Some business owners are facing going out business as they struggle to compete with employers using cheap and illegal labour.
A three-part ONE News Investigation has found some small business owners in Auckland are profiting from migrant workers by offering work for as little as $8 an hour.
The illegal practice is causing a headache for electrician Daniel Jackman who said he is unable to compete with other businesses able to offer below cost quotes.
He said tradespeople from across the board are being undercut by dodgy bosses paying their staff below the minimum wage.
"I just cannot compete with the people paying below the minimum wage, it's just not possible," said Jackman.
"To find a job I'd priced at $12,000 could be done for $4,700 by immigrants...it's not hard to do the maths."
The practice is also causing concern for the Inland Revenue Department as illegal wages often go hand in hand with tax evasion.
The IRD estimates it loses out on $7 billion a year because of wage payments made under the table.
IRD investigations manager Raju Budhia said the practice is essentially cheating New Zealanders out of public services.
"Essentially they're cheating the revenue (IRD) of the amount of money that the Government takes in as revenue that they can spend on the services that they provide, like hospitals, schools," said Budhia.
"So in effect evading your obligations cheats every New Zealander."
Ministry vows to take action
Labour watchdogs are vowing to crack down on the practice of underpaying desperate workers.
The Ministry of Business, Innovation and Employment has responded to the ONE News investigation with a "full co-ordinated initiative", including a raft of measures to target illegal bosses.
On-the-spot compliance checks, where a team will sweep into the workplace without prior warning, aims to catch-out dodgy employers paying below the minimum wage.
The checks will focus on reviewing the number of hours employees work in comparison with their pay, as well as checking the visa details of both workers and employers.
"The significance of the new initiative is that it brings employment and immigration matters together in one team, supported by appropriate language speakers, and it toughens our stance on non-compliant behaviour," said Ministry of Business, Innovation and Employment spokesperson Mark Scott.
"The labour inspectors and the intelligence staff from Immigration New Zealand have put a lot of work into identifying the sectors to target based on previous behaviour in the sector, information provided, anecdotal evidence and intelligence gathering."
The Ministry is also looking to ramp up education measures in non-English speaking communities.
Workers, employers could face deportation
ONE News has talked to migration experts concerned underpaid employees are too scared to report dodgy bosses as they fear losing their migration status.
Liquor store worker Arjun Krishnan said he would discourage migrants from reporting dodgy bosses after he reported his boss for paying him $6 an hour.
Krishnan was forced to admit he was working more hours than his student visa allowed and is now facing deportation when his visa expires next week.
"I did think I would be safe because they did promise me I would be safe," said Krishnan. "This is the reason nobody comes forward. I don't want any other immigrant showing this courage and getting in trouble like me."
The ministry said they will continue to treat whistle-blowers on a case-by-case basis and those unwilling to reveal their identity can always contact Crimestoppers anonymously.
They say the immigration status of employers who break labour laws will also be treated on a case-by-case basis.