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Banks: Industry Training Federation's Labour Market Forum

John Banks

5 December, 2012

Speech to Industry Training Federation's Labour Market Forum

The future is looking brighter for small business in New Zealand.

Interest rates and inflation are at record lows.

We are just starting to see the first positive signs of productivity growth since 2006.

New Zealand is faring a lot better than many other countries.

Recent surveys by the BNZ and ANZ have found small business owners are feeling more confident about their prospects in the year ahead.

One significant finding from the BNZ survey was that most small firms say they lack the skills to fulfil their potential.

As Mark mentioned, skills are vital to enable our small firms to be more productive.

When our workers and managers are more skilled, we get higher performing businesses.

We increase the quality of our goods and services, and customers are happier.

Our firms are also more innovative, able to meet the demands of new markets, and increase their competitiveness.

If small businesses are the engine room of our economy, skilled workers and managers are the fuel that makes that engine perform.

This morning I want to share with you:

• what we know about small businesses in New Zealand;

• how we can reach them and enable them to improve their skills; and

• specific government initiatives to support skill training and development.

In New Zealand, 97 per cent of our enterprises have fewer than twenty employees – that’s 455,000 businesses.

They employ 31 per cent of all workers in New Zealand and they generate 40 per cent of our GDP.

Small businesses create the greatest number of new jobs each year and are the source of much of our country’s innovation and creativity.

But SMEs are very disparate - they vary greatly by size, capability, and industry.

Some industries have a very high percentage of SMEs such as retail, accommodation and food services. Some industries have businesses able to collectively support each other, while other industries are less organised.

We know that small business owners are under huge time pressure and lack resources.

I had a chance to look through the Ministry of Education’s recent survey of employers as part of the Industry Training Review.
The small firms surveyed faced many barriers to training staff.

These included the short-term impact on productivity when staff are away from the workplace, lack of information, and management systems ill-equipped to cope with hiring and mentoring apprentices.

And it’s not only the employees of small businesses who may struggle to get the training they need.

Research shows that most of our small business owners learn on the job.

Compared with other developed countries, our management skills are “average to middling”, which is really not good enough.

We have good research to show that businesses in New Zealand with better management practices tend to perform better.

It’s particularly the people management, financial, and marketing skills that need to improve if we want our businesses to be internationally competitive.

So, how can we reach our SME owners? How can we make them more aware of the value of training and what is available to them?

This will always be a challenge for any government.

No one programme or service can do it for all our firms.

Of course, Industry Training Organisations have a large reach and offer local training advice and support for over 35,000 businesses.

ITOs can be extremely valuable advisors for a small firm.

The survey of employers found the most important thing they valued from their ITO was the time they took to listen to their needs.

I want to pick up on the point I made earlier on how time pressured our small businesses are.

We can’t expect all firms to have the time for traditional training and development.

So the questions I want to leave with you today are about how we best deliver our training to suit a firm’s situation.

How can we make more use of online interactive technology?

And how can we get alongside small business owners, by supporting them with the management systems required to manage their training needs?

We need to think more about how we work within their realities.

A way in which government is reaching out to a broad range of small businesses is through the www.business.govt.nz website.

This site has everything needed to start, manage and grow a business.

There are links to training options for employees and employers, as well as a suite of free tools and resources.

More applications are being added to the site all the time and I urge everyone to check it out regularly.

Small enterprise can also access local support through the Regional Business Partners network.

This nationwide network of organisations help firms work out their development needs, and offer advice or point them towards suitable training and development programmes.

Business Mentors New Zealand also does a great job matching business owners to advisors who can apply their knowledge and experience to those enterprises.
Lifting skills is a high priority for the Government.

The Business Growth Agenda recognises that building skilled and safe workplaces is one of the key ingredients firms need to grow, become more productive and boost our economy.

The Government recently released a progress report on the 62 separate actions aimed at improving our country’s skill base.

You have the opportunity to provide feedback, and I urge you to do so.

Getting Christchurch up and running again is another top priority for the Government, and rightly so.

Small firms will play a crucial part in the recovery of Christchurch and Canterbury.

A number of new initiatives include:

The $28 million Skills for Canterbury programme which will ensure we have enough skilled tradespeople for the rebuilding of Christchurch, and the Canterbury Skills and Employment Hub; this great initiative is a business-friendly one-stop shop where employers can list vacancies and be matched up with jobseekers from Christchurch and elsewhere.

It will ensure employers can easily get the staff they need so there are no roadblocks to the rebuild.

There is much we can learn from our on-going response to the Canterbury earthquakes, and initiatives like this could be expanded to the whole country.

The Government is also working hard to break the welfare dependency cycle and improve outcomes for our families. This includes supporting people to move off the benefit and into work, and supporting at-risk young people to stay involved in education, training or work.

Another fantastic initiative by the Government has been the introduction of the 90 day employment trial period.

It was originally targeted at small and medium businesses to encourage them to take on new staff. It was so successful it was extended to all firms.

NZIER have estimated the voluntary trial periods have created up to 13,000 new jobs in small and medium businesses.

Finally, the government-funded ITO training is continuing to play a valuable role.

I am very glad to see the achievement rate is increasing.

More trainees are obtaining those long-term transferable skills that will benefit their enterprise and the economy.

We all have to lift our game when it comes to skills – government, employees and employers.

We all have a common interest in encouraging and supporting our small business owners to improve their skills and those of their employees.

I would like to thank the Industry Training Federation and Chief Executive Mark Oldershaw for inviting me here today.

Thank you for your time and I look forward to hearing some of your thoughts and ideas on how we can lift our skills in New Zealand businesses.

ENDS

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