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Job ad analysis shows skill shortages deepening


20 May 2005
Job ad analysis shows skill shortages are deepening

The number of advertised job vacancies in newspapers nationwide was 13% higher in April, compared with April 2004, according to the Department of Labour’s Job Vacancy Monitor.

Department Deputy Secretary Andrew Crisp said this continued the trend experienced in the past year of a steadily deepening skill shortage.

The Department analyses vacancies published in a single edition of 25 newspapers each month. April was the 16th successive month in which the index has shown double digit growth.

Mr Crisp says skill shortages are a consequence of a booming economy and rapid growth in employment. The strong growth in advertised vacancies indicates that employers are having to increase their efforts to find new employees, including advertising and re-advertising positions they would previously have filled by word of mouth.

The difficulty in finding staff is further reflected in the country’s low unemployment rate. The latest Household Labour Force Survey measured unemployment at 3.9%, which is the second lowest rate in the OECD group of developed nations. Despite the recent increase in unemployment, the rate is still at near-historic lows. The Department expects the unemployment rate to stay around 4% over the next 18 months.

Growth in the April job vacancies was highest at the top end of the skill spectrum, with vacancies for highly skilled staff rising by 20%. Within this category, highest growth was measured for accountants and auditors (53%).

The annual growth in vacancies for skilled workers slowed to 8%, from a high of 27% in May 2004. Within this group, vacancies for technicians/associate professionals increased by 13%, the main contributors being social workers (39%), finance and sales professionals (25%), and physical science and engineering technicians (12%). Growth for trades workers was only 3%, due largely to the effect of a 14% decrease in vacancies for building trades, which dominate this sector of the job market.

Mr Crisp says this may be a sign that construction industry employers are finding it slightly easier to recruit staff, although skill shortages are still widespread. The growth in construction trade vacancies has declined each month since December 2004. Annual employment growth in the construction sector has slowed considerably, from 12.2% in March 2004 to 3.7% in the same period in 2005.

The decrease in building trades vacancies was, however, partially offset by growth for the metal (11%) and electrical and electronics trades (17%).

Semi-skilled/elementary vacancies increased by 17%, with strong growth for plant/machine operators and assemblers (34%), elementary workers (29%), agriculture and fishery workers (26%), and service and sales workers (10%).

A separate Information Technology index based on vacancies on two IT websites increased by 49% over the April 2004 and April 2005 years, indicating a growing gap between demand and supply for IT skills. This growth was strongest in Christchurch with 136%, while Wellington and Auckland each recorded 47% growth.

Regional increases in the index in April 2005, compared with April 2004, are:

Auckland 19%
Bay of Plenty 30%
Canterbury 4%
Gisborne 3%
Hawke's Bay 11%
Manawatu-Wanganui 15%
Marlborough 4%
Nelson 0%
Northland 31%
Otago 4%
Southland 7%
Tasman/West Coast 36%
Taranaki 20%
Waikato 13%
Wellington 19%


Background Information

What is the Job Vacancy Monitor?

The Department of Labour produces the Job Vacancy Monitor (JVM). The JVM compares the number of advertised vacancies with the number for the same time the previous year. It also has an occupational breakdown of the advertisements, and categorises these occupations into highly skilled, skilled and semi-skilled/elementary groups.

How is it compiled?

The Department analyses advertised job vacancies in 25 newspapers on a specific day each month to provide a snapshot of the employment scene.

The Department’s website lists the publications job vacancy advertisements are collected from. It also outlines the occupations job vacancy advertisements are categorised into.

What does it tell us?

It provides a timely and regular insight into job vacancies, highlighting trends and sudden shifts. Changes in the number of job advertisements are indicative of labour market demand and supply forces. For example, more advertisements could mean demand has increased, it could mean supply is limited, or it could be a mix of the two. The JVM highlights trends over time, and also provides understanding into anecdotal accounts of labour market activity.

What is its purpose?

The JVM is a key part of the Department’s wider Job Vacancy Monitoring Programme. The programme consists of the JVM, and also an intensive, largely qualitative survey of employers who have advertised vacancies, in order to gain an in-depth understanding of shortages in key occupations. The results of these surveys are analysed alongside information from a range of other sources to produce an annual set of reports. Sixteen reports covering trade occupations were published in March 2005, and reports of selected professional occupations will be produced in mid-2005.

The programme aims to inform the Government’s strategies for alleviating skill shortages, including immigration and industry training policies. Industry bodies, education and training providers, and labour market participants also use the report to understand trends and plan for the future.

The programme identifies which skilled occupations are in shortage, and helps understanding of the supply and demand forces contributing to these shortages. The programme recently influenced changes to the skill shortage lists the Department uses to attract the type of skilled migrants the labour market needs.

How does the JVM differ from the ANZ Job Advertisement series?

There are a number of differences:
1. JVM measures job vacancies, while ANZ measures job advertisements. If an employer took a double page spread in a newspaper in which it advertised 50 positions ANZ would count that as a single advertisement whereas JVM would count it as 50 vacancies. The number of vacancies per advertisement has grown over time as the labour market tightens. This is the major reason why JVM has measured faster growth than ANZ.
2. The ANZ series is an aggregate count of advertisements whereas JVM captures and analyses each advertised vacancy separately and enables detailed analysis by occupation, region, urban area etc.
3. JVM is based on 25 newspapers whereas ANZ is based on seven.
4. ANZ is based on all editions of each newspaper each month whereas JVM is based on a single edition each month (usually the first Saturday edition).
5. JVM removes duplicate vacancies (e.g. a vacancy advertised in two different papers on the same day) whereas ANZ does not.

What else does the Department of Labour produce regularly?

The Department plays a key role in monitoring and predicting labour market trends. Two key reports are: the quarterly Labour Market Outlook, which predicts trends for the following two years; and the quarterly Skills in the Labour Market, which analyses all available information on the labour market to summarise events in the past quarter.

Where can I get more information?

Visit www.dol.govt.nz for reports and background information supporting them.

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