Labour says using migrants' wages as a proxy for skills is a "poor policy".
"Tweaking the threshold and coming up with a new arbitrary threshold is not going to solve any of the concerns people have about immigration," immigration spokesman Iain Lees-Galloway told The Nation on Saturday.
The Government's original plan was for immigrants to have a three-year cap in New Zealand unless they were paid more than $48,839 a year or $23.50 per hour.
But under today's backdown, immigrants now only need to be paid over $41,859 a year or $20 per hour to avoid the cap. That pushes the threshold down closer to the minimum wage, which is $15.75 an hour.
Kim Campbell from the Employers and Manufacturers Association told the Nation the adjustment had gone far enough for employers, but said something had to be done.
"Everyone agreed there had to be some adjustment to the settings, and in our view they'd gone a bit far.
"Employer surveys were saying they couldn't get people in certain places, across the board. Pretty much anyone employing, anywhere."
Mr Campbell says both the EMA and Labour agree that immigration is needed, but differ on how to go about putting filters on.
He thinks Labour's 30,000 "arbitrary" target is too low, and will stall the economy.
"All the growth we're enjoying will disappear. These are growth problems - we've got to find out way through them. I don't think the arbitrary plan [Labour] has will work."
Mr Campbell said using an income gap was one way to put a filter on the number of people wanting to move to New Zealand. The number was about right, he said.
Mr Lees-Galloway says National has failed to engage on the immigration debate.
"They rolled this policy out without consulting with people like Kim or Federated Farmers, without thinking it through properly because they hadn't done the homework."
He said Labour wants to focus its attention on genuine skill shortages, which should be filled by migrant workers.
"Unfortunately our immigration system is being used to prop up the economy. All our economic growth is based on population growth.
"That's not making people better off in real terms - it's just growing this size of the economy".
He said as long as the country is reliant on migrants working minimum wage jobs, the economy will not become more productive.