Indian students in Aotea Square in Auckland. Photo by Lynn Grieveson

Labour is about to launch an inquiry into migrant and international student abuse. But Bernard Hickey reports the fixes could slam small businesses and education exporters.

The Government is preparing to launch an official inquiry into abuse of migrants and international students, but the possible fixes could force Labour to make some economically uncomfortable choices for the international education industry and many small businesses.

Migrants, unions and migration lawyers cite cases where indebted students and workers on temporary visas are paid less than the minimum wage, work long hours, get no holiday or sick leave or even have to pay their employers for a job in the hope the employer will help them get permanent residency. Employers often threaten to withdraw the job or documentation for residency applications.

Immigration and Workplace Relations Minister Iain Lees-Galloway told Parliament this week that the Government would soon initiate an inquiry into migrant exploitation.

“And we are working on a number of fronts to stamp out the shameful exploitation of international students,” Lees-Galloway said.

Labour included a promise to launch an inquiry into migrant abuse in its manifesto, but it received little profile through the election. New Zealand First has also highlighted the issue of migrant abuse in its campaign to reduce migration.

“Exploitation is a source of human misery and is simply not acceptable in New Zealand. We need to be known as a nation that upholds workers’ rights and a great place for migrants to live and work. The good employers should not be undermined by rogues who exploit their workers,” Lees-Galloway said.

He told Newsroom MBIE was preparing the policy work on how to proceed with the inquiry and he expected to receive it shortly. Ethnic Communities Minister Jenny Salesa is handling the details of the inquiry.

“This is a high priority for this Government and the details of the form, terms of reference and timing of this work are to be decided,” Salesa said.

Lees-Galloway said it would look more widely than just migrant exploitation in the workplace.

“Jenny often cites situations where people were being charged astonishingly high rent for what most of us would consider overcrowded situations for their rent,” he said.

Lees-Galloway confirmed it would cover both migrants and international students, who currently have work rights during and after their study.

“There has been extensive exploitation of international students in New Zealand. Certainly true that some work has been done in that area and some progress is being made, but we want to hear the voices of the migrants themselves,” he said.

“It’s often very difficult for a migrant to come forward, to tell your story, to lay complaints where it would be perfectly legitimate to lay a complaint. A lot of people feel very vulnerable. They feel very exposed, so we want to create an opportunity for people to tell their stories.

“The previous Government didn’t really want to hear the stories of migrant exploitation in New Zealand.”

Lees-Galloway would not detail expected recommendations, although Labour promised before the election to “remove the ability to work for international students in low-level courses except where the work is approved as part of their study, and remove the ability to get a work visa without a job for those who have completed study below university level.”

However, Lees-Galloway has slowed down work on removing these in-study and post-study work rights after the international education industry argued it would hit revenues. See Shane Cowlishaw’s article on the Government putting a handbrake on its migration crackdown.

“We’re already expecting changes that we hope will clamp down on migrant exploitation and if the inquiry recommends good ideas then of course the Government will look to pursue those,” he said.

The connection with international students

However, fixing the problem of migrant abuse will be difficult for both the international education industry, which has estimated it creates economic value of $4.5 billion, and many small businesses, which are effectively subsidised by either underpaying their workers, or by receiving money from their workers.

Auckland migration lawyer Alastair McClymont said the Government needed to look at the close connections between the international education industry and the incentives for migrant abuse.

“They’ve got to look at the intrinsic connections between study and work and they’ve got to look at the particular vulnerabilities of students who have indebted themselves to come here, and you’ve got to look at what Education New Zealand are doing when they’re marketing education overseas, and what they’re basically promising people before they come,” he said.

“As soon as you strip the work rights then nobody is going to come.”

Work rights and a pathway to residency were often marketed by international educators as a feature of studying in New Zealand. Students often get themselves and their families into debt in the hope of earning from work and then getting residency, with the plan of eventually bringing in family behind them.

“The bigger problem is the huge number of students who are bought into the country, not to study, but to work,” McClymont said.

“If the focus is on those people who come in under work visas and employer compliance, and you don’t look at the wider residency policy, then you’re going to miss the underlying problem. Particularly the students, who are indebted and come here to study, and the reason they’re indebted is they’ve been promised this pathway to residency,” he said.

McClymont said education agents and the Government itself through both Immigration New Zealand and Education New Zealand (which promotes international education) promote the work rights and the pathway to residence as a marketing feature.

“That’s not just from the education agents. That’s from the Government’s own information on their website and in their correspondence, because that’s the only way you can get students to come here is through a pathway to residency. And to achieve that residency you’ve got to work for specific employer for a specific period of time, meet certain criteria for that employer in order to get residency, and that’s what makes them so vulnerable,” he said.

McClymont gave the example of Indian students who came to do a level 5 or 6 business diploma.

“They have one year on an open work visa to get a job. They know that they can achieve a resident’s visa by getting a job as a manager of a liquor store and therefore they’re a retail manager,” he said.

“They’ll come across a liquor store owner, who’ll say ‘I’ll support you for your two year work visa and residency’. Then all that person needs to do is to apply for residency on the basis of this job offer as a liquor store manager. That requires a high level of cooperation from the employer in terms of providing the correct job description, the correct salary and providing the verification information to Immigration NZ, which enables residency to be approved, and the employer can then at will demand whatever they like.

“‘You work for 70 hours. You work for $5 an hour. You pay me $40k for the privilege of this job. If this person complains, they will lose their visa, and then they’ll be deported back to India.”

McClymont said this was the most common situation he saw.

“They’re in debt back in India so they have to repay the money. The only way they can repay that money is getting a job and working long term to repay their debt. They have to borrow money from their family to pay their employer so they have to work here long term to get that, so they are completely at the mercy of the employer.

“You can be a manager of a liquor store and become a resident when you’re basically just serving customers behind a counter is the first problem. And they’re just so heavily reliant on the employer to provide all the verification information.”

He suggested a system of warrant of fitnesses for employers where their documentation and treatment of workers was checked regularly.

“Somebody could achieve residence by working for a particular period of time for an approved employer and after a period of time they can automatically have residence by having employment history. That way the incentive is there for employers to clean up their act, and the incentive is there for employers who want to employ migrants. And you’ve got to have the ability for these people to swap employers with ease.”

McClymont said any inquiry should also look at the connections between employers, education agents and educators.

“Part of the problem is you’ve got marketing people at the schools who also own a whole lot of education agencies in countries like India, and also own businesses here in New Zealand which employ graduate students from the same school,” he said.

“So you’ve got a whole lot of people who’ve got their fingers in all three of these pies.”

Removing the small business subsidy

McClymont said many small businesses in Auckland in particular would not be able to survive without the systematic underpayment of workers.

“There’s a whole lot of South Auckland businesses and employers that are surviving on employers rorting the system. You get a small liquor store that’s making a profit of $80,000 a year. That $80,000 profit is the amount that the two employees are paying the employer to work in the store. If they weren’t doing that then that business wouldn’t exist,” he said.

Many liquor stores, dairies, takeaway shops and IT shops were in this situation, particularly those offering jobs for skills trained for at the international education firms.

“The single most useless qualifications are your business diplomas, some of the low level IT diplomas and some of the hospitality stuff. You find those businesses basically grow from those qualifications. Those businesses exist solely because there’s all these students out there with these qualifications,” he said.

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