Businesses that are losing money, cutting back hours and dealing with "devastated" overseas workers stuck in "limbo"' have criticised Immigration NZ for not letting people in for jobs.
Employers spoken to by NZME said they were "frustrated" by the Government's tough stance, which they say has been amplified by the skilled labour shortage.
But Immigration Minister Kris Faafoi said the Government regularly reviewed border settings and made adjustments to exceptions where and when it was possible.
One business stuck in limbo is a Katikati restaurant which may have to close two days a week if it can't hang on to its internationally-acclaimed chef, who has been separated from his overseas wife and children for more than a year due to visa delays.
The Talisman Hotel in Katikati has already reduced its seating capacity twice a week because of staffing shortages and is struggling to fill positions in the kitchen.
Co-owner Michele Reichmuth said if the shortage continued it might have to close the restaurant some days to ensure the team had sufficient time off and was not overworked.
Last year the business hired award-winning head chef Mahesh Peters - who arrived from the Armani Hotel Dubai - to help grow the business.
Owners Danielle, Fred and Michele Reichmuth are building a case for a highly skilled work visa application to help get Mahesh's wife and daughters into the country from Sri Lanka.
The chef trained at Marc Verite's Michelin-star restaurant in France and Convotherms Manitowoc Food Service in Germany.
Danielle said Peters was "irreplaceable".
"Mahesh gives so much love to all he does and treats the business like his own."
A family visa application was submitted in 2019 after Peters' work visa was confirmed but when New Zealand went into lockdown Peters' wife and young daughters, 10 and 6, had to move back to Sri Lanka while waiting for the family visa application to be approved by Immigration NZ.
Peters said he was constantly concerned about his family's safety.
He said the situation was heartbreaking and very frustrating," but I keep hoping".
Coromandel National MP Scott Simpson wrote to the Immigration Minister asking to exercise his discretion in this case, but this was denied.
Simpson said he had never dealt with so many immigration cases as an MP and the number of visa applications spoke to a broader labour shortage.
"Our businesses are shrinking and our economy is shrinking as a result."
Another business, Tauranga Hardware and Plumbing, hired a South African plumber before Covid and was still waiting for Immigration to let him in.
Managing director Craig McCord said it was "incredibly frustrating".
"He has sold his business and sold his house, he is married with children and would be a perfect contributor to New Zealand.
"Prior to Covid he fulfilled all his immigration requirements ... now it is June and he is stuck in limbo."
Tauranga Hardware and Plumbing had completed immigration certification for an exemption and was willing to pay the managed isolation costs.
McCord said it was being told it should hire within the country but that was proving near impossible.
Phil Van Syp, of 1st Call Recruitment, said if you can find a tradesperson at the moment "you are winning".
He had clients who had signed deals with skilled workers from overseas and everything was ready to roll but then it stopped.
"There is no indication when those wheels are going to get back in motion. The Government is dragging the chain on decision-making."
Meanwhile, Reg Hennessy, owner of Hennessy's Bar in Rotorua Hospitality New Zealand Bay of Plenty branch president, said he had eight job vacancies and chefs were doing the dishes.
Business hours had been slashed and the pub was only open six days a week.
Hennessy said the situation was desperate.
"We are hurting."
Success Group Ltd managing director Graham Rodgers said by his calculation the entire New Zealand workforce was short of 200,000 staff.
"We've got baby boomers retiring, and we haven't got young people coming through. So basically we don't have any staff left. We need them. Where are they going to come from?"
Rodgers said the borders needed to open for workers, and in his view the Government was stalling because there was no accommodation for them.
Success Group could place 150 Kiwi workers tomorrow if they could find them, he said.
Tauranga Chamber of Commerce chief executive Matt Cowley said the Government's immigration settings needed to be re-adjusted.
"For instance, requests for skilled working visas are being rejected for most non-government projects. Now is not the time for the Government to stall the nation's recovery."
Immigration New Zealand was unable to comment on the specific details of Peters' case without a privacy waiver but border and visa operations general manager Nicola Hogg said they empathised with migrants who had been affected by border restrictions.
Hogg said Immigration NZ had "no ability" to apply discretion when considering requests for border exceptions.
"Border restrictions remain in place for a large majority of travellers to help to protect the country from the impacts of Covid-19."
Individuals had to meet strict criteria to be granted an exception, she said.
Partners or dependent children of temporary visa holders who were currently outside of the country might be eligible to travel to New Zealand under a dedicated border exception.
Asked about the Peters case, a spokesperson for Faafoi said the Government had implemented limited exceptions to help meet workforce shortages where it could.
The Government was also signalling to sectors that they should develop plans to attract, recruit, train and retain local workers with pay rates, career pathways and secure work hours and working conditions, they said.
"The Government continues to monitor border settings while maintaining a balance that keeps New Zealanders safe through its Covid health response and provides New Zealand citizens and permanent residents with the ability to come home."
Faafoi said the Government was aware of the challenges Covid had presented for businesses across many sectors.
Ministry for Business Innovation and Employment, Employment, Skills and Immigration Policy general manager Ruth Isaac said in a written statement the current unemployment rate was 4.7 per cent, which was down on its most recent peak of 5.2 per cent in September 2020.
The underutilisation rate was 12.2 per cent and remains up from pre-Covid of 10.1 per cent.
There are also many workers who wanted more hours and that work was simply not available, Isaac said.
Ministry for Social Development Bay of Plenty regional commissioner Mike Bryant said experience showed the majority of people who received a benefit wanted to be self-reliant and have the dignity of work.
"We work hard to assist them in achieving their goals."
What is being done
• Last month the Government extended 10,000 Working Holiday and Supplementary Seasonal work visas that were due to expire between June 21 and December 31 for six months.
• It also gave open work rights to Supplementary Seasonal Employer work scheme visa open work rights.
• These changes provide employers with continued access to the current onshore workforce to help fill roles.
- Source Immigration Minister