And Now for Some Good News

Doing International Aid the Right Way

A World Bank research paper has hailed New Zealand’s Recognized Seasonal Employer (“RSE”) scheme as highly successful and “best in class”. The RSE scheme was set up around 2007 as a New Zealand Pacific island aid programme. Normally these things are complete disasters, counter productive, replete with unintended consequences, and more often than not, lead to more dependency of the donee nation. But the RSE scheme appears to be working well. In fact the World Bank says it is the only international aid scheme which is successful.

The programme allows Pacific island nations to send seasonal workers to New Zealand to work in horticultural industries, picking and packing fruit and vegetables. This programme has proved to be a great boon to orchardists and winegrowers–who had lobbied for a scheme such as this. The industry was bedevilled with seasonal labour shortages. Whilst there were plenty of unemployed in New Zealand too many preferred to stay on the dole, rather than work seasonally in orchards.

The World Bank study says that the impact upon the sending Pacific Islands, Tonga and Vanuatu (which formed part of the study) has been very positive.

The results show that the RSE has had large positive effects on sending households in Tonga and Vanuatu. We find per capita incomes of households participating in the RSE to have increased by over 30 percent relative to the comparison groups in both countries, with per-capita expenditure also increasing, although by less than income. Subjective economic welfare is estimated to have increased by almost half a standard deviation in both countries, and households have purchased more durable assets such as DVD players, radios, ovens, and in Vanuatu, boats.

In Tonga RSE households also doubled the rate of home improvement, and in both countries, households became more likely to have a bank account, likely reflecting more formal savings. School attendance rates increased by 20 percentage points for 16 to 18 year olds in Tonga, and community-level effects were generally modest, but positive. Overall these results show that the seasonal worker program has been a powerful development intervention for the participating households, and that the RSE policy appears to have succeeded in its development objectives in the short run.

(School attendance rates have gone up due to parents being able, as a result of participating in the work programme, to afford school fees.)

The programme has been carefully designed to avoid some of the pitfalls of seasonal migrant worker programmes around the world.

Design of the RSE paid careful attention to previous experience with seasonal worker programs around the world, and the resulting policy contains many of the features that are believed to be best practice for ensuring success of seasonal worker schemes and to mitigate the risks of overstaying, displacement of New Zealand workers, and worker exploitation.

Clearly “overstaying” risks were a serious problem. Here is how the programme is structured to mitigate these risks:

The risk of overstaying is mitigated in a number of ways: workers may be re-employed in subsequent years, either with the same or a new employer, which can be contrasted with single entry schemes which provide high incentives for workers to overstay; employers are required to pay the costs associated with worker removal from New Zealand if workers become illegal, giving employers incentives to choose workers who they believe will return, and to not be complicit in their overstaying; and competition for places among communities and countries leads to social pressures to not jeopardize future possibilities for others by overstaying and thereby creating a negative reputation for one’s community.

Overstay rates are less than one percent–which is extremely low.
Another really good design feature of the programme is that employers are required to exercise an appropriate duty of care to their seasonal workers, not just to ensure they are not exploited, but that some basic services are available to them.

The RSE places special emphasis on “pastoral care”, with employers required to arrange suitable accommodation, internal transportation, access to personal banking services, provision of protective equipment and opportunities for recreation and religious observance. The risk of exploitation is mitigated through regulations stating that workers must not be charged recruitment fees and that employers must pay market wages and offer workers at least a minimum remuneration which depends on the length of the contract.

Is such programme easily replicable? Possibly, but we suspect there are some crucial required factors, the absence of which would mean yet another international aid disaster. Firstly, the programme had heavy input from the private sector in New Zealand, where it was clearly meeting an industry need. The industry itself worked intensively with the Labour Department to “get it right”.

Secondly, the sending communities often had significant input into who was accredited to go and work in NZ. The communities chose reliable, hard-working, decent citizens who would represent their communities well. This has not been a rights-based programme, but a merit-based programme.

Thirdly, because the participants worked hard–and the labour is physically demanding–they tended to use their earnings with great care. The money was not “easy-come, easy-go”.

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