Median Wage Increase Will Drive Cost of Living
The government has announced a new median wage of NZD $31.61 per hour to be implemented in the immigration system by February 2024. While it may seem like a straightforward update, the implications for both employers and migrants are far-reaching. Here’s why this policy could be fuelling the cost of living crisis and what you can do about it.
By Aaron Martin, Principal Immigration Lawyer at New Zealand Immigration Law
Government’s Wage Inflation: A Vicious Cycle
The New Zealand government recently revealed an increase in the median wage to NZD $31.61 an hour, effective from February 2024. This change will impact various visa categories, including the Accredited Employer Visa and the Skilled Migrant Residence Categories. While this adjustment might appear routine, it comes with unintended consequences that could exacerbate the already rising cost of living.
The Untold Cost of Wage Increases
According to Immigration New Zealand, the new wage will apply to most work and skilled residence visa categories. In simple terms, if you’re an employer wishing to hire an international worker, you’ll need to meet this new minimum pay rate. However, this top-down approach to wage setting will inevitably lead employers to increase their costs, which will, in turn, be passed on to consumers. This cycle helps continue a cost of living crisis, compounded by a government seemingly addicted to the benefits of wage inflation. The increase in wages leads to higher tax collections through the PAYE system and a surge in GST as prices rise.
Complex Implications for Various Visa Categories
The repercussions extend beyond immediate cost concerns. This wage increase will also affect other visa criteria, such as the Skilled Migrant Residence under the soon-to-be-released 6 points system and Green List Residence visas, where the specified occupations have set wage requirements. Furthermore, sectors governed by Sector Agreements, especially the care workforce, will find themselves entangled in additional complexities due to these changes.
An Urgent Message for Employers
If you’re an employer contemplating hiring decisions, act swiftly.
Become accredited if you haven’t already; the process is not overly complicated.
If you need a job check approved, proceed without delay.
Advance with urgency applications for job checks for vacancies you need to fill with overseas workers and select candidates as quickly as possible. Remember their work visa applications need to be filed before this rate change takes effect.
Remember, the last time the median wage was adjusted, employers who had completed job checks under the old rate still had to pay the new rate if the associated work visa application was filed after the effective date of the increase.
In summary, finalise your hiring and immigration processes before February 2024 to avoid unnecessary complications and costs.
How NZIL Can Assist
If these changes have left you concerned or confused, you’re not alone. Contact one of our experienced immigration lawyers today to discuss how these new wage requirements might affect you or your business. We’re here to guide you through the labyrinth of New Zealand’s immigration laws, ensuring you’re well-prepared for what lies ahead.