Skill shortages continue to be a major constraint on the economy. New Zealand should not have skill shortages in an industry as basic as building.
Skill shortages continue to be a major constraint on the economy. New Zealand should not have skill shortages in an industry as basic as building.
COMMENT:
We should mint a medal for political leaders who admit they got something wrong. Finance Minister Grant Robertson deserves one for admitting Labour over-estimated the need for free tertiary education.
The need has turned out to be close to zero, tertiary rolls have hardly risen since the first yearbecame free. School leavers have given the Government the valuable lesson that fees are not a barrier to higher education after all.
It is not a lesson anyone should have needed. The student loan scheme introduced with serious fees 30 years ago made them manageable for the poorest of ambitious kids because no repayments were needed until they were earning a reasonable income.
Now Labour needs to learn more lessons about tertiary education, a subject that is too close to its heart.
It professes to be more concerned about workers' education than the academic kind. In Opposition, Robertson led a caucus study, "future of work", that worried about the pace of technological change, the destruction of manual jobs and the possibility people would need several careers in a working life.
Not much came of that exercise until February this year, when Education Minister Chris Hipkins announced a drastic shake-up of industry training. Essentially he proposed to put polytechs in the driving seat, rescuing them from the hardship of maintaining rolls when the economy is growing and jobs are plentiful.
Hipkins thinks it is an indictment of National that polytech rolls declined during its years in government.
They declined because most school leavers would prefer to start earning money and learn on a job.
For a good six or seven years now, just about every employable school leaver (literate, numerate, mobile, reliable and drug-free) could find a paying job rather than sit in a classroom for another three or four years.
The institutions have only themselves to blame. They boomed when jobs were lost in the transition to an open economy in the 1980s and 1990s. Economic reforms not only destroyed previously protected job-heavy industries, they frowned on "make-work" schemes for the unemployed.
Apprenticeships also fell out of favour with the reformers for some reason. The only permissible public investment in employment was through tertiary training institutions and they soon proliferated.
By the late 1980s, the Auckland CBD had turned into a giant campus. Queen St was thronged with students on their way to or from classes or just hanging out in between times.
They appeared to have a lot of time for hanging out. Courses cannot have been concise, material that could probably have been imparted in a fraction of the time would be spun out over several years. The longer that school leavers could postpone the search for a scarce job, the better.
The institutions, of course, became major employers themselves, providing quite a number of experienced workers with a second career when they needed one.
Workforce training became heavily institutionalised and employers generally discovered graduates did not know how to do very much.
Employers were eventually given more influence with the creation of Industry Training Organisations (ITOs) that would buy courses from institutions. This is the system Hipkins would turn on its head.
His February proposal would abolish ITOs and relegate employers to an advisory role, sitting with representatives of local government and iwi on bodies that technical institutions would merely "consult" over the design of their courses.
Education Minister Chris Hipkins. Photo / Mark Mitchell
He also proposed to make all the institutions subsidiaries of a single national training institute, which has brought an outcry from successful polytechs such as Southland's. The ITOs and major employers have protested too and Hipkins may be reconsidering the whole plan.
We may hear something better in the Budget next week. Announcing the $200 million "saving" on free tertiary education, Robertson said, "Now we have the opportunity to put that [money] towards … a vocational system that's delivering people with the skills that they need."
Sounds good, but the crucial element of that statement is missing: who will decide what skills they need?
Will it be employers who are supposed to buy those skills? Will it be prospective trainees? Will it be workers who find they need more skills? Or will it be tertiary institutions, either independently or as agencies of a central committee?
The answer is fairly important for the whole economy. Skill shortages continue to be the main constraint on its capacity to generate more wealth for everybody. We should not have skill shortages in an industry as basic as building.
Skill shortages indicate the training system driven by industry organisations has not done well enough. The ITOs have involved only about 15 per cent of all businesses that employ people.
There must be a way to boost training on the job rather than via institutions. If Hipkins backs down on this, he will deserve a medal too.
