Labour shortage set to continue for some time

2.45pm

The skilled labour shortage currently dogging the economy will continue for some time, and a lack of unskilled labour is now emerging too, the Department of Labour says.

The department today released its Labour Market Outlook for the next 18 months in which it forecast the unemployment rate to remain near current low levels.

"We expect a fairly steady but positive period for the labour market, with solid growth in jobs and the labour supply, ongoing low unemployment, and improving labour productivity," the department said in the report.

But department deputy secretary Mary Anne Thompson told a media briefing in Wellington today the lack of skilled workers reported recently by firms as their biggest worry would not be fixed fixed.

"Not only is New Zealand facing skilled labour shortages... but our view is that we think this is going to be a long term feature of the economy as opposed to a short term blip.

"I don't think we should be surprised if we find ourselves in a tight labour market over the medium term."

Ms Thompson also said the department had spoken to firms in a number of sectors including construction who were "very worried" about labour shortages.

"A lot of firms now say they can't find skilled staff but the other thing that's happening here is that a lot of people can't find unskilled people.

"It's not as if it's only at the top end... this is actually a constraint that goes right through to the unskilled."

Ms Thompson said one means of addressing the shortage of labour was encouraging potential workers "left on the edge" of the work force to rejoin it.

"There are about 200,000 people who are not beneficiaries who could be enticed back into the labour market," she said.

These included mothers, older people and young men.

Other avenues for tackling the labour shortage included attracting skilled overseas workers, developing and retaining skilled New Zealand workers and initiatives to increase productivity.

Ms Thompson said the department was currently working with firms in some sectors to examine possible links between the labour shortages and wages and conditions.

She said some sectors had admitted they hadn't treated their workers very well. While pay was often an issue, more often it was conditions that deterred workers.

Meanwhile, New Zealand's work force would likely grow to 2.34 million in the early 2020s from a base of 1.97 million in 2001, according to Statistics New Zealand (SNZ) projections released today.

Half of the increase was expected to occur between 2001 and 2006, SNZ said in a statement.

After 2021, the workforce would stabilise as new entrants matched those retiring.

The projections also showed the median age of the workforce would increase from 40 years old presently to 42 in 2014, largely due to the effects of the large sector of the population born from the 1950s to the 1970s.

The number of workers aged of 65 years is projected to rise from about 38,000 in 2001 to 101,000 in 2021.

- NZPA