As businesses struggle through the worker shortage local business chambers are calling on the Government to adjust its student allowance criteria. Photo / Getty Images
Business leaders are calling on the Government to urgently adjust its student allowance criteria to provide "much-needed" relief over the peak season amid nationwide staff shortages.
Employers were falling over backwards to find staff but one Bay boss says the current student allowance criteria puts students off wanting to work or study in fear of "living in poverty" as the cost of living climbed.
But the Ministry of Education says it has lifted student loan living costs and allowances twice since 2018 and, as a result, rates have been higher than they have been in five years.
Students can currently earn up to $240.70 (before tax) per week before it affects their student allowance payment. Any additional income earned above this amount is subtracted from it.
About 62,000 students receive the student allowance across the country.
Tauranga Business Chamber chief executive Matt Cowley said by increasing the total income a student can earn before it affects their student allowance payment would provide businesses with much-needed relief over the peak season.
It would also support students struggling with the rapid rise in the cost of living by allowing them to increase their total weekly income.
"Many businesses are struggling right now with major staffing shortages – particularly in hospitality, retail and tourism – and it's only going to get worse as we enter the peak summer period."
At the same time there were students employed by those businesses who wanted to work more hours to combat the rising cost of living but were put off because of the income threshold set by the Ministry of Social Development, he said.
"We're asking the Government to urgently lift the income threshold for students, so they can work more hours over the peak summer season without it impacting their student allowance or other entitlements."
The Government makes an Annual General Adjustment to all benefit entitlements on April 1 each year, but Cowley believed the income threshold for student entitlements needed to keep up with the rapid inflation that students and businesses had experienced since then.
"We've seen rapid rises in both wages, and the cost of living, in the past six months, and the income thresholds for student entitlements have not kept pace.
"The Government's recent change to worker visa eligibility is a great start, but we need to do everything we can to get more Kiwis into employment for summer, and through this crisis."
Rotorua Business Chamber chief executive Bryce Heard said there was no doubt people were struggling to get employees and some were falling over backwards looking for staff.
"Anything is going to help."
He was not sure what kinds of numbers a change would bring to jobs.
"But I do know costs are going up, inflation is driving everything up, wages are going up. All of those things have to move in unison.
"When you move all the parts without others you create distortions."
But Heard also believed migrants would be the key to picking up the jobs locals did not.
Immigration minister Michael Wood last week announced more than 34,200 working holiday visa applications have been approved, with 14,400 visa holders arriving in New Zealand since borders reopened.
All the new visa holders will have open work rights, can work in New Zealand for 12 months with multiple entry rights and must be in New Zealand by January 31, 2023.
"Our government recognises the crucial part working holiday visa holders' play in the New Zealand economy. We need their skills here to meet demand in industries like tourism, hospitality, agriculture, and horticulture."
Ashleigh Gee, owner of Miss Gee's Bar and Eatery in Tauranga, hired students and supported allowing those on an allowance to work up to 20 hours a week.
"An extra $140 a week is pretty mean I'd say."
Gee said the current student allowance criteria disincentivised students to work, but also to not study if they thought they would be "living in poverty".
"Businesses are doing it hard, students are doing it hard."
She said students hired over summer left when on the allowance, and businesses needed to fill those holes at a time they were already struggling to do so.
Waikato Students' Union president Lushomo Thebe said the cost of living had "really impacted" and students were barely making ends meet, she said.
"I support the intention of helping students but there needs to be some consideration on how to do that."
Students needed to be at the centre of any conversation she said, given the potential impact on student well-being.
"There needs to be a balance struck."
Three drop-in sessions were set up in Rotorua over the past few weeks as part of the Best Summer Job Ever campaign that aimed to get students set up with local jobs.
Roles spanned tourism and hospitality roles - two of the industries struggling finding staff.
There had so far been 150 applications for the roles through Student Job Search and more than 400 people attended the first two.
The last session was held on Wednesday.
In the last six months, Student Job Search listed 785 jobs in the Bay of Plenty and received 1209 applications.
Chief executive Suzanne Boyd said there was a "huge appetite" from students to work.
"Which points to a highly motivated future workforce keen to build their skills and experience to ensure they are well equipped and in the best possible position to launch their careers."
Boyd said it had been operating for more than 40 years to help students into jobs to achieve its goal of alleviating student poverty.
"Not only that, we support students to find their first full-time roles when they graduate.
"We are proud to enable students to find about 47,000 jobs every year across a wide range of sectors all over New Zealand."
Ministry of Education Te Puna Kaupapahere (policy) group manager Katrina Sutich said it knew some tertiary students can find it difficult to meet living and study costs and had permanently increased living support available to students through student loans and allowances.
In 2018, student loan living costs and student allowances were increased by $50 per week and a further $25 per week from April 1 this year in addition to the 5.95 per cent inflation adjustment.
The new threshold of $240.70 gross per week allowed students to work about 11 hours per week based on the minimum wage of $21.20 per hour from April 1.
"As a result of these permanent increases student allowances rates over the last five years have been significantly higher than for the preceding five years."
For example, the percentage increase in rates for single students without children who are under 24 and living away from home was 3.6 per cent from 2012 to 2017 and 58.1 per cent from 2017 to 2022.
The weekly gross student allowance for a single student aged under 24 years of age, who was living away from home was $316.51.
This student can earn an additional $240.70 gross per week before their student allowance is abated.
"The Government is not currently considering raising the student allowance personal income threshold."
Any future increase of the threshold beyond the annual inflation adjustment would need to consider several factors, she said, including how well additional spending would be targeted to those students who need it the most; ensuring students don't work too many hours a week at the expense of their study, and the cost of increasing incentives for part-time work to help meet their living costs what other priorities there are for government expenditure.
Students who do not want to be limited in their earnings, or who do not qualify for a student allowance, are able to access the Student Loan Scheme to help with their living costs (currently $281.96 per week).
The Student Loan Scheme has income-contingent repayments and is interest-free for borrowers who live in New Zealand.
"This helps to ensure that no one is denied access to tertiary education because they do not have finance available."
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