Artificial Intelligence has become surrounded by competing narratives. One side often predicts the wholesale replacement of workers, while the other side dismisses AI as an overhyped technology that will never live up to expectations.
The International Monetary Fund recently delivered what appears to be encouraging news for New Zealand. It concluded that New Zealand is among the countries best placed to benefit from artificial intelligence because of its skilled workforce and capacity to adopt new technology.
That optimism came with a warning though. While AI has the potential to improve productivity and economic growth, a significant proportion of New Zealand jobs may be affected by artificial intelligence, with many workers needing to adapt as technology changes the way work is performed. The IMF estimates that around one third of workers may be effected and it is likely to be particularly acute amongst women and younger workers.
AI is already transforming workplaces. It can analyse vast quantities of information in seconds, review documents, draft reports, automate repetitive administrative work and assist decision-makers in ways that would have seemed impossible only a few years ago. For a country like New Zealand plagued by low productivity AI does offer genuine opportunities to do more with the resources we have. But increased productivity should not be confused with simply reducing head counts in the workplace.
Some of the world's largest employers are discovering that replacing experienced workers with artificial intelligence is proving considerably more difficult than they planned for.
The Ford Motor Company invested heavily in AI-assisted engineering and manufacturing systems but it found that automation lacked something its most experienced engineers possessed in abundance - decades of accumulated practical knowledge, intuition and judgment. Recently Charles Poon, Ford's Vice-President of Vehicle Hardware Engineering, candidly explained "Mistakenly, we thought that by just introducing artificial intelligence ... that would produce a high-quality product." Ford has since brought back more than 300 experienced engineers (internally known as "greybeards") to mentor younger employees and to improve AI systems. Since doing so, Ford has reportedly reduced warranty costs, improved vehicle quality and achieved its highest industry quality ranking for more than a decade.
IBM has reached similar conclusions. While artificial intelligence has successfully automated routine human resources and administrative functions, it has confirmed that it continues to hire software engineers, sales professionals and client-facing staff because automation created demand for different human skills rather than eliminating the need for workers altogether. It has so far concluded that AI proves effective at routine tasks but it has proved much less effective where creativity, judgment and human relationships remain essential.
For 2026 IBM has planned to triple its entry-level hires in the United States. It’s Chief Human Resources Officer, Nickle LaMoreaux, said that investing in entry-level talent is essential to IBM’s long-term agility “if we don’t continue to invest in entry-level hires, what happens in 3-5 years”, and commenting further “there’s no pipeline, the well simply dries up”.
Closer to home, the Commonwealth Bank of Australia has also found that customer service could not simply be handed over to AI. While chatbots dealt efficiently with straightforward enquiries, many interactions ultimately required escalation to experienced employees. Last year CBA laid off 45 customer service staff and replaced them with an AI "voicebot” but it soon found that the AI system was unable to cope, which led to an increase in calls and it led to CBA to reversing the job cuts.
It is hard to object if AI removes repetitive administration, reduces waiting times and allows public servants to concentrate on work requiring higher levels of skill and judgment. But work is seldom a collection of tasks. It often requires exercising judgment, discretion, initiative and accountability. It often is assisted by “institutional knowledge”, either gained by experience or recognising whom to turn to. Those qualities are often impossible to reduce to a written process, let alone an algorithm. Responsibility still rests with a human decision-maker that can be held to account – not with an algorithm.
In this year's Budget, the Government signalled that AI would play an increasing role in cost saving and improving efficiency across the public service while continuing to reduce staffing numbers. It plans to further slash public service jobs by about 14 per cent (around 8,700 jobs) over the next three years, with a planned cost saving of about $2.4 billion.
Unfortunately, this government takes a pretty blunt approach to major ticket items; tiny tax cuts in 2024 which cost billions, tax cuts for landlords, again with billions in costs. We were told to tighten our belts, the government had nothing to meaningfully assist those hardest hit in the continuing cost of living crisis. Cost savings have taken similar blunt approaches; stripping pay equity from thousands and thousands of largely underpaid female workers. Other large investments in the future of New Zealanders faced similar approaches; slashing the quality of school lunches and scrapping large electric ferries for second hand Toyota type fuel guzzling ferries spring to mind.
If huge companies such as Ford, IBM and the Commonwealth Bank have rediscovered the value of experienced employees after attempting greater automation, the government and its agencies should be careful not to repeat the same experiment at the public expense. Read more...
The budget announcement that the government has set aside $18 million over the next fours years to counter migrant exploitation and immigration non-compliance is good news for migrants and those in New Zealand on working visas.
In announcing the funding the Immigration Minister, Erica Stanford, said that the funding would be used for three new front-line teams to respond to serious offending, protect people from harm and exploitation, and increase the number of cases investigated.
A recent Employment Tribunal decision in the United Kingdom illustrates the effect that non-compliance by so-called employers on migrants can have on migrant employees that accept work in good faith and move to a new country with limited support for migrants.
Shabin Shaji, a 33 year old Indian citizen, came to the UK to work as a care worker through a post-Brexit visa scheme for an “employer”, Swan Care Solutions Ltd, that failed to provide him with a single days work.
Mr Shaji paid agents £17,000 before he was interviewed for a role at Swan Care Solutions on WhatsApp. He was “successful”, and was then given a certificate of sponsorship, entitling him to live and work in the UK with Swan Care Solutions as his Home Office-approved sponsoring employer. The computer science graduate emigrated from Kerala to Stafford, England, bought a car for the job and undertook online training in 2023 believing there was a major shortage of healthcare workers in the UK.
His sponsored visa prevented him from working for anyone else for more than 20 hours a week. The Tribunal heard that Swan Care Solutions’ staff suggested Shaji take cash-in-hand jobs and use a food bank when he said he was struggling, telling him they would be in touch when it was his turn.
Mr Shaji described being broke and having to rely on charity. He drank tap water and bought bread close to its expiration date to survive. He looked around local shops in Stafford for free bananas and bread for those who were struggling. He said he attended church and after worship the good people shared snacks with tea with him, for which he was very grateful.”
He described being in a terrible situation, feeling like no one in authority cared “if I lived or died.” A year after his arrival in the UK, Mr Shaji eventually managed to secure sponsorship with another employer in April 2024, but he later returned to India in ill health.
The Employment Tribunal ordered Swan Care Solutions to pay Mr Shaji nearly £30,000 wages for the work he was “ready, able and willing to do”. The judge, Kate Edmonds said “the claimant had done what needed to be done to start work. He was now in the country, with the right permissions, and living in the right location. However, the respondent did not provide him with work, nor did they pay him.”
In New Zealand, Immigration NZ statistics show for the financial year 1 July to 30 June 25 there were:
- Complaints received – 2,798
- Investigation actions taken – 413
- Warnings issued – 45
- Prosecutions – 4
Perhaps the most significant prosecution that financial year was of Mr Ratha Ny, the owner and director of R.S.X Ltd (trading as the Bakehouse Café in Murupara) who pleaded guilty and was convicted in March 2025 for 4 charges under the Immigration Act for providing false or misleading information to Immigration NZ. His company, R.S.X Ltd, also pleaded guilty and was convicted of 6 exploitation charges for serious breaches of employment law, including knowingly underpaying employees below the minimum wage and failing to correctly pay holiday and related entitlements. The Court fined R.S.X Ltd $150,000 for the 6 exploitation charges and ordered the company to pay $25,000 in emotional harm reparations — $10,000 each to 2 victims and $5,000 to a third. These reparations were paid by Mr Ny in anticipation of sentencing and were not court-imposed. This brought the total court-imposed penalty to $175,000. These penalties were in addition to $160,000 in minimum wage arrears that R.S.X Ltd had already repaid to the affected workers prior to sentencing.
Minister Stanford explained that the need for the extra funding was due to “delays in responding to migrant exploitation, bad behaviour by employers” and to justify more stringent changes in relation to the ability to deport migrants facing more minor criminal offences.
Speaking for the Labour Party, Phil Twyford said “Labour welcomes the increased resources for combating migrant worker exploitation”, “increased staffing for compliance in this area was a condition of Labour’s support for the India free trade agreement”.
Migrants legally entitled to work in New Zealand often leave family, careers and support networks behind them, and arrive with little support in New Zealand. At the least, they should be provided the protection that the criminal laws, immigration laws and employment laws afford. The problem is ensuring that those migrants know their rights, the protections that are provided and channels for reporting breaches – and of course adequate resourcing to ensure compliance with those laws. Read more...
In Australia, from July this year, about 100,000 of the lowest paid employees on Australia’s minimum wage will receive an above-inflation pay rise of 6% as part of the Fair Work Commission’s annual review. The new minimum wage will be AUD$26.44 per hour (or $1,004.90 per week for a 38-hour week). The Commission has also raised the wages of a further 2.7 million workers on the lowest award rates by 4.75%.
Award rates are legally enforceable minimum pay rates and employment conditions determined by the Australian national industrial relations system. They cover most employees and are industry or occupation specific, covering things like base wages, overtime, penalty rates, and allowances. They are updated regularly.
The Fair Work Commission said tighter monetary policy by the Reserve Bank of Australia will "undoubtedly" slow the economy in the year. The Commission said that “it would not be practicable or responsible in the current uncertain circumstances to award a real wage increase for employees," but we should ensure that “employees generally are not worse off in real terms than they were as at 1 July 2025."
In New Zealand employees aged 16 or over must be paid at least the New Zealand minimum wage. This rose on 1 April 2026 by 45 cents (or 2%) to NZ$23.95 per hour (or $958 for a 40hour week) for all adult employees. Unlike Australia, the minimum wage is set by the government, not an independent body like the Fair Work Commission in Australia.
The minimum wage effects a significant proportion of our workforce and helps to enable many of New Zealand’s most vulnerable workers support themselves and their families. MBIE figures show that there were estimated to be just over 101,000 earning the minimum wage in 2025.
In announcing New Zealand’s minimum wage rate increase for 2026 the Minister of Workplace Relations and Safety Brooke van Velden said “I am pleased to deliver this moderate increase to the minimum wage that reflects this Government’s commitment to growing the economy, boosting incomes and supporting Kiwis in jobs throughout New Zealand. The increase aims to help minimum wage workers keep up with the cost of living, with inflation projected to remain relatively stable at around 2 per cent from June 2026”.
Currently inflation based on the Consumer Price Index for New Zealand households is running at 3.1%. The Reserve Bank of New Zealand says that the CPI increased by approximately 15.5% over the three-year period from the March 2023 quarter to the March 2026 quarter. In simple terms, this means that a basket of goods and services that cost $100 in March 2023 would typically cost around $115.50 by March 2026. The primary drivers of these cumulative increases over the three years have been housing and household utilities such as rising electricity costs, local authority rates, and rent. According to MBIE figures, in comparison the adult minimum wage in New Zealand has increased by 5.51% over the past 3 years (moving from $22.70 in 2023 to $23.95 in 2026).
The Employment Court has said that the Minimum Wage Act “is a statute of fundamental importance in the sphere of employment law in New Zealand. It is a statute that is designed to impose a floor below which employers and employees cannot go. It is directed at preventing the exploitation of workers, and is a statutory recognition of the diminished bargaining power in low paid employment”.
In forming the government, the National Party campaigned on tackling the cost of living crisis. “Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost of living crisis and National will deliver that to them”, Christopher Luxon said.
In delivering the budget this year the government provided little in the way of new support for New Zealanders struggling with the cost of living. The Finance Minister, Nicola Willis, defended the “prudent” approach. She said the “Middle East conflict underscores the need for fiscal discipline”.
The Labour Party leader, Chris Hipkins, said the budget offered “no plan on cost of living” with “no support for New Zealanders who are struggling”. He said the budget would result in more job losses and “more decline and more people giving up and leaving the country”.
What is clear is that our lowest paid workers are set to continue to go backwards as the cost of living crisis continues. Where does the pay for our most vulnerable workers cross the line from a minimum level of fair pay into exploitation? Read more....
