Developing skills and talents
[ Last Updated 15 August 2008 ]
How skills and talents relate to growth
A well-educated, skilled and adaptable workforce is crucial if New Zealand is to sustain higher rates of economic growth through innovation. Skills and talents contribute to growth by increasing productivity and participation in paid work. Better skills increase the likelihood of employment and support higher labour utilisation, and make it easier for firms to adopt the latest technologies which enable them to compete internationally.
When skills and talents are used effectively, and matched to appropriate opportunities in the labour market, they can contribute to economic growth by:
- building the management capability of firms
- enhancing entrepreneurial skills
- enhancing innovation and adoption of appropriate technologies throughout the economy
- fostering working relationships that enhance productivity
- increasing the foundation competencies, including the skills, knowledge and attitudes of the existing and future workforce
- ensuring advanced skills are in adequate supply and matched to areas of strong growth
- creating systems to ensure people's skills are relevant and match the changing opportunities in the economy
- ensuring the existing skills of the population are utilised to the full and labour force participation is maximised.
Issues for New Zealand
Building firms' management capability
Firms are under constant pressure to improve productivity and enhance competitiveness by producing value-added and differentiated goods and services. Management and business capability is at the heart of enhancing firm competitiveness. New Zealand managers are increasingly required to take an international focus, benchmark themselves against global competitors, and become more responsive to the requirements of international markets. In order to sell their products and services internationally, they need to constantly improve their businesses.
Productive working relationships
Recruitment difficulties can inhibit growth and productivity. Many factors can lead to employers experiencing such difficulties. For example, shortages of sustainable labour often occur because of rapid changes in technology or customer demand.
Both local and international studies suggest that certain human resource practices (usually involving worker participation and incentive alignment) have positive productivity effects. In particular, employees seem to respond well to working in environments that support open communication, engender trust between workers and management, and involve workers in the practice of innovation. Studies seem to indicate that firms have sought to increase worker involvement with satisfying results.
Foundation skills
Work by the OECD suggests that raising the foundation skills of those at the lower end of the distribution, and reducing the inequality in educational achievement in schools (by improving outcomes for low achievers), can have significant economic and social payoffs. According to the International Adult Literacy Survey, around 49 percent of New Zealanders aged 16 – 65 have weak literacy (measured as prose, document and quantitative literacy) skills, slightly worse than the OECD median. However, results from the PISA (the Programme for International Student Assessment) study indicate that New Zealand's 15-year olds are among the highest performers in reading, mathematics, science literacy and problem solving skills. This suggests that the literacy and numeracy skills of New Zealand's population will improve as those currently in school move into adulthood.
Supplying advanced skills
New Zealanders are entering and graduating from tertiary education at a growing rate and have a high rate of tertiary participation by international standards. Participation in tertiary education by the youth population has increased significantly from around 20 per cent of 18–24 year olds in 1990 to 44 per cent in 2002. In 2002, there were 452,421 students enrolled with tertiary education providers for the full academic year.
Overall, New Zealanders' educational attainment is improving, although we have probably only just kept up with the rest of the OECD since the early 1990s. Economic Development Indicators 2005 show that in 2002, the proportion of New Zealand adults with secondary and post-secondary non-tertiary qualifications was at the OECD median (46 percent). Thirty percent of New Zealand adults had tertiary qualifications as their highest qualification in 2002, five percentage points above the OECD median. We also have the highest number of hours of continuing education and training per adult.
The percentage of school leavers with no qualifications has remained relatively constant at around 16 percent since 1990. A disproportionate number of Māori (30 percent) and Pasifika (21 percent) students continue to leave without qualifications. The equivalent figures for Asian and Pākehā/European are seven and eleven percent respectively.
Advanced skills are likely to contribute strongly to growth through wide ranging influences – on labour productivity within the firm, on firms' capital investment decisions (such as the introduction of new technology), as well as on firms' ability to exploit the potential of new technology.
New Zealand's small population base makes it difficult to offer some types of education and training at tertiary level. It is likely that immigration and return migration will play a large part in developing the specialist and technical skill base in some niches of the New Zealand labour market. This suggests a need for systems that facilitate international connections for actual and potential participation in the New Zealand labour market.
Matching skills and opportunities
Skill shortages can have significant adverse effects on productivity and economic growth in both the short- and long-term.
Where there are difficulties in matching skills and opportunities, an initial question to consider is the optimal balance between developing skills through education and importing skills through immigration and the return migration of New Zealanders. Immigration can contribute to economic growth, if migrants are able to bring skills to this country that are not readily available or cannot be developed in the education system and labour market. A critical issue is to consider how best migrants can be matched to opportunities in New Zealand with minimum transaction costs for both parties.
The role of government
The government's role is to enhance the development and utilisation of skills and talents through:
- provision of education and training at all levels
- immigration policy
- employment policy
- provision of information and advice to assist better labour market matching
- encouragement of information sharing by acting as a conduit for all interested parties.
A working group led by the Department of Labour is focusing on issues related to skills and talents in New Zealand. Its task has been assisted by research and policy work being undertaken by the Ministry of Economic Development, the Department of Labour, the Ministry of Education, the Tertiary Education Commission, and the Treasury. Information generated by the working group has in turn provided a useful tool for developing policy recommendations for budgets and work agendas across government.
The 2004 Budget included funding for a range of skills and talents initiatives.
Contacts and links
Contact
Convenor
Interdepartmental Working Group on Skills and Talents
Department of Labour
P: +64-4-915 4400
E: info@dol.govt.nz
Links
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