Righting the power imbalance at the heart of the RSE scheme

Friday, 16 December 2022

Some RSE employers “frankly, shouldn't have the privilege of having these workers work for them”, says Prime Minister Jacinda Ardern ahead of new wine centre opening.

Peter Wilson is a principal economist at the Auckland office of the New Zealand Institute of Economic Research. Julie Fry is an NZIER associate who divides her time between New York and her family farm in Riwaka.

OPINION: New Zealand’s Recognised Seasonal Employer (RSE) scheme for bringing short-term migrants from the Pacific to our shores to work in horticulture and viticulture jobs is once again in the news.

The idea behind the RSE scheme is a good one. It replaced a system where migrants came to New Zealand on visitors’ and other short-stay visas, and then worked illegally in the fruit and wine sectors, often being paid below minimum wage.

In return for agreeing to regularise employment practices, the sectors received a guaranteed supply of workers to help out during peak periods.

* Growers building accommodation, bumping up wages in bid for workers in Eastern Bay of Plenty

* Struggling RSE contractors turning to foodbanks to feed workforce

Nelson-based RSE worker Lolohea Huni, who was trapped in New Zealand during the Covid lockdowns.

People from Pacific countries receive a legal right to work in New Zealand, with employers paying for their travel and providing accommodation. The attraction is earning a surplus above living costs: money they can take home to build better lives.

The initial idea was to provide a “triple win”; the growers, New Zealand as a whole and the sending countries would all be better off.

But is the scheme still providing winners across all three groups?

As economists, when we analyse any particular migration policy, we ask two questions: does it improve the wellbeing of the whole country, and does it improve the wellbeing of the migrants?

Jason Papali'i, left, Simanualii Ieremia, Leo Pene, Isumu Enele and Junior Tasala, RSE workers from Samoa on an orchard in the Nelson region (file photo). While such workers provide vital labour for the horticulture sector, the broader economic benefits of the RSE scheme are not so clear-cut.

The RSE scheme gets mixed marks on both questions.

One of the great successes of the RSE scheme is that it has not led to problems with people overstaying, which has been an issue with guest worker schemes operated in other counties.

People from the Pacific come to New Zealand for part of the year and then return home.

Many come back here year after year, forming strong links with their employers and other members of the communities they visit.

An example of the living conditions for RSE workers on one Hawke’s Bay property (file photo).

In our view, having the certainty of a guaranteed workforce is the biggest win for the local economy.

Fruit needs to be pruned, thinned and picked at the right time, and knowing there will be people willing and able to work long hours when needed removes a key risk for growers.

We are less convinced that having low-wage workers is good for New Zealand or the migrants.

Experience here and overseas is that wages are linked to worker productivity. High-productivity firms can both be profitable and pay high wages.

The Nobel Prize-winning economist Paul Krugman once famously said that, “productivity isn't everything, but, in the long run, it is almost everything”.

“A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker”.

Equal Employment Opportunities commissioner Saunoamaali’i Karanina Sumeo has taken a close interest in the treatment of RSE workers by New Zealand employers and has been highly critical of what she’s seen.

If the RSE scheme contributes to raising the productivity of the horticulture and viticulture sectors, then it will contribute to the long-run wellbeing of Aotearoa.

Continuing to support low-productivity business models – ones that rely mainly on physical strength and worker endurance – is unlikely to lead to better living standards.

Peter Wilson is a principal economist at the New Zealand Institute of Economic Research. Julie Fry is an NZIER associate.

If, on the other hand, firms use the certainty of an assured workforce to support investment in labour-enhancing capital, like mechanical hoists and automated packing, then that will lead to greater productivity.

Our greatest concern, however, is with the wellbeing of the people we are inviting to our country to work.

The prospect of hard physical labour in the orchards and vineyards of New Zealand is attractive to people who have few opportunities for well-paid work at home. This will always condition what they will accept by way of terms and conditions of employment here.

Many New Zealand employers develop the skills of their workers and pay them fairly.

Some provide recreation and entertainment opportunities, and something small but very significant: free wi-fi so workers can stay in touch with their families back home.

Kiwi communities have helped build infrastructure, such as wharves, in the Pacific, and provided financial and practical support after catastrophic events such as the 2021 volcanic eruption in Tonga.

But Human Rights Commission Equal Employment Opportunities Commissioner Dr Saunoamaali’i Karanina Sumeo and others have also documented horrific examples of racism and exploitation: RSE workers experiencing cold, crowded and unsanitary accommodation; restrictions on their relationships, movements and activities outside working hours; and excessive charges for housing, transport and protective equipment.

None of these practices would be acceptable to local workers, who, if they were offered them, would seek employment elsewhere. RSE workers, however, have no real choice if they want to work in New Zealand.

There are many ways in which appropriate terms and conditions of employment can be guaranteed. Applying and enforcing minimum standards is one. But ensuring a fair balance of power between employees and their employers is also critical.

In the case of RSE workers, the term of their visa is an important part of the power balance.

The practice of tying workers to a single employer creates a particularly troubling power imbalance.

Sumeo has repeated the recommendation made by the Productivity Commission in its report on immigration settings released earlier this year, that this provision should be removed. We agree.

Such a change will require looking at the issue of who pays for airfares to come to New Zealand.

We strongly recommend that the Government consult with workers and their representatives on this and other changes that would make coming to New Zealand a true triple win.

Peter Wilson and Julie Fry have written extensively on immigration and wellbeing and were members of the panel the Government appointed in 2021 to review the use of migrant labour in the seafood sector.