Backpacking — an own goal for New Zealand?

New Zealand has a problem. On the one hand side the state gets a lot of money by having young foreign people working in their country. Those young people get a working visa for a year and most of them work on fields as harvesters. After the year the working visa can be extended for three months but then it is time to leave the island or more explicitly: the “temporary workers” leave. The visa regulation makes sure that employers have the possibility to employ cheap workers. Sounds like a good solution and all people involved seem to profit from it.

But on the other hand, with a view to the current unemployment rate, the question comes up whether all parties profit from backpackers who can work for average wages. At 5.7 per cent the unemployment rate in NZ is quite high (unemployment rate Apr. 2015 Germany: 4.7). Besides, a lot of Kiwis work for wages which are insufficient for buying a house or renting a flat on the basis of the increasing prices. By raising the wages of harvesters, the final product prices would grow rapidly.

The debate about how to improve the situation also exists in Australia where there are similar problems.

One opportunity would be to limit the number of working visas or to set up a rule for a minimum employment of locals. The state has to take care on its habitants and therefore the state needs money. An extra tax which employers would have to pay for employed backpackers would also be an option which would bring money to the state but increase food prices.

It seems like every possibility ends in a vicious circle and it is hard to find a proper solution. But it is definitely a topic that New Zealand government has to work on in the future.