Access Denied? Pacific Island States Need Regional Labor Markets

For the South Pacific the novel coronavirus has not – at this moment – become a direct serious health concern. At present, Pacific Island states have done an excellent job of containing the pandemic, with fewer than 300 cases across the region and only seven deaths as of April 22. The ability of island states to quickly seal off their borders and isolate themselves from the world in order to keep what cases they have to a minimum has been advantageous.

However, this isolation has come at a huge economic cost. Most of the Pacific Island countries are heavily reliant on tourism for income, and with international travel all but completely shut down, they have limited resources to maintain their economies. With no possible way of knowing when international travel will again become safe, these states will be facing considerable economic difficulties.

Alongside tourism, one other major source of income for these country – remittances – looks like it will be seriously affected. Seasonal agricultural work in Australia and New Zealand is the primary source of remittances for Pacific Island states. The ability to generate remittances is the most effective, and least paternalistic, tool for the advancement of developing countries. Both Australia and New Zealand have expanded their seasonal worker programs in recent years, although greater labor market access remains a key demand of Pacific Island states.

In light of the COVID-19 pandemic there has been some good and some bad news on this front. The good news is that the Australian government has extended visas by 12 months for Pacific Islanders already in the country working. New Zealand has extended these visas until late September 2020. This will provide some certainty for domestic farmers who often struggle to find local labor for their farms, and whose other main source of labor – backpackers – will be considerably affected by the pandemic. Importantly, this will allow remittances to continue to flow back to workers’ home countries, where other economic opportunities will be limited.

According to the World Bank, for several months work within Australia’s Seasonal Workers Program, Pacific Islanders typically send back around US$5,700 to their families in their respective countries. This can be as much as three years’ worth of wages that they would earn in their home countries. Seasonal work in Australia is thus a huge boost. In this currently difficult period, such remittances are a significant financial addition that families might very well require.

However, the bad news is that both Canberra and Wellington have declared they won’t be issuing any new visas for the foreseeable future. This closes off one major opportunity that Pacific Islanders could have had to circumvent the collapse of the tourist industry.

There may be one sign of hope on the horizon. With both Australia and New Zealand doing well to keep their own case numbers relatively low there is an increasing prospect that the flow of people between the two countries and the region could reopen, although this still seems potentially months away.  However, if transmissions of the virus also remain low throughout the Pacific the prospect of allowing new seasonal worker visas could be possible.  This, however, would likely require strict monitoring and considerable precautions.

Both Canberra and Wellington will undoubtedly be devising rescue packages for the smaller countries of the region, and the ability to complement these with increased labor mobility would be a way to quickly get cash into people’s hands throughout the Pacific. This would not only be welcomed by the people and governments of the South Pacific, but also by the treasury departments in Australia and New Zealand, who will see it as an opportunity to spend less on rescue packages.

Pacific Island governments will be left with a difficult choice. Access to the Australian and New Zealand labor markets would prove vital to their economies and the well-being of their publics, but the risk of transmitting the disease back into their countries – where the healthcare systems do not have the capability to handle significant numbers of infected people – could be devastating.

For Australia and New Zealand, however, economic difficulties in the Pacific have the potential to pose serious knock-on effects. These will undoubtedly exacerbate the Pacific’s challenges with their development, leading governments to potentially seek assistance further afield. The offer of considerable loans from China could become very attractive, and continue to prove very concerning for Canberra and Wellington. Labor mobility is the one strategic card that both these countries have that Beijing cannot match. Finding a way to facilitate its continuation – even during this extraordinary period – should be a priority for Australia’s continued Pacific Step-Up and New Zealand’s Pacific Reset regional policies.