The Skilled Migrant Category (SMC) is a points-based policy that allows people who have the ability to contribute to New Zealand economically and socially to gain permanent residence in New Zealand. In recent years, SMC approvals have made up more than half of all residence approvals (58 percent in 2009/10).
The objective of the Skilled Migrant Category is to grant residence to people who demonstrate that they:
- have skills to fill identified needs and opportunities in New Zealand
- can transfer those skills to New Zealand and link with local needs and opportunities
- can contribute to New Zealand both economically and socially
- can successfully settle in New Zealand.
Points are awarded for transferable skills and employability, including recognised qualifications and years of experience in comparable or ‘relevant’ labour markets are awarded points. The match between skills and New Zealand’s needs is stressed, through points being awarded for having a job or job offer and bonus points it is in identified future growth areas and areas of skills shortage. Migrants’ ability to settle in New Zealand can be demonstrated by gaining qualifications or work experience in New Zealand, English language skills, or having close family members living in New Zealand.
Findings from analysis of data from the Longitudinal Immigration Survey: New Zealand (LisNZ) show that more than 93 percent of the principal migrants who were selected through the SMC system were employed 6 months after taking up residence, a proportion significantly higher than for other migrants granted residence (over 58 percent).3 The factors that can be awarded points through the SMC are constrained by the information that is available and that can be produced and verified at a reasonable cost. Furthermore, there are other important ethical and legal considerations, such as not discriminating against people (for example on the basis of sex, ethnicity, or nationality), even if these factors predict labour market outcomes.
This research uses data from the LisNZ to examine how the employability and capacity-building factors that are used to select among applicants are related to the wages earned by SMC migrants 3 years after taking up residence. The LisNZ was specifically designed by Department of Labour in partnership with Statistics New Zealand to increase the understanding of immigration and to inform immigration policy. For the first time in a New Zealand survey, the visa category under which migrants were approved was collected. A great deal of extra demographic information was also collected, much longitudinally. As such, this survey provides a new opportunity to study the labour market outcomes of SMC migrants and to inform the upcoming review of the SMC Policy.
By focusing on the wages of successful migrants, this research only partly covers the objectives of the policy. Further research is required to understand and take into account all of the objectives, for example the identification of specific skills that are needed in the New Zealand labour market, the social capital contribution of migrants, and issues of retention.
In this paper, we discuss the skilled migration policy framework and previous research on skilled migrants’ labour market outcomes, and introduce the data set and some descriptive statistics. Then, we use regression models to examine the association between employability and capacity-building points factors and the wages earned by principal SMC migrants 3 years after taking up residence while taking a set of other factors that are likely to influence wages into account. The model is then tested by removing the controlling factors to reflect that the policy does not use demographic criteria such as nationality and gender to select migrants.
We consider changing the allocation of points, using the wages earned by migrants as a measure of their contribution to the country. We extend the regression models to test criteria that are observable at the time of application but are not awarded points. Then, we explore the implications of the proposed changes for the ranking of migrants. The report finishes with a discussion of the findings, practical recommendations, and next steps.
Purpose
The Skilled Migrant Category (SMC) is a points-based policy that allows people to gain permanent residence in New Zealand if they have the ability to contribute to New Zealand economically and socially. More migrants are approved for residence in New Zealand under the SMC than any other immigration category, with approvals making up in excess of half of all people approved for residence.
The research on which this report is based examined how the employability and capacity-building factors that are used to select among SMC applicants are related to the wages earned by SMC migrants 3 years after taking up residence. The report goes on to draw implications and make recommendations for SMC policy.
Methodology
The Longitudinal Immigration Survey: New Zealand (LisNZ) documents the outcomes of migrants up to 3 years after taking up residence in New Zealand and, for the first time, the visa category under which migrants were approved and other detailed information.
LisNZ is used to assess what points applicants were eligible for in the SMC points system. Regression models are then used to examine how the SMC points and a set of other factors are associated with wages. Finally, improvements in the allocation of points are considered, using the wages earned by migrants as a measure of their contribution to the country.
Key Results
Qualifications have positive returns
Among skilled migrants, qualifications have positive returns, but New Zealand qualifications are not more rewarded than foreign ones.
Migrants granted residence with a job offer earn at least as much as those already employed in New Zealand at the time of application
In the medium term, migrants who were granted residence with a job offer earn at least as much as those who were already employed in New Zealand at the time of application.
Wage increases for New Zealand work experience are low
Additional increases in wages for New Zealand work experience compared with foreign work experience are found to be low.
English language ability and skill level are not rewarded under SMC
Self-reported English language ability (additional to a minimum standard) and the skill level of the current or previous job are positively associated with wages, but are currently not rewarded under the SMC points system.
Asian and Pacific skilled migrants earn less than other skilled migrants
In line with previous studies of migrants’ outcomes in New Zealand, skilled migrants from Asia and the Pacific earn less than other skilled migrants even when factors such as age, qualifications, work experience, and self-reported English language ability are controlled for. Further work is needed to better explain this difference.