Potential changes to median wage rate

Most readers will be aware that in terms of current immigration policy, the median wage rate is an important consideration for Immigration New Zealand (INZ) when assessing Skilled Migrant Category (SMC) resident visa applications and Essential Skills work visa (ESWV) applications.

On 26 August 2020, Statistics New Zealand (SNZ) published an update noting that the New Zealand median wage rate increased from $25.50 to $27.00 in the June 2020 quarter.

INZ generally update the remuneration thresholds in November each year which means there is a real possibility that by (or shortly after) November 2020, the minimum income thresholds for ESWV and SMC applications will increase from the current $25.50 per hour to $27 per hour (or perhaps somewhere between these two figures).

If INZ updates the Instructions to reflect the higher median wage rate, there will be significant effects for migrant employees and their employers. We set out the possible effects of updated median wage rates below.

Essential Skills Work category

The table below summarises the current requirements for labour market testing and the associated visa conditions that are driven off the pay rate of a migrant worker.

Below median wage – $27.00 per hour At or above the median wage  – $27.00 per hour
Applied Labour Market Test Employer needs to engage with MSD and provide a Skills Match Report, in addition to making genuine attempts to hire New Zealanders, including advertising for the role and considering New Zealanders Employer does not need to engage with MSD to provide a Skills Match Report, however the employer will continue to need to make genuine attempts to hire New Zealanders, including advertising for the role and considering New Zealanders
Visa duration Maximum duration of each visa is 6 months for the next 18 months (i.e. from 10 July 2020 – 10 January 2022) Maximum duration of each visa is 3 years
Maximum combined duration of all work visas in jobs paying below the median wage is 3 years at which time holders of this visa will be subject to a stand down period of 12 months offshore No maximum combined duration – not subject to stand down.
Visas for family ordinarily residing in New Zealand (excluding offshore based applicants due to border closure) Support visitor visas for partners (partners can apply for a work visa in their own right) Support visitor or work visas for partners
Support visitor or student visas for dependent children (subject to meeting the minimum income threshold of $43,322.76 per annum) Support visitor or student visas for dependent children

Skilled Migrant Resident category

If and when INZ updates the Instructions to reflect that the median wage rate has increased to $27.00 per hour, the following threshold requirements will be applicable to applicants applying for resident visas under the SMC:

  • Occupations classified as ANZSCO skill level 1, 2 or 3 – $27.00+ per hour (or equivalent annual salary).
  • Occupations classified as ANZSCO skill level 4 or 5 – $40.50+ per hour (or equivalent annual salary).
  • Occupations not included in the ANZSCO – $40.50+ per hour (or equivalent annual salary).
  • Bonus points for high remuneration – $54.00+ per hour (or equivalent annual salary).

Moving forward

We recommend that employers of migrant employees, who currently earn between $25.50 per hour and $27 per hour, and whose work visas are due to expire within the next 12 months, should strongly consider the option of facilitating the submission of new ESWV applications before the median income rate is updated by INZ (likely during November 2020).

We make the same recommendation for employers of migrant employees interested in applying for residence under the SMC as INZ should assess any Expressions of Interest (EOI) for an SMC resident visa application against the relevant Instructions that are current at the time the EOI is submitted.

We do note that while EOI selections are currently suspended, INZ should be applying Instruction SM2.1.10 which provides that “An EOI is current for a period of six months from the date of initial submission to the Pool unless no selection of EOIs from the Pool has occurred within that six-month period.

Where this is the case, an EOI is current until such time as a selection from the Pool has occurred and while EOIs have been lapsing, we anticipate that INZ will apply Instruction SM2.1.10 to allow EOIs that have been submitted during the period that selections have been suspended to allow EOIS to remain current until the next selection.

To summarise, employers of migrant workers, who are currently paid between $25.50 and $27.00 per hour and whose visas are expiring in the next few months, should strongly consider facilitating the submission of a new ESWV or SMC EOI before November 2020 when the Instructions are likely to be updated to reflect the current New Zealand median wage of $27.00 per hour.

If an ESWV application is submitted after the median wage rate is updated, employees paid between $25.50 and $27.00 per hour may miss out on being able to secure a three year ESWV.

To get expert guidance on ensuring the best outcome for you and your employees, please get in touch with us today.

Sign up for news

Our team issues regular newsletters on immigration-related topics as well as up-to-the-minute alerts when immigration policy changes are announced.

Sign up to receive news

Click here for other Employment Law or Immigration Law articles.

Meet the team that makes
things simple.

Mark Williams