Hospitality businesses struggling with next month’s worker visa accreditation paperwork are dismayed to learn of even more red tape to hire overseas workers, from next year
Buried in the flurry of reforms in last month’s immigration system ‘rebalance’, the Government quietly signalled another adjustment that will have significant ramifications for businesses reliant on migrant labour.
The changes, laid out in a document called ‘Rebalancing New Zealand’s immigration system’ will see any business hiring migrant workers, from a big tech company to the cafe down the road, expected to pay to become an accredited employer.
“During 2023, a new requirement will come into effect, with all employers needing to be accredited to employ any migrant, including those with open work rights (such as working holidaymakers or students),” the Immigration NZ fact sheet reads.
“Accreditation is straightforward but prevents employers that do not meet minimum employment and immigration standards, such as those convicted of migrant exploitation offences, from hiring migrants.”
There’s precious little additional information provided by the New Zealand Immigration document, except to say more details will be provided closer to the time.
But these changes are separate to the ones announced last month, which will see a new accredited worker visa system up and running from July 4 this year. Businesses wanting to be part of the system need to become an accredited employer, and companies are reporting complicated paperwork and a fee structure which is tough for small companies.
The productivity conundrum
The Government says the changes are needed to move away from businesses using low skilled migrant labour to keep running or to grow. Instead it aims to build companies’ resilience and productivity by encouraging them to “offer competitive wages, hire less experienced New Zealanders and train them, and work together as a sector to showcase employment opportunities and career pathways”, according to the rebalancing document.
“By shifting to a higher skill mix of migrant labour and reducing the previous reliance on low wage low skill migrant labour, this can help New Zealand grow a more productive economy.”
The accreditation rules set for 2023 will hurt small businesses and the short-term migrants they employ, says Arunima Dhingra, director at immigration advisory firm Aims Global.
“We are going to tie those employers’ hands. They need to jump through so many loops before they offer these jobs.”
Dhingra says New Zealand is reliant on migrant workers coming into the country to help fill a labour shortage, but from next year is planning to place a roadblock in front of employers hiring them.
“It is completely contradictory. The left hand is not really talking to the right hand here.”
It’s wrong to think there’s a queue of people desperate to come to New Zealand, she says, especially given the cost of living here. This means the country must work to stay attractive to workers overseas.
Dhingra’s firm deals with international students, and she’s worried the cost and the extra paperwork will mean employers will decide not to get accredited and will simply stop hiring foreign students in part-time jobs.
This means it could be harder for international students to get a part-time job while studying and they might decide not to come to New Zealand at all.
“Some employers will absolutely have to get accredited, but others will be not interested, and say it’s too hard.”
The accreditation process for businesses hiring migrant workers from next year is expected to be similar to that for the worker visa category accreditation coming into place next month. And that’s not straightforward, whatever the Government may say, Dhingra says – especially given the obligations businesses have to meet to get it renewed.
On top of that, it’s not cheap, especially if you are a small firm.
According to the Immigration NZ application information, employers pay different fees depending on the type of accreditation. It costs $740 for up to five migrants at any one time, and the fees bump up to $1220 for six or more migrants.
Accreditation costly exercise
Mark Wilson, owner of The Grange bistro in Takapuna, is among the hospitality businesses currently working through the accreditation process to make use of the new accredited employer work visa that kicks in next month.
He says the fee level is pricey and operators are struggling to wrap their heads around the process.
“We’re all recovering financially and then they want $740 out of us for filling out this form. It’s another nightmare that we as an industry don’t need at the moment,” Wilson says.
“I’m going to sit down over the weekend and tidy it up because my manager has just thrown his hands in the air and said, ‘Oh look, I probably don’t know enough’.”
Wilson counts himself lucky his bar is a bigger business with a reasonable cash flow right now, but says the fee will sting smaller operators.
“The government is just applying this one size fits all. [The fees] should be revenue-based or on a tiered system based on the number of employees. It’s a big ask for some people to shell out that sort of money.”
Businesses must also prove they’re financially eligible to apply to be an accredited employer. This includes not making a loss over the last two years and having a positive cash flow each month for the last 6 months.
That’s regardless of whether a business can even meet the accreditation viability criteria, Wilson says.
Struggling businesses set to miss out
Many hospitality businesses have been hit hard by the Covid-19 pandemic and are potentially still in the red, he says.
Hospitality New Zealand national operations manager Jonathan Alve says many businesses will miss out on accreditation because of their financial situation following the pandemic.
“Right when we need access to migrant labour to help us recover in our businesses, we’re going to have a number of businesses that potentially won’t be able to meet the threshold for accreditation through no fault of their own,” he says.
“This is putting a lot of that pressure, the administrative cost and burden on to the businesses that have already been struggling over the last couple of years.”
Alves says the additional accreditation requirements coming into play in 2023 will take many employers by surprise, and he wants to see more detail on the changes well in advance of it coming into play.
“Unfortunately we’ve had to deal with things at very short notice over the last couple of years,” he says. “We would like some clarity about what the proposed changes are, and then have time to consult and give feedback to Immigration NZ,” he says.
At the end of the day, he thinks most businesses will get the accreditation next year, even if it costs them.
“They’ll have to wear the cost which likely means a longer wait for them to return to profitability, with potentially higher costs for consumers and businesses as well.”
Newsroom asked the Minister for Immigration Kris Faafoi about the concerns of firms struggling to cover accreditation fees and fill out the necessary application forms, and whether the 2023 scheme will discourage businesses from hiring migrants.
A spokesperson for the Minister’s office says accreditation is “relatively light touch, but important.”
“It means Immigration NZ can check a business is genuine, and that the people running it haven’t committed immigration or employment offences. This helps address migrant exploitation, and helps prevent poor employers from hiring migrants, providing a level-playing field for those employers doing the right thing,” the spokesperson says.
“For most employers, accreditation will be a simple and relatively low-touch assessment. Immigration NZ has indicated they don’t expect this to take long, but the timeframe will depend on the number of applications, and the quality of information people provide.”
The exact cost to an employer will depend on which accreditation pathway applies, the spokesperson says. Employers can minimise costs by submitting multiple jobs in the same job check. To be submitted in the same job check, all the jobs must be subject to the same labour market test conditions (that is, same pay rate, same occupation and region, etc), and all covered by the same advertising and proposed employment agreement.
“Employers’ compliance costs under the new policy need to be put in the context of the business’ overall personnel costs, of which they will only ever be a small fraction,” the spokesperson says.
“The changes are about rebalancing our immigration settings to achieve the right skill mix, but New Zealand will remain a welcoming country for migrants.”