Labour drought starves growth, alarms employers

By KEVIN TAYLOR

The shortage of skilled and unskilled labour that continues to dog the economy is unlikely to ease over the next 12 months.

The Labour Department's latest skill shortages report - for the three months to the end of June - says businesses are finding it more and more difficult to get skilled staff.

But the demand for unskilled staff is also growing, and finding unskilled labour is now harder than it has been at any time since 1985.

Tertiary Education and Employment Minister Steve Maharey says while the shortages are a concern they are a symptom of a country transforming into a highly skilled economy.

He denies that a commodity-driven boom is behind the shortages - otherwise, he says, it would just be a labour shortage and not a skill shortage.

Business New Zealand chief executive Simon Carlaw is not convinced and suspects the cause of the labour market problems is indeed commodity-driven growth, not a sign of any economic transformation.

He says the latest skill shortages report is sobering and backs anecdotal evidence from businesses that the shortages are persisting across the economy.

The report cites low unemployment - at a 14-year low of 5.1 per cent in the June quarter - and high participation rates as the reasons for the shortages.

Even high net immigration rates, attacked by NZ First leader Winston Peters last week as "treason", are failing to ease the problem.

The Government has trumpeted increases in the numbers in its Modern Apprentices scheme and workplace training.

Maharey last month issued figures showing 3254 young people were in apprenticeships at June 30, a rise of 23 per cent on the previous three months.

The Government hopes to double that to 6000 by December next year.

In addition, 78,240 Kiwis were involved in structured workplace learning for the year to June 30, up 18 per cent on the same time last year.

But the Government's efforts do not appear to be enough.

The report says shortages are at their worst in the South Island, followed by the upper North Island and then the lower North Island.

Manufacturers were recording the highest difficulty in finding staff, followed closely by wholesale and retail trade merchants and then builders.

Labour shortages are being increasingly cited by businesses as a constraint on expanding output.

Twelve per cent of businesses now rate their inability to find labour as the number one constraint on expanding output, a level not seen since 1975.

Carlaw says that statistic is the one that sticks with him.

"If businesses can't find the labour, then the growth needed to lift our living standards will not be achieved."

The country was reaping the rewards of two years of extraordinary growth by New Zealand standards.

"But that is a negative. We should not be having these sorts of labour constraints."

Carlaw says the Government has done much to try to solve the problem.

He says workplace training was probably the best "quick cure" available. It had the best turnaround time and met the needs of individual firms.

Immigration was also an important factor in addressing skill shortages.

The Government has introduced a "Talent Visa" programme to fill skill holes in the economy and he says it has worked well.

Far from taking jobs from Kiwis, he says, immigration enables firms to grow and create jobs for everyone.

But Carlaw says that in the long run New Zealand needs to reach those not in work, and promote basic literacy, numeracy, computing and work skills.

Maharey says the root of the problem is, in fact, a good-news story - low unemployment, and virtually no unemployment in some regions such as Nelson.

Often, businesses were dealing with two issues other than an absolute skill shortages; either the skills were available in the wrong sector or there were skill "gaps", with existing staff needing more training.

Maharey says that underlying the labour shortage issue is the economy's move from relying heavily on low-skilled jobs making unprocessed products to producing higher-value goods.

"Now, of course, we are building things like luxury yachts," he says.

"You have got a problem that's fundamental to our economy - how do you get the numbers of skilled people you want for a new highly skilled work environment?

"That is something that could take 12 months, but I suspect we are talking about a long-term issue for this country as it tries to reposition itself as a highly skilled economy."

* In Forum tomorrow: Business NZ chief executive Simon Carlaw and Tertiary Education and Employment Minister Steve Maharey talk about solutions to the labour shortages.