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Maharey Speech: Training & Development conference

Preparing for our future through investment in our people

Steve Maharey Speech to the to the New Zealand Association for Training and Development conference 2003. Duxton Hotel, Wellington.

INTRODUCTION

Thank you for inviting me to speak at the New Zealand Association for Training and Development Conference. Conferences like this one are an important way of discussing how as people and businesses we can address the challenges that we face in an ever-changing world. In order for New Zealand to have a competitive edge we need businesses and individuals that are innovative and adaptable to change. We need learning and development at all levels to develop a competitive edge.

The future of New Zealand depends on the skills of our workforce and the way that we use our people.

In an environment where there have been increases in global connectedness, rapid advances in technology and a great deal of turbulence there is a need for adaptability and skills that can be applied across a number of different jobs. Not only is the adaptability required for workers, but it is also required by business. Firm success depends on being adaptable to changing circumstances and innovative leadership.

There is no one way to achieve a productive and adaptable workforce, let alone an economy that uses these workers in the way that makes the most of their capabilities. Government, business and New Zealanders need to work on a number of fronts to meet these goals. We need a co-ordinated approach to up-skill the work-force. The public and private sectors need to work in co-operation to create a talented, prosperous nation.

THE FUTURE OF WORK IN NEW ZEALAND

Over the past two decades there have been some major trends and changes affecting the New Zealand economy and labour market and many of these are expected to continue into the future. The challenges presented by these changes provide the backdrop under which planning, innovation, investment and training take place.

Firstly, there has been an increase in global connectedness. Over the two decades world trade has increased at about twice the rate of world GDP. Flows of capital, labour and information have also increased considerably as technology has driven down the costs of transport and communication.

Integration into the world economy allows New Zealand enterprises and workers to earn higher incomes by specialising in industries where we can build a competitive advantage. For an economy like ours, that competitive advantage will lie in knowledge and innovation (across all industries). Industries that use low skilled labour and compete on cost have come under increasing pressure from foreign producers. To make the most of increasing global connectedness, New Zealand needs a workforce that is highly skilled and capable of innovating.

Secondly, technology has changed and may have boosted productivity growth. It is just two decades since PCs were introduced into the New Zealand economy, PCs and ICTs generally are now essential to the work of most firms.

A lot of research internationally has shown that new technologies, on average, increase the demand for highly skilled labour relative to low skilled labour. This is both because skilled workers are more able to work with technology, but also because they adapt more readily to the changes they have brought about in workplaces. With technology advancing rapidly on several fronts the demands on our workforce to cope with constantly evolving and more sophisticated production techniques look set to increase.

Thirdly, there are large on-going changes in the nature of work and the way that firms organise themselves. Generally, there is a high turnover rate amongst firms, with high rates of firm entry and exit, leading to constantly changing circumstances for business, employees and people considering work. More specifically, the work environment and what we consider as the “workplace” is changing. Examples of this change are the increases in home-based businesses and teleworking.

Finally, New Zealand’s population is ageing, with significant implications for our economy and society. The average age of workers is increasing and is expected to increase further in the future. This may not reduce the pace of change in the economy and the workplace, but it will necessitate a change in attitudes towards participation in work and training and who are considered to be “typical” workers. For example, we may expect more people to continue working beyond what is currently the norm, meaning that life-long learning is going to be important for them so that their skills remain relevant.
THE CRUCIAL ISSUES FACING THE NEW ZEALAND GOVERNMENT, FIRMS AND PEOPLE

There has been a lot of talk recently about building a high quality-high wage economy, but what does it really mean? What it means is that we need to have a workforce with the skills to not only be productive in their current jobs, but increasingly they have to be able to adapt to the rapid and on-going change that occurs in the economy and society. However, not only does the workforce need to be skilled and adaptable, the workforce needs to have the opportunities to apply their skills. There is no one method for achieving this, but a number of different issues that need to be addressed.

We need to build management capability to innovate and manage for commercial success. Firms and entrepreneurs make decisions about innovation, investment, employment, what to produce and how much to produce on a daily basis. The leaders of firms need to encourage innovation and take opportunities where they exist. Firm capability in the end will determine how well we use our workforce and our people.

Working relationships and work places should be set up in a way that promotes productivity. We need an environment where workers feel safe, where they feel engaged in their job and where they have open communication with their employer. This sort of environment can encourage employees to move outside of their ‘core job description’ and innovate to create productive solutions.

Increasing the foundation skills of the existing and future workforce is going to be crucial to our future economic success. As stated above, developed economies continue to face on-going structural changes and people are going to need skills that can be adapted to a number of jobs. Foundation skills are the skills that are required to some degree in all jobs. As their name suggests they are the foundations on which other skills are built. They are also a key to adaptability. These foundation skills range from literacy, numeracy and presentation skills to learning how to learn. Such skills also underpin individuals’ sense of self-worth. Attitudes and behaviours, such as self-motivation, are also essential to the development of foundation skills.

Not only do we need people with strong foundation skills, but we need people with strong technical and specialist skills. There have been many reports about how shortages of people with technical and specialist skills are holding back economic growth in New Zealand, and this looks set to continue with expected continuation of rapid changes in technology. Many production processes, and certainly innovation in many areas, requires specialists with the in depth knowledge about a process, technology or field.

Not only is specialist and general training important, we need systems to ensure people’s skills are relevant and that their skills and talents match the rapidly changing opportunities in the economy. This means that the skills produced in the education and training system and by the private sector need to be those that are required to produce innovative and high quality products.

A final challenge that faces us as we seek to give New Zealand a competitive advantage is that we need to make the full use of our people. This means ensuring that people aren’t left behind, without jobs or in jobs that do not fully utilise their skills. For every person who is available to work and not working, we are losing their contribution to New Zealand income and wealth.

SPECIFIC GOVERNMENT POLICIES TO ADDRESS THESE CHALLENGES

The Government is doing its part to address the challenges that face New Zealand.

The tertiary education sector is being reformed so that the skills being learnt by students more closely align with those needed by business. Under the Tertiary Education strategy, tertiary education organisations will have charters and profiles to ensure that their goals align with national economic goals. We are also working on better alignment of the industry training sector with the wider tertiary education system to ensure that these sectors are working together to produce skills needed by our future economy. Other key changes in the tertiary education sector are: to create effective partnership arrangements with Maori communities; to create more future focussed strategies; to have improved global linkages; and to create a culture of optimism and creativity. One of the key focuses of the Government has been to strengthen the various pathways from school into tertiary education, training and work. In the 2003 Budget there has been an expansion of student allowances to 16 and 17 year olds who have finished year 13, an expansion of the student loans schemes and the capping of tertiary education fees.

Other initiatives to help with the pathways from school include the Gateway programme that provides senior school leavers with a range of structured learning opportunities in workplaces, which has been expanded so that by 2007 all 1 to 5 decile secondary schools will be covered. The Modern Apprenticeship programme has been expanded, so that a greater number of young people can participate in workplace learning. Regionalised programmes have been introduced to help early school leavers enter training, further education or paid employment. Support is to be expanded for young people who have completed youth training programmes and are in the workforce.

As well as specific funding for young people and for formal education, there has been significant expansion of Government funded industry training. Systematic work-based training is a cornerstone of the government’s Tertiary Education Strategy, enabling businesses to increase their productivity and compete successfully in the global economy and workers to gain new skills, boosting their value to employers. In the 2003 budget an $84.3 million package will increase the number of workers in structured industry training by 2005 from 100,000 to 150,000.
This Government is not only looking at the direct funding of education and training, but at the wider environment’s impact on skills and training. Through the Growth and Innovation Framework, we are considering the wide variety of influences on skills formation and the use of those skills and how to harness skills better in the interests of economic growth.

The workplace is where individuals often under-take a great deal of informal training. We need to promote workplace environments that encourage skill formation and productivity. The employment relations framework introduced by this government promotes good faith bargaining and mutual trust recognising that the employment relationship is a human relationship and recognising that employees are assets not merely costs. By promoting good practices in employment, we are looking to promote productive employment and discourage a race to the cheapest form of production.

This Government has established excellent partnerships with various industry groups to assist in meeting the challenges of achieving and maintaining a competitive edge. For example, as part of the Wood Processing Strategy (the Government’s partnership with the forestry industry), Government and Industry are working on key labour and skills issues for the industry. Examples of these issues are recruitment and retention problems, how to increasing productivity, improving the co-ordination of training to meet the needs of industry and improving the industry’s image as an employer.

Another example of this form of partnership is the Government’s involvement with the Nelson Marlborough Seafood cluster, where we are assisting the cluster to develop strategies to improve current and future recruitment, retention and training within the local industry. The Government is committed to working alongside industry in a real sense to overcome barriers to New Zealand achieving and maintaining a competitive edge.

The Government launched the Skills Action Plan in May 2002 to help employers, employees and future employees address the problem of mismatches between the skills of the workforce and the jobs available. One of the key Skills Action Plan goals is to improve the information available to key stakeholders (including employers, employees and people considering education and training) to help inform labour market choices. Two key initiatives to improve information to stakeholders are the introduction of the website WorkSite (www.worksite.govt.nz) and the introduction of the six-monthly publication workINSIGHT. These initiatives provide a wide variety of information about work and education and training in New Zealand.

Other goals of the Skills Action Plan are: to offer regions and industries assistance with solving labour market issues; to support skill development; and to ensure that New Zealand is able to attract skills and talents from global labour markets. CONCLUSION

New Zealand faces many challenges both currently and in our future, including increasing global connectedness, rapid advances in technology and large on-going changes in the economy and labour market.

To face these challenges we need a workforce that can adapt to change with transferable skills, we need a highly skilled workforce so that New Zealand has a high productivity, high wage economy. We need a system that encourages participation and is inclusive, to help both the economy and those that would have been left behind.

To address these challenges the Government, private sector and individuals need to work together. The Government needs to ensure that we have a system that promotes life-long learning, skill formation and a productive workforce. This is done through the funding and management of formal education, through a regulatory environment that promotes productive employment relationships and through business, industry and regional assistance that remove barriers to firm growth.

However, Government policy alone cannot address these challenges.

Businesses need to use good practice in their dealings with their customers, suppliers and employees. While there is no one model of good practice across all industries, a study by the Ministry of Economic Development indicates that leading firms are more likely to have greater commitment to deeper relationships with stakeholders groups, such as employees, and they work more closely with customers to meet their needs, rather than focusing on a “quality” or ”cost” strategy. They have a greater commitment to research, investment, training and innovation and have a broad competitive scope and examine a balanced portfolio of strategies. Finally, as a nation we need to encourage a culture of learning, upskilling and high quality innovation.

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