Islands Business - We Say: ROOM FOR IMPROVEMENT IN WORKERS' SCHEME

'In the four to seven months that the workers spent in New Zealand, each one on average earned NZ$6000 after expenses, thereby sending back over NZ$30 million to their countries collectively by way of remittances'

No initiative in recent years has brought so much benefit so quickly to so many Pacific islanders—and directly too—as New Zealand’s labour mobility scheme which has been in operation for the past one year.

In a global scenario, where labour mobility has been growing by leaps and bounds in the past decade or so despite tighter immigration controls following the widespread perception of a progressively worsening security situation, the Pacific islands region has lagged behind.

This has been due to a number of issues ranging from the lack of an easily employable skilled workforce to fears of illegal overstaying by those granted fixed term work visas.

After discussions and deliberations that went on for years, the sheer pressure brought to bear on the governments by the local industry following the shortage of local semi-skilled and unskilled labour finally forced the issue which led to the metropolitan governments of the region to consider the matter in all its seriousness.

New Zealand’s initiative, called the Registered Seasonal Employer scheme (RSE), employed over 5000 workers from five Pacific countries—Samoa, Tonga, Tuvalu, Kiribati and Vanuatu—in the first year of implementation (the Solomon Islands has been added to the list recently). The scheme has been deemed a success both for Pacific islanders and New Zealand farmers and entrepreneurs in the agriculture and horticulture sectors.

In the four to seven months that workers spent in New Zealand, each one on average earned NZ$6000 after expenses thereby sending back over NZ$30 million to their countries collectively, adding substantially by way of remittances particularly to a small islands economy like Tuvalu.

What the seasonal workers earned in New Zealand net of expenses in the less than one year they spent there was more than what they would have earned back in their home nations.

Smile of satisfaction: a returned worker in Vanuatu. Pic: Dev Nadkarni

For a nation like Vanuatu, which unlike other Pacific Islands has no remittance revenue channel to speak of, the RSE scheme has opened a whole new opportunity, earning for the economy as much as 55 million Vatu (equivalent to approximately A$670,500) in the first year alone. In a country that is comparatively new to the cash economy, these earnings are beginning to set in motion a transformation at the rural and community levels.

Perhaps one of the best outcomes of last month’s Pacific Islands Forum meeting in Niue was Australia’s announcement of a trial scheme similar to New Zealand’s in which some 2500 Pacific Islanders would be awarded seasonal work visas for employment in the country’s farm sector.

The Australian government has closely studied the RSE scheme sending its officials to Wellington for consultations and though it has been extremely cautious in announcing the scheme in Australia, it is a good beginning.

In the first instance, a representative country each from Melanesia, Polynesia and Micronesia—the Solomon Islands, Kiribati and Tonga–will kick-start the Australian scheme with Papua New Guinea added later following pressure from its leader.

Though hailed as a success, there is considerable room for improvement in the way the scheme is implemented. This has been highlighted by a number of issues that have come to light in New Zealand.

As well as better sensitisation of both employers and employees to each other’s socio-cultural mores, there needs to be a better methodology in the preparation of candidates for work in New Zealand and Australia before they leave their home countries. This would undoubtedly result in better productivity earlier on in the employment cycle leading to less frustration on both sides.

On the part of the employers, there must be better control from the government in ensuring that optimal working and living conditions are made available to seasonal workers. There have been complaints of overcrowded living quarters from some parts of New Zealand where seasonal workers are employed.

But the most important aspects that need immediate attention from all stakeholders that includes governments of the host countries, islands nations, financial institutions and workers themselves have to do with matters relating to money.

Because of the high cost of insurance in New Zealand and Australia, most seasonal workers loathe paying a premium to buy medical and injury insurance covers for the duration of their stay. This can result in the employer being saddled with costly medical and hospital bills and even perhaps the cost of sending back an incapacitated worker prematurely. There have already been some precedents in New Zealand that has had several employers worried.

It is important, therefore, for all concerned to work out a cost effective but compulsory medical and injury insurance scheme sooner rather than later.

The other issue is that of money transfer. Though the World Bank has been working with regional governments and banks to reduce the prohibitively high commissions that are charged for transferring money in the Pacific Islands region—even working on a separate mechanism for the purpose—an alternative seems to be still some distance away. The region happens to have the highest money transfer fees in the world, in some cases even as high as 25 to 40 percent of the amount transferred.

On a positive note, there have been discussions at last month’s Forum on ways and means to achieve this reduction in fees. One of the suggestions is to have twin bank access cards—one each in the country of origin and the country of employment—so that the account can be seamlessly accessed at both ends, thereby considerably reducing transaction costs and cutting out the high fees currently being paid by seasonal workers to money transfer companies.

This must be treated with utmost urgency if workers’ earnings are to be maximised for islands nations’ economies.

A third possible area that could potentially cause problems for seasonal workers is the role of recruitment agents in their home countries.

Their manner of doing business needs to be regulated by the home countries in that it must be ensured that fees charged are reasonable and there are no hidden costs which the hapless workers may sign up in their enthusiasm to work abroad.

In several countries around the world, the role of recruitment agents is subject to some form of administrative scrutiny for there have been too many cases of unsuspecting workers having been charged unfairly.