The Government was warned three years ago that a surge in international students was lowering the skill level of our immigrants.

International students now make up nearly half of New Zealand's skilled migrants - up from 17 per cent in 2006 to 43 per cent last year. The skilled migrant category is seen as the economic cornerstone of our immigration policy, accounting for 50 to 60 per cent of all migrants.

But a series of reports obtained by the Herald under the Official Information Act show officials have repeatedly warned ministers that low-skilled former international students have been manipulating the system to secure work and residence visas and may be pushing low-paid New Zealanders out of jobs.

A 2013 report to Immigration Minister Michael Woodhouse said: "The abundance of former international students with similar skill sets and the popularity of low-paid 'managerial' roles in the hospitality and retail sectors means that the SMC (Skilled Migrant Category) may not be supplying New Zealand with the skills it needs."


The warnings appear to have had a delayed effect, as international students are likely to face tougher obstacles in future under sweeping immigration changes and an upcoming policy review Woodhouse announced in October.

The new rules have lowered the annual residency intake to about 45,000 a year, raised the points threshold for skilled migrants from 140 to 160, toughened the English language test and frozen applications to bring in parents.

However Woodhouse and Tertiary Education Minister Steven Joyce have downplayed the change in direction, saying they remain generally happy with the skills that international students bring into New Zealand and with their contribution to the economy.

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Woodhouse says the changes will have an effect but insists most international students are not using their courses as a backdoor route to immigration.

"The challenges in the Indian market are well documented and Immigration is having to make some changes to ensure the integrity of the visa system is maintained.

"But putting that aside, student visas are issued in order that applicants can get what they're asking for, which is an excellent international education."

Immigration Minister Michael Woodhouse. Photo / Mark Mitchell
Immigration Minister Michael Woodhouse. Photo / Mark Mitchell

"The overwhelming majority of them stay for a bit after they graduate and then go home. Their first reason for being here is to study, not to stay."


Joyce says a survey this year showed New Zealand has the highest-skilled migrants of any economy in the OECD and international students make up a significant part of that.

"They might start initially in lower-skilled jobs but they tend to move up into higher-skilled jobs over time, just like everybody else.

"We're bringing in graduates who are adding significantly to the New Zealand workforce, there's no doubt they're doing that."

However a series of reports to ministers paint a different picture of international students' contribution to the economy.

A Ministry of Business Innovation and Employment report shows officials warned Woodhouse in June 2013 that the quality of skilled migrants, who make up half the country's residency approvals, was falling as British and South African migrants gave way to former international students from India.

The former students tended to earn less and were more likely to be out of work than other skilled migrants, the report said. Many had taken short, low-level courses and were working in semi-skilled service jobs that New Zealanders might be able to do. It mentioned Immigration NZ concern - later confirmed in several court cases - over "job title inflation" (such as shop assistants calling themselves managers) and migrants paying employers for job offers.

"Having a job or job offer may not be a reliable indicator of genuine demand, as anecdotal evidence suggests some employers prefer to recruit migrant workers even when New Zealanders are available," the report warned. "Migrants, particularly those former international students who plan to stay in New Zealand to obtain residence, may be prepared to accept lower wages than a comparably skilled New Zealander."

The report said many so-called skilled migrants were not working in areas that had a genuine shortage even though that was what the policy was designed for. Only 11 per cent were in jobs that met the requirements on Immigration NZ's long-term skill-shortage list. Four of the top 10 occupations - cafe or restaurant manager, retail manager, early childhood teacher and ICT support technician - were not on the list. And most of the 762 chefs - the most popular occupation by far - were not highly experienced, so they did not qualify either.

The flipside of the problem was that many occupations with genuine skills shortages were getting no applicants at all. There were 23 occupations with no approvals and 107 with very low levels.

Officials highlighted the way former international students, mainly working in hospitality and retail, were skewing the whole system.

"The number of applicants approved holding job offers as cafe and restaurant managers increased by 70 per cent in 2011/12 compared to 2008/09. Despite a relatively weak retail sector, the number of applicants approved based on job offers as retail managers increased by 67 per cent over the same period."

A research paper in June last year by former Treasury economist and immigration specialist Julie Fry echoed these concerns and added that the qualification levels of former international students who went on to become skilled migrants had also dropped.

In 2007/08, 1400 held a bachelor degree and only about 450 had a diploma. By 2013/14, only 400 had a degree, yet 800 had a diploma.

Meanwhile New Zealand was losing too many highly qualified students who didn't stay because they had choices elsewhere, said Fry.

A joint Mbie-Treasury briefing to Joyce, Woodhouse and Finance Minister Bill English in December last year said 45 per cent of former international students who became skilled migrants did not have degrees, compared to only 30 per cent in 2004/05.

It added that in 2014 recent migrants held 25 per cent of accommodation and food jobs and about 18 per cent of administrative and support jobs, despite "no strong evidence of genuine skills shortages" in these industries.

Officials note frequently in the reports that any move to improve skilled migration by clamping down on international students could affect the Government's goal to make export education even bigger, to reach a $5 billion annual revenue target by 2025.

In October the Government responded to strong political pressure over immigration by lifting the points threshold for skilled migrants from 140 to 160 points, immediately cutting out many former international students in relatively low-skilled jobs - including 90 per cent of those winning residency as chefs and 81 per cent of cafe and restaurant managers.

A cabinet paper noted that even with the higher selection mark, more people would be admitted as skilled migrants next year.

The report said many so-called skilled migrants were not working in areas which had a genuine shortage even though that was what the policy was designed for. Photo / 123RF
The report said many so-called skilled migrants were not working in areas which had a genuine shortage even though that was what the policy was designed for. Photo / 123RF

It predicted many would-be skilled migrants would not pass the tougher English language test, under which immigration officers can insist that people from outside the UK, Ireland, Canada or US test take an English test before applying.

The paper also urged the Government to set a minimum salary threshold to ensure genuinely skilled people - for instance, top chefs rather than ordinary cooks - were admitted.

Woodhouse says he will consider that, along with the suggestion that more weight should be given to work experience, rather than job offers.

But he rejects claims of widespread job title inflation, saying some people might "gild the lily a bit" but generally migrants are bringing the right skills into New Zealand.

The immigration changes, combined with the return of external English language tests, have already had an effect. Immigration New Zealand's student visa newsletter said applications had almost halved from 4524 in July and August last year to 2382 in the same period this year.

Newton College of Business and Technology director Paul Chalmers, whose school takes only Indian students, says enrolments have already dropped by 30 per cent after the announcement of the English test, with any effect from the higher points threshold still to come.

Immigration lawyer Simon Laurent, who is part of a reference group working on the skilled migrant policy, says it became clear change was necessary when everyone noticed "undergraduates working in fast food chains".

He thinks officials were slow to react because the Government was not meeting its previous residency target of 45,000 to 50,000 approvals a year.

"They could have stopped people getting in by raising the threshold earlier but that would have meant missing the target."

However Woodhouse says that was never a consideration. "Immigration said 'do you want us to lower the bar to get to the planning range' and I said 'no, absolutely not'."

The series

• Monday: Visa and school fraud
• Tuesday: Student exploitation
• Wednesday: Effect on immigration