Inflation and the cost of living are hot topics that have spurred a swathe of policies and interventions intended to level the financial playing field. A prominent change has been the increase in both median and minimum wages which has impacted both Kiwis and offshore workers looking to settle in New Zealand.
Whether or not rising median and minimum wages is effective is an argument for economists (i.e., not us). However, the introduction of median wage as a benchmark for employers and migrants is something that has affected the ability of employers to hire offshore workers, and by extension, the ability of migrants to find work in New Zealand.
A Quick Recap
2022 changes to immigration practices reinforced the median wage as a required part of sourcing offshore workers under the AEWV scheme. AEWV has become one of the primary visa pathways for those seeking work and long-term living in New Zealand so the median wage requirement is critical to many.
In response to public feedback, amendments have been made to various industries to exempt some roles from the median wage requirements. Minimum pay rates for migrant workers are still well above the current national minimum wage of $21.20, but for some sectors they’ve been reduced from the median wage to better fit the industry standard and employers’ budgets.
February Will see Increases to Median Wage
On February 27th, the median wage for visa applications will increase from $27.76 to $29.66 (an increase of $1.90). The government has announced that the median wage will be updated in February from now on (previously November).
How will this increase affect those in the middle of an AEWV application? Migrant wages/salary will have to meet the threshold in effect at the time of applying for the visa. Meaning that if you’ve completed the job check but have yet to apply for the visa as it changes, you may need a higher wage to have the AEWV approved.
While the AEWV is the hottest topic, other visa categories will be affected by the increase in the median wage. Residence visa categories (including the Highly Paid and Green List), Skilled Migrant Category and Parent Category.
Hospitality and Tourism sectors will continue to have exemptions to these increases. Employers in hospitality and tourism will have to pay AEWV workers a minimum of $25 an hour until April 2023. From here, wage thresholds will increase to $28.18 which will be 95% of the new median wage. i
April 2024 will be when these sectors are required to pay 100% of the median wage, whatever that may be at the time. At that stage, it’s expected (and hoped) that hospitality and tourism will have recovered from the COVID-19 pandemic.
April Marks Increases in Minimum Wage
The first of April will see an increase in New Zealand’s minimum wage from $21.20 to $22.70, an increase of $1.50.
The increase has been informed by MBIE (Ministry of Business and Innovation) and while it’s not expected to affect employment rates or (significantly) affect inflation, there have been concerns from some business owners. Particularly if they’re working on the April-March financial year and have done their planning around the current minimum wage.
Whether the rising minimum wage will affect the median wage later down the line is yet to be seen, but reasonable to expect. We’ll have to wait for 2024 to see for sure.
What to do?
Overall, our advice is to take advantage of new changes to immigration policy. In particular, those regarding median wage rates. Apply early for visas for migrant staff, before the rate hikes, in order to keep wage costs down for your business! This change will happen annually (announced in November and taking effect in February), so there is plenty of time to plan ahead. For now, $29.66ph starts on Monday 27 February if you want to employ migrant workers across most sectors.
Demand for labour of any kind, either domestic or international, remains high and due to recent local emergency events which have affected New Zealand, we expect businesses will continue to look overseas for a solution to their staffing levels.
VisaMaxNZ and our sister company RecruitMaxNZ can assist with advice to help you overcome your staffing needs and navigate the complex immigration framework for you.