of was taking orders and stacking shelves. The end result? Those supposedly skilled workers the system let in weren’t so skilled after all.

The proposed changes

The idea of National’s changes was to add income into the test for whether a person is skilled or not. The level chosen wasn’t particularly high – a full time job on the median wage (which is $49,000). So that would mean this supposedly “skilled” person is earning in the top 50% of wages.

It is a fairly low bar, and you’d think that any skilled worker would by definition earn at least the average wage. However, even that seems to have spooked the horses in the regions. Farmers clearly aren’t able to offer the average wage, and are concerned that they won’t be able to find local workers at the rates they can afford to pay.

Do we want a low wage economy?

Allowing in unlimited amounts of low skilled labour is keeping wages down for our poorest people. BNZ economist Jason Wong agrees:

"In New Zealand’s case we can add strong net immigration as a possible factor weighing on wage inflation."

In a normal market, if you can’t hire someone, you offer more pay. That is how the economy is supposed to work when it is going well, so that workers end up getting paid more. If one business can’t afford to pay those higher wages, and another can, then they get the worker and the other goes out of business. That is business, folks. Why should farming be any different?

Why are we trapped in a low wage economy, and why are National determined to keep us there? Why should we support some industries with cheap labour to suppress wages?

Winston claims that migrants going to the regions aren’t the problem, it is when they go to Auckland. The trouble is that once someone is a resident, there is no way we can keep them in the regions. This problem won’t go away, no matter how Winston twists and turns on his immigration policy. As with most of his ideas, this policy is made up on the hoof and can’t be implemented.

It is incredible to think that our biggest and most successful industry can’t afford to pay the average wage. No wonder Kiwis won’t move to the regions if farmers can’t possibly put their wages up.

Of course there are much bigger issues at play here. One reason farmers can’t afford to pay their workers more is because they are trapped bidding up the price of land to ridiculous levels. Much like our housing sector, our desire to speculate on land prevents investment in things that will actually generate revenue, allowing us to pay people more. TOP’s Fair Tax policy will put pay to this obsession with speculation.

Why the UBI is the superior solution to targeted benefits

Our nation has poverty, it also has plenty of work, even if it is at low wages. So why do we still have unemployment?

The fact is that there are massive costs to taking work. We have a benefit system that actively traps people in poverty by removing their benefit if they work. Why would someone go through the costs of moving to the regions for work if they are no better off?

An Unconditional Basic Income is clearly a superior solution to targeted benefits as it does not discourage work. We are far more likely to see young Kiwis moving to the regions, even chasing short-term seasonal work, if they aren’t penalized by losing their benefits.