The Employers and Manufacturers Association says New Zealand's high cost of living is putting off overseas workers.
It comes as industries across the country struggle with dire staffing shortages. Healthcare, agriculture, teaching and hospitality are being hit particularly hard.
Speaking with AM on Wednesday National leader Christopher Luxon warned if the worker shortages aren't fixed, New Zealand's international reputation could be damaged.
"The problem is that many of our tourism restaurants across New Zealand, our tourism attractions are actually not operating at full capacity.
"It's a real challenge and it won't take much for some bad experiences to lead… New Zealand gets a bad reputation for poor service," he said.
But it seems our reputation might already be in trouble - but not in the way he warned.
Earlier on Wednesday, head of advocacy and strategy at the Employers and Manufacturers Association (EMA) Alan McDonald said the country's high costs are putting potential migrants off.
"I think we've probably lost our lustre as a great place to come," McDonald told AM's Ryan Bridge.
"For example, one of our bigger members has done job shows in the United Kingdom for a number of years. They went back up this year looking for 200 or 300 positions, they made 30 offers and only eight were accepted. And those people were saying [it was because of] the high cost of living, high cost of housing and you're shut,' If I come down here, my family and friends can't come and visit'."
McDonald said New Zealand currently has a "little bit" of a reputation problem internationally.
And it couldn't come at a worse time. McDonald said a recent EMA survey of its members found 93 percent are struggling to find staff and 40 percent have been advertising for more than six months.
He said the 1.5 percent who weren't having problems finding workers weren't actually looking.
McDonald said the lack of workers is hitting "pretty much everybody" and the Government desperately needs to help employers find staff.
He said employers are looking absolutely everywhere for workers but the low unemployment rate of 3.1 percent is making it near impossible.
"You've seen the Prime Minister [Jacinda Ardern] out talking about the country being open for business. But while she was in the US, the State Department was saying, 'Don't come to New Zealand because of the pandemic and the closed borders'," McDonald said.
"We're seeing the ministers getting out there and supporting New Zealand but as you know, when you lose your reputation, it takes quite a while to get it back.
"We are perceived as difficult to get into because of the confusion around visas. There are some issues around processing, although to be fair, Immigration New Zealand's doing a hell of a lot better than it was."
McDonald said the Government should allow more access to staff while the country adjusts to the new immigration settings.
"We've gone from sort of relatively free access to migrant labour to quite tight with the median wage, now set as a barrier at $58,000.
"We probably need some kind of transition process because the skill shortages and the people shortages are across the board at all levels of skills and all wage brackets."
The Government's newly introduced immigration reset made it easier for migrants to become residents but only if they are paid certain amounts. The changes mean most employers wanting to hire migrants will need to pay them the median wage - currently $27.76 an hour or $57,740 a year.
McDonald said the wage makes it difficult for businesses to get staff and a slower transition would help.
"You need to look at a transition from where we were to that because it's quite a hard line and that [pay requirement] would catch out, for example, chefs, truck drivers and barristers, and tourism operators… there are real shortages in the hospitality sector.
"But not just that, we're seeing factories working one shift instead of two because they can't get people. We're seeing factories paying $25 to $27 an hour instead of minimum wage because they can't get people."
When announcing the new pay requirements, then-Immigration Minister Kris Faafoi said it will help stop migrant exploitation.
"New Zealand cannot return to pre-pandemic trends that saw us overly reliant on growing numbers of lower-skilled workers and resulted in the increased exploitation of migrants," Faafoi said at the time.
"The cornerstone of our rebalance is the new green list which will incentivise and attract high skilled migrants to New Zealand, by providing a new streamlined pathway to residency for those globally hard-to-fill roles. The list features 85 hard-to-fill roles, including construction, engineering, trades, health workers and tech.
"Our rebalanced immigration system will be simpler, reducing categories, bringing more online accessibility and streamlining application processes for businesses," he added.