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New analysis shows 40 percent per capita jump in Tonga

PORT VILA, Vanuatu (Vanuatu Daily Post, Dec. 7, 2010) – New research out of the University of Waikato shows that the Recognized Seasonal employment (RSE) scheme is producing a triple win good for the [New Zealand] horticulture and viticulture industry, good for the seasonal workers, and good for economic development of the participating countries.

An evaluation of New Zealand’s seasonal program shows that participation in the scheme raises household per capita income by almost 40 percent in both Vanuatu and Tonga.

The analysis by Professor John Gibson of Waikato Management School and Dr David McKenzie of the World Bank is the first of its kind to look at the impact of such a scheme on the sending countries.

"Our research provides further evidence that migration is one of the most effective ways to boost development in poor countries says Professor Gibson. Coupled with analysis which shows improvements in productivity for growers that hire RSE workers and very low rates of overstaying and modest impacts on the native labor force, these results suggest more countries should give seasonal worker programs a chance."

New Zealand’s RSE scheme draws up to 8,000 workers a year, mostly from Pacific nations. Amongst the Pacific Island workers, nearly three-quarters are from Tonga and Vanuatu. The researchers looked at the impact of the scheme on a sample of 900 households in these two Pacific nations between 2007 and 2010. Their sample included households supplying workers, households with RSE applicants who were not as yet recruited, and non-applicant households. The research team visited the households four times over three years to measure the impacts.

After participating in the scheme, per capita incomes of households sending workers were approximately 40 percent higher than for matched households who did not have workers recruited. "These gains in household well-being greatly exceed those of other popular development interventions like microfinance and conditional cash transfers," says Dr McKenzie.

On top of higher incomes, the researchers found other benefits to households from participating in the Employment scheme

"They are more likely to make dwelling improvements, to open bank accounts, and to make major purchases of durable goods, says Professor Gibson. And in Tonga we found substantial increases in secondary school attendance for 15 to 18 year olds in households participating in the scheme."

Head of Immigration New Zealand Nigel Bickle says the RSE policy is about creating a sustainable labor supply if no New Zealanders are available to do the job. At the same time the Employment scheme provides Pacific people with an opportunity to contribute to their economy and Island development, gain knowledge and transfer it to work experience through on the job training an opportunity which may not be available in their home country.

"The impact results reflect a combined commitment of New Zealand and the Pacific to ensure a continuous success of the scheme by managing the local businesses’ sustainability and to gain maximum advantage for both New Zealand and Pacific Island economies. The RSE is a great model of a triple win initiative."

More than half a million seasonal workers take part in temporary worker migration programs across the Organization for Economic Co-operation and Development countries. Under New Zealand’s RSE scheme, which began in 2007, migrants work for an accredited employer in the horticulture and viticulture industries for up to seven months in every 11 months, and may return if recruited again.

Employers first have to show that no New Zealanders are available for the work, must contribute one-half the cost of airfares for their migrant workers, must pay market wages and provide a minimum quantity of work, and are responsible for costs of repatriating any migrant workers who overstay their visa.

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