Wage pressure in high-skill industries tops global index
New Zealand’s wage pressure in high-skill industries tops a global index of 31 countries
New Zealand has been given a score of 10.0 – the highest possible – for wage pressure in high-skill industries in the 2014 Hays Global Skills Index. This shows that New Zealand’s sector-specific skills shortages are the main pressure point in the local labour market and the highest in the 31 countries in the Index.
The Hays Global Skills Index, produced in collaboration with Oxford Economics, ranks New Zealand 10th on the list of 31 countries overall for efficiency of the skilled labour market. But a deeper dive into the findings shows that New Zealand’s employers face a tight labour market.
Reflecting New Zealand’s improving economy all seven of the indicators in the Index are either the same or higher than last year.
But the score of 10.0 for wage pressure in high-skill industries shows that wages in high-skill industries like engineering, technology, construction and finance, are experiencing skills shortages.
“These industries require highly-skilled staff but it takes time to undertake the necessary training,” says Jason Walker, Managing Director of Hays in New Zealand. “This makes these industries more vulnerable to skill shortages as the number of people qualified to start work cannot be changed quickly.
“We’re seeing particularly high demand in finance and IT, and also in engineering and construction. This is the result of increasing private commercial development, large public ‘anchor’ projects and the residential rebuild in Christchurch, as well as an increase in high value civil projects in Auckland and Wellington. Residential development is also strong across all the major regions.
“The shortage of talent has seen employers in these industries offer competitive wages to secure and retain suitably experienced professionals. The economic expansion is now well underway and increasingly broad based,” he said.
While New Zealand received the highest possible score for wage pressure in high-skill industries, it received low scores for both overall wage pressure and wage pressure in high-skill occupations (2.9 and 1.2 respectively). This suggests that wages for highly-skilled candidates (such as managers, senior officials or skilled trades) in all industries bar high-skill industries, are rising at the same rate as those for low-skilled candidates (such as process, plant and machines operatives, and administration workers).
Also of interest is the indicator for labour market participation, for which New Zealand received a moderately high score of 6.7. This shows that the proportion of working age people isn’t increasing, which gives less scope to boost overall participation rates.
New Zealand’s overall score rose from 4.3 in 2013 to 4.9 in 2014, further demonstrating that employers in high-skill industries face more competition for key talent.
“As a result, candidates with in-demand skills can be confident of securing their next career move,” said Jason. “But for employers in high-skill industries, there is a need to look at more innovative strategies to attract and retain top talent.”
About the Hays Global Skills Index
The Hays Global Skills Index assesses the efficiency of the skilled labour market in 31 countries, or its ability to supply skilled labour. It is a composite figure based on seven indicators, each with their own score. Three indicators explore the supply of talent, namely education flexibility, labour market participation and labour market flexibility. One looks at talent mismatch. The final three are wage pressures indicators, looking at overall wage pressure, wage pressure in high-skill industries and wage pressure in high-skill occupations.
A score of 5.0 indicates a balanced picture for labour markets, a score close to 0 indicates less intense competition for vacancies, and a score close to 10 shows severe difficulty in finding skills.
The Hays Global Skills Index can be viewed at www.hays-index.com.
Hays, the world’s leading recruiting experts in qualified, professional and skilled people.
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