Wednesday, June 08, 2016

Time to end the subsidy of migrant labour


Stuff this morning has an article containing the usual whining from business about how they need migrants because they "can't get kiwis to do the work". You know, like working late at night with drunks for fuck-all pay, or 18 days in a row in the middle of nowhere for less than minimum wage.

The common thread in this is that the jobs they want filled are shit jobs that people are reluctant to take if they have any better option. And in a market economy, the proper solution is for employers with such jobs to offer higher wages until they fill. Can't get people to work your crazy hospitality hours with your unpleasant hospitality customers? Offer more money. Can't get people to pick fruit in holiday season? Pay them more. Can't get people to effectively give up any chance of a normal life because you can't be fucked taking care of your own cows? Fork over the cash (or hire another person so they can live like normal people, rather than crazed Stakhanovite cow-cultists). If you can't find someone to fill a job, then the market is sending you a message, and the message is "better pay and conditions".

So the problem here isn't that kiwis are not willing to take those jobs - its that employers are not willing to pay what it takes to fill them. And when you frame it like that, access to easy migrant labour really is just a subsidy to shit employers. And that doesn't just suppress the wages and living conditions of the rest of us and allow bad employers to unjustly profit from exploitation - the subsidy of low migrant wages also stops them from innovating and competing properly with one another. It allows them to retain outdated labour practices that no longer match the modern world, because our government lets them avoid the market consequences. And that's not good for any of us.

The thing is that this is already illegal. New Zealand law requires employers to offer a job to New Zealanders and have genuinely failed to fill it before seeking foreign workers. But that law is not enforced, and skills are deemed "essential" and in "shortage" not because of any genuine shortage, but because of a "shortage" at the price employers are willing to pay. The entire dairy industry runs off such practices (and are squealing because they might have to up their game and start paying real wages).

But no matter what form it takes - cash, environmental, regulatory or migrant - if a business is only "profitable" because it receives a subsidy and is able to dump its costs on the rest of us, its really not profitable at all. We are socially better off by ending those subsidies and letting those businesses die rather than letting them continue to leech off us. Bad employers should stand on their own two feet and offer real pay and conditions rather than being subsidised by migrant labour. And if they won't, we should let them go bankrupt and make space for someone who will.

(And just to make this perfectly clear: I like immigration, and I'm perfectly comfortable with people coming her to share and change the New Zealand way of life. What I don't like is the law being ignored to effectively subsidise bad businesses unwilling to accept that they will have to pay more for workers)