This review of New Zealand’s labour migration policy is the third of a series conducted by the OECD Secretariat as a follow-up to the 2009 High Level Policy Forum on International Migration. The rationale for this initiative was the recent growth in labour migration observed in many countries and the likelihood that recourse to labour migration would increase in the context of demographic ageing. Prior to the 2008-09 economic crisis, many countries had made substantial changes to labour migration policies with a view to facilitating recruitment from abroad. With the introduction of these changes, more prominence was accorded to the question of their effectiveness and more broadly, to the objectives of labour migration policy in general. Although the economic crisis put a damper on labour migration movements, it did not stop them entirely, and interest in labour migration policy is unlikely to diminish in the near future.

New Zealand has a longstanding history of immigration and depends like few other OECD countries on foreign labour. More than one out of four persons in the workforce are foreign-born, and both temporary and permanent labour migration flows are among the largest in the OECD.

Immigration has been a driving force in the development of New Zealand throughout its history and the country has one of the largest immigration flows in the OECD. Partly because of the longstanding and significant immigration flows, the demographic outlook for New Zealand is much more favourable than in most other OECD countries. Apart from demographic projections, relatively little is known about the extent and evolution of labour shortages in New Zealand. That notwithstanding, compared with most other OECD countries, New Zealand has rich data and research about labour migration, a large part of which is publicly accessible.

Temporary labour migration is the main means of entry for labour migrants into New Zealand, and has expanded massively since the late 1990s to stand at the highest level in the OECD, relative to its population. Currently, the single largest component of temporary flows is comprised of Working Holiday Schemes. Traditionally, the main category of admission for temporary labour migration has been the Essential Skills visa, which is intended for migrants who fill jobs for which no New Zealander or permanent resident is available. To ensure that priority is given to the domestic workforce while swiftly responding to employer needs, New Zealand has a rather elaborate system. A further important component of temporary flows is international students, who are not considered labour migrants but have some work rights. The bulk of temporary flows goes into low-skilled occupations, mainly through the Working Holiday Schemes and international students. Both of these are largely unmanaged, and there is little oversight of their working conditions.

A distinguishing feature of permanent migration to New Zealand is that it predominantly concerns migrants who are already in New Zealand, most of whom have a job. This is mainly attributable to the fact that employment in a job considered as skilled or an offer of such weighs heavily in the points system that is used for the admission of permanent labour migrants. However, only a select set of occupations provide points, making it essentially an “all or nothing” approach. One option to be considered would be to provide more variation in the system, by giving some – albeit fewer – points also for work experience in New Zealand in lesser-skilled jobs. Adjustments in the points system should also be considered regarding English language knowledge, by rewarding higher levels.

In a system that is largely onshore-based and demand-driven, New Zealand’s capacity to attract labour migrants depends essentially on labour market conditions. There has been significant effort in recent years to better branding New Zealand abroad and informing migrants and employers about the possibilities available to them. A closely related issue is the retention of migrants. About 75% of the skilled migrants stay in New Zealand beyond the first five years of taking up residence. One factor that seems to encourage this relatively high retention rate is that most migrants who are selected for permanent migration have both already been in the country for some time before they are admitted as skilled migrants and are generally in an employment commensurate with their formal qualification level.