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Recession a time to build skills

16 December 2008

Media release
Institutes of Technology and Polytechnics of New Zealand

Recession a time to build skills

[Note to editors: for copies of the two research reports that investigate the impact of the recession on the New Zealand economy, including on regions and professions, please visit www.itpnz.ac.nz]

Institutes of technology and polytechnics (ITPs) will support the Government’s ‘Restart’ package by providing training for the recently unemployed and others affected by the recession.

“The Restart programme appropriately focuses on the most urgent need for people who have lost their job – financial support – while our proposal will support people in the longer term,” says Dave Guerin, Executive Director of ITP New Zealand.

According to BERL research commissioned by ITP New Zealand, there will be 46,500 to 76,400 more people unemployed or out of the labour force by March 2011. Unemployment will peak in March 2010 and people with lower skills are likely to make up 75% of the increase.

“New Zealand’s challenge is to look for the silver lining in what is a dark grey storm cloud; the recession. Just as trees were planted in the Great Depression to create a sustainable new industry, this is the time to develop New Zealanders’ skills for future growth.

“The growing group of people affected by the recession could be enrolled in high quality courses to boost their industry skills, preparing them for a higher level role than they left, or retraining them for growing sectors.

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“This would address both unemployment increases and help develop a more productive workforce and a faster growing economy in 2010 and 2011.”

According to BERL, job losses are likely to be highest in the retail, hospitality and tourism, manufacturing, transport and finance industries.

According to research by NZIER for ITP New Zealand, employment growth over the next five years will be:
• strongest in the Bay of Plenty, Auckland, Manawatu-Wanganui and Wellington;
• weakest in Taranaki, Southland, Gisborne-Hawkes Bay, and Waikato;
• medium in Northland, Upper South Island, Canterbury and Otago; and
• strongest in the following industries: agriculture and services to agriculture; transport, storage and communication, health and community services, personal and other services, and education.

“ITPs are best-placed to respond with their regional focus, strong networks with their communities and strength in providing applied professional and vocational education which is developed alongside industry,” he says.

“ITPs have both the capability and flexibility to respond immediately to increased enrolments in skill development courses.”

ITP New Zealand has identified four groups most affected by the recession, and expects an increase in ITP enrolments from those groups of over 10,000 people.

1. People who have lost their jobs.
2. People who are underemployed e.g. workers in firms working fewer shifts or shorter weeks.
3. School leavers who delay entry into the labour force.
4. Tertiary students choosing to study longer.

“We are seeking support from Ministers to work with the ITP sector to build skilled communities in this recession, and encourage their officials to work with us in a whole of government manner.”


Key Research Findings
For copies of the NZIER and BERL research reports commissioned by ITP New Zealand, go to www.itpnz.ac.nz.

Research produced by NZIER for ITP New Zealand – based upon a review of their Quarterly Survey of Business Opinion (QSBO) and Statistics New Zealand’s Household Labour Force Survey (HLFS) –shows that:

• unemployment is increasing and the QSBO suggests it will go higher;
• the industries with lowest QSBO employment expectations were building materials, merchants, builders and manufacturers;
• the firms with lowest QSBO employment expectations were those in the upper North Island and those operating nationally; and
• forecasts based on HLFS data show which industries, region and age groups are likely to increase or decrease employment over the next 5-10 years.

Research produced by BERL for ITP New Zealand – based upon their own analysis and forecasts by the Reserve Bank, The Treasury, NZIER’s Consensus Forecasts and BERL– provides detail on the size and composition of unemployment increases, showing that:

• total increase in those unemployed and not in the labour force will be between 46,500 and 76,400 by 2011 (BERL has more confidence in the higher forecasts of unemployment, which were produced more recently);
• seasonal unemployment could rise to between 111,000 and 140,000 by March 2011, with 29,500 to 59,400 due to the recession;
• a further 17,000 people will exit, or not enter, the labour force over the next three years – these will generally be aged under 24 (staying in study) or over 60 (retiring or staying at home);
• the recession will be short, with most unemployment generated in the years to March 2009 and 2010;
• industries most likely to be affected (75% of impact) will be: manufacturing; wholesale and retail trade; accommodation and food services; transport, postal and warehousing; financial and insurance services; and administrative and support services (there is a focus on the non-essential consumption-based industries and those affected by recession in export markets);
• declines in residential construction are likely to be balanced by commercial construction and infrastructure projects; and
• about 75% of those unemployed are likely to be in low skilled occupations, such as: community and personal service workers; clerical and administrative workers; sales workers; machine operators and drivers; and labourers (these occupations are closely linked to the affected industries).

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