7  Policy implications

7.1  Introduction

As stated earlier, government has a strong influence over immigration policy as it ultimately determines who will be admitted to New Zealand and for how long. It is therefore important that government ensures it has an evidence-based immigration policy programme designed to select migrants who will bring the greatest net benefits to the incumbent population.

This section presents policy implications that can be drawn from the evidence presented above. Policy implications are considered for labour utilisation and labour productivity, and include a high level consideration of the size of the New Zealand Immigration Programme (NZIP).

7.2  Policy implications for labour utilisation

As set out in the analysis in Section 4 above, improving the participation and employment rates of migrants is likely to bring economic benefits to New Zealand. If highly skilled migrants are employed in jobs commensurate with their skills and the returns to skills are shared with the native population then there should be an improvement in GDP per capita.

As previously stated there are two main levers through which New Zealand can attempt to improve migrants’ participation rates. First, the entry requirements need to be set so that those people entering New Zealand have the skills and characteristics that are in demand in the labour market. Secondly, there are barriers to employment that exist within the host community which may be able to be partially addressed through government policies.

7.2.1  Entry requirements

The first policy lever has recently had major adjustments made to it. The SMC, introduced in 2004, aims to let in migrants who will be able to quickly settle and contribute to New Zealand. The huge majority of migrants admitted under this category are now likely to currently work in New Zealand or have job offers. It is probable that the policy changes made will therefore ensure greater labour force participation and employment rates for the cohort of migrants entering New Zealand under this new category. The initial data supports this; in 2004/05 87 percent of principal applicants had a job or offer of skilled employment in New Zealand. Sixty one percent had a main occupation in an area of immediate or long-term skill shortage. Given the current tight labour market, this outcome for migrants may be relieving some of the existing labour market constraints on growth.

Temporary work policy has increasingly become a pathway through to residency. There is evidence that the new SMC will continue to encourage prospective migrants on temporary work policies to “upgrade” to residence policy. Eighty eight percent of principal applicants approved for residence in 2004/05 had previously held a work, student or visitor permit. In this case it remains important that New Zealand’s work policy facilitates the quick entry of migrants to fill job offers. New Zealand is competing against other countries to attract and retain the best migrants, delays in processing are likely to be one factor that migrants consider when making a relocation decision. The use of the expression of interest system is one way to manage expectations but the government needs to ensure that processing times are the shortest possible while being compatible with ensuring appropriate scrutiny.

7.2.2  Reducing barriers to employment

This second policy lever is important in dealing with those migrants whom the literature indicates are likely to have poor participation and employment outcomes. There is a large stock of migrants currently in New Zealand who fit this description so government needs to consider interventions to assist the stock of existing migrants, in addition to trying to get the right flow. There are a wide variety of policy responses to deal with barriers to employment.

In particular the literature indicates that improvements in the use of the English language will assist migrants to move into employment. Results from the inflows of the SMC show there has been a shift in the emphasis of the flow of migrants towards Anglophone countries. However, there will still be a flow of migrants from non-Anglophone countries under all categories and a significant existing stock.

Proficiency in the English language makes all the initial aspects of the settlement process easier for migrants. In the medium term it is critical to ensuring good labour market outcomes. Since November 1998, non-principal applicants under the skilled and business categories (and principal business applicants prior to November 2002) who do not meet the minimum English language standards have been required to pre-purchase English for Speakers of Other Languages (ESOL) training. There are some concerns about the level of take-up of this tuition.The government has two options for increasing the English language proficiency of migrants. Either the English language requirement for entry could be increased (and/or it could be introduced for the family stream as well) or there could be greater ESOL provision and support for migrants after they have arrived. The latter suggestion is likely to have greater upfront costs, assuming there is not a return to the previous mechanism of an English language bond. Previous experience of the bond was that it had very low take up rates so it is not recommended that this policy be reintroduced. It is possible that further work could be done to consider a more assertive approach. For example, those under the work-to-residence route could be asked to provide evidence that they have attended and passed the requisite course before they are approved for residence.

In 2002 the English language requirements (IELTS scores) for the skilled and business stream were increased. Increasing the requirements further would reduce the pool of eligible migrants, which may be sustainable during times of high demand, but there would likely be pressure to lower it if demand dropped off. Therefore consideration of increasing the requirement would need to be balanced against the desirability of consistency in migration policy. The Settlement Strategy 2004 put some emphasis on ESOL provision and evaluation of this provision should inform future investment in programmes. There has been some initial evidence from previous programmes that there can be low take-up of courses, but this may be due to insufficient awareness in migrant communities about its availability. In this case the use of Migrant Settlement Centres to disseminate information should be assessed to ensure their effectiveness.

In general the changes to the new SMC have seen an increase in the arrival of migrants from Anglophone countries, such as Britain and the United States. Having a greater proportion of migrants with high levels of English literacy is likely to improve labour force participation and employment rates, given the evidence presented above that English language proficiency is a key barrier to employment.

There is a more difficult issue around the attitude of employers towards migrants. There is some evidence, mostly anecdotal, that employers are hesitant to employ migrants – often due to their perception that heavy accents are a negative attribute. The Auckland Chambers of Commerce have done some excellent work in matching highly skilled migrants with employment among their members. This use of networking can be used to break down barriers and illustrate to employers the great pool of talent that migrants can provide. It is less clear to see the role of government here, but the initiation of such programmes in the private sector is promising and where possible should be encouraged.

7.2.3  Skilled vs family-based outcomes

The literature outlined in the preceding discussion has illustrated that the difference in outcomes for skilled versus family-based migrants may not be quite as significant as has previously been assumed. This is one particular area whether further work would be particularly warranted. New Zealand has been taking greater numbers of skilled migrants over the last ten years, and these migrants are now beginning to sponsor family migrants. Demand in the family stream continues to outnumber places available and from September 2004 priority has been given to partners and dependent children over other applicants in this stream. Pressure on this stream is likely to increase and it would be prudent for the government to prepare for this by further investigating the outcomes of this stream, and ways to improve them.

Australia has been facing this problem and their solution has been to implement a queuing system. Around 40 percent of Australia’s Migration Programme in 2003/04 was for family migrants.^[19]. The 2002-03 program outcome of 108,072 places, included 40,794 (37.7 percent) in the Family Stream. The Australian Minister of Immigration makes decisions on parent caps as necessary during the Program Year. Once the limit or cap has been reached, no further visas are granted in that visa class in the Program Year. On 1 July 2003, there were about 23,210 people who had lodged applications for parent visas. Of these, approximately 16,400 were in the queue. The offshore component of this pipeline comprises about 17,140 people while 6,070 are in the onshore component (Australian Department of Immigration and Multicultural and Indigenous Affairs 2003).