Sector Agreements - What, Why and How?

What are they? 

‘Sector Agreements’ are a government-led initiative to develop a region and industry- based workforce planning model and give these sectors specific immigration settings to work with. They provide limited exceptions to the median wage requirement in exchange for ongoing improvements within these sectors. Each sector agreement has different requirements around duration of the agreement, number of workers allowed, wage threshold and visa duration. 

Sector agreements came into force across these industries: 

• Care workforce 
• Meat processing 
• Seafood (onshore and sea-based) 
• Construction and infrastructure 
• Seasonal snow and adventure tourism
• Transport

These agreements allow businesses in these sectors to hire migrant workers on Accredited Employer Work Visa (AEWV) in specific occupations even if they pay them below median wage (specific wage thresholds still apply).  

Further, these employers can also continue to hire migrants with open work visas until such time that new requirements for accreditation are introduced in 2024 (this will be mandatory accreditation for all employers hiring migrants on any type of work visa). 

Why do they exist? 

In general, the government’s principle under the ‘Immigration Rebalance’ strategy is that lower paid roles should be filled by New Zealanders and migrants with open work rights rather than relying on attracting lower-skilled temporary migrants as a permanent solution. However, in a few specified sectors there is a temporary or ongoing need for exceptions to the median wage threshold. The Sector Agreements were born out of this need.   

There was a high bar for deciding which sectors would be eligible for sector agreements. The factors the Government used were: 

• Occupations of interest had to be of sufficient national interest and already relying on lower skilled migrant labour 
• The sectors will have to demonstrate that they are working towards reducing their existing dependence on migrant workers. 

Hospitality and the wider tourism sector were not selected because many of their migrant workers are on open work visas. However, many roles in this hospitality and tourism industry have allowances to pay them below median wage for a limited time.  

How do they work?  

The details for each sector, its purpose, duration, the number of migrant workers permitted under each sector, included occupations, wage thresholds, maximum visa durations and any residence pathway settings can be found here. For example - The care workforce can get work visas on Level 3 and Level 4 roles (as per Pay Agreement). However, Level 3 roles are subject to a stand-down period, but Level 4 roles have a residence pathway. Roles such as Metal fabricator, Welder, Painters, carpenters, roofers and some other selected trade roles can get an AEWV on 90% of median wage.   

Also, the details of the Transport sector agreement have recently been confirmed.

Everytime the median wage increases, it will impact sector agreements. The median wage is now $29.66 per hour. All wage thresholds that are indexed to the median wage are updated.

What to look out for?  

Both employers and their migrant workers need to be aware of the ‘Stand down’ periods. For migrants that get their AEWV while being paid below the median wage, their visa will only be granted for 2 years. After 2 years, they will be ‘stood down’ for at least 12 months and they will not be able to apply for another AEWV if they continue to earn below median wage (applicable at that time). Other than the exceptions for specific roles such as those in sector agreements, all migrants applying for AEWV must earn at least the median wage. 

3-year AEWV & no stand down period for Bus drivers under Transport sector agreement 

Employers now have a median wage exemption set at $28/hr when hiring bus drivers for an eligible role on an AEWV. Bus drivers hired under the sector agreement will be eligible for AEWV for 3 years and there is no stand down period, despite being paid below the median wage. This will ensure that they have enough time to complete their 2 years of work in New Zealand required to apply for residence.

To be eligible for the exemption, the role must either:

• be for an employer who has signed the All Parties Memorandum of Understanding on Improving Bus Driver Pay and Conditions, or
• be as a school bus driver on a Ministry of Education-funded school bus service.

What is the future of Sector Agreements? 

The government has placed expectations for improvement on each sector. These are to demonstrate that the sectors are working towards more productive and resilient workforces, by reducing their reliance on migrant workers. The expectations for improvement vary across the sector agreements, but they broadly require sectors to: 

• Increase investment in worker training, upskilling, and career development 
• Improve domestic worker attraction and retention numbers of New Zealanders 
• Increase investment, where appropriate, in new business models and labour-saving technology 

The sector agreements are designed to give these sectors time to do the above as they transition to the new system. The Government will monitor progress on the expectations and this monitoring will feed into the 2024 reviews. 

If you or your organization need assistance in navigating the exceptions or requirements of the sector agreement, please do not hesitate to get in touch with our team. We can help you tackle the present and prepare for the future.