19 November 2002 Media Statement

Tackling skill shortages

Social Services and Employment Minister Steve Maharey today released the Department of Labour's latest report on skill shortages in the New Zealand economy and a summary of the Government's initiatives to address those shortages. He summarises both reports below.

A net 37 percent of firms reported increased difficulty finding skilled staff in the September 2002 quarter, according to the NZ Institute of Economic Research's Quarterly Survey of Business Opinion (a slight reduction from a net 39 percent in the June 2002 quarter). The difficulty of finding unskilled labour was unchanged from the June 2002 quarter, with a net 19 percent of respondents to the Survey reporting increased difficulty. As a result of the difficulty finding the right staff, one firm in eight reported that a lack of labour was the main factor constraining expansion of output.

At present skill and labour shortages are greatest in the building and manufacturing sectors, while retail and wholesale merchants' difficulty in hiring staff eased slightly. Firms in the South Island are experiencing the greatest difficulty hiring skilled labour. The South Island's stronger economic growth, expansion of the dairy sector, lower population growth and low unemployment rates has brought greater labour shortages than in the North Island.

Unfortunately the figures reported in the Survey do not distinguish between genuine skill shortages (when employers are unable to fill vacancies because of a lack of applicants with the required skills) and recruitment difficulties (when there are people available with the skills required but they are unwilling to take on the work on offer because of some factors associated with it, e.g. wages or working conditions). Nevertheless they underline the importance of the government, business and unions working together to boost skill acquisition by New Zealanders.

Earlier in the year the Government launched the Skills Action Plan to address skill shortages by improving the matching of people's skills to job opportunities and assisting people to make better decisions about participating in (or providing) education and training. There are four main kinds of activities under the Skills Action Plan: information and guidance responses, regional/industry initiatives, education and training initiatives, and immigration initiatives.

Information and guidance responses

Two new means of distributing information on the labour market will be launched later this month. Next Monday ‘WorkSite’ (www.worksite.govt.nz), a portal for labour market information, goes live. The website will assist people to more quickly identify and acquire skills and more readily find new work and is aimed at the needs of a wide range of people - employees, school leavers, the unemployed, potential immigrants, employers, government and industry groups.

The first of a new six-monthly publication WorkINSIGHT will also be published this month. It aims to improve the matching of people and jobs in the labour market by disseminating information on skills and work in New Zealand. The primary target audience is career advisers, Work and Income brokers and other job market intermediaries.

Regional/industry initiatives

The Government is working with industry to address skill needs at a number of different levels. For example, at an industry and regional level the Government has established partnerships to address labour and skills issues in areas such as forestry. We have also started working on skills strategies for the seafood, clothing and textile, agriculture and pip fruit industries.

Education and training initiatives

The government’s reforms to tertiary education system will make it better able to respond to the needs of the economy. A 5-year Tertiary Education Strategy has been published, a new Tertiary Education Commission is being established and industry and community skill needs will need to be actively weighed when providers are developing their funding profiles in the future.

The Government will also expand the Modern Apprenticeship programme and boost the number of people in industry training from the 95,000 trainees who learned on-the-job last year to 250,000 within five years.

Immigration initiatives

New immigration initiatives have a strong emphasis on matching skilled migrants with the needs of the labour market. For example, the Talent Visa introduced in April 2002 allows accredited employers to recruit talented and skilled people overseas. The New Zealand Immigration Service is also working with particular industries to assist them to recruit people with the required skills from overseas.

In all of these initiatives employers have a vital role to play. To attract and maintain highly skilled staff, business needs to offer appropriate wages and fund firm-specific training. There is also a role for industry associations and groups to work together to address recruitment issues and attract people into their industry. Agriculture is one example of an industry that is doing this.

The outlook for skill shortages largely depends on the outlook for the economy as a whole. While considerable uncertainty currently surrounds the outlook for some of our major trading partners, robust growth is expected in the New Zealand economy by most commentators. At 5.4 percent, our unemployment rate remains relatively low and it seems skill shortages are likely to persist in the short term. Boosting the overall skill levels in the New Zealand workforce today is our best insurance policy against damaging skills shortages emerging tomorrow.

ENDS

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