Human Resources Development Working Group – Labour and Social Protection Network Meeting
New ZealandSkills and Productivity Challenges
Dr Dafydd DaviesDirector, InternationalDepartment of LabourDouglas GormanGeneral Manager, Strategic Labour Market PolicyDepartment of LabourFebruary 9, 2012. APEC, Moscow
Why is NZ’s productivity growth so low?
Causality:• Poor long run economic growth…• …due to poor long run productivity growth…• …due to poor long run export performance…• …due to export composition and…• …exacerbated by factors such as shallow capital markets, exchange rate volatility, firm composition
• … a land of migrants…reliance on importing skills…• …poor utilisation of skills• … being far, far away with a small population and low population density
Good, OK or Bad by OECD standards, & what’s the trend (= over 10 yrs vs OECD mean)
GoodLabour participation International linkages
- inward FDI =Workforce skills Quality of institutions
=Quality of regulation (Quality of Labour
regulation =)Fiscal position =Government
effectiveness
OKInnovation in firms =Innovation linkages Firm dynamicsInvestment Debt market development
=University & compulsory
education =Inflation rate
performance =Quality of tax system =
PoorGDP per capita Labour productivity Formal measures of innovation Saving Equity market development International trade Int’l linkages - outward FDI Management skills ICT =Real interest rate performance =Exchange rate stability =Current account =Net foreign asset position
yjrEconomic Development Indicators 2011 – Treasury, MED, Stats NZ
Employment growth & GDP growth 1991-2008
0
20
40
60
80
100
120
140
-40 -20 0 20 40 60 80 100 120 140
Em ploym ent grow th
%
G D P grow th %
Prim aryM anufacturing
Transport & storage
W holesale/retail, accom & restaurantsEduc, Health, Govt adm in & other services
Construction
Finance/Insurance/RealEstate/Business Services
Electricity/Gas/W ater
High productiv ity grow th/ low econom ic grow th
High productiv ity/ high e conom ic grow th
Low productiv ity/ Low econom ic grow th
Low productivity/ high e conom ic grow th
Recent trends in the demand for skills
O ccupations 1991 2008 Professionals 13% 17% Service and Sale W orkers 13% 15% M anagers 11% 14% Technicians and Associate Professionals
11% 12%
Clerks 15% 12% Trades W orkers 10% 9% Plant and M achine O perators 10% 8% Agric and Fishery W orkers 10% 7% Elem entary O ccupations 6% 6% Source: Statistics NZ, Household Labour Force Survey
The demographic challenge• Factors pushing up participation have dominated the downward demographic pressure for the past 20 years.
• Demographic pressure will increase over the next 20 years
• Share of the working age population who are 65+ years old is projected to increase from 16% in 2009 to 25% in 2029
• Labour force growth slowing and participation projected to fall
Do we have a skills mismatch issue?• New Zealand performs well in tertiary education achievement
• BUT our labour productivity performance is still poor
• A fifth of our workers are over-qualified and around 40% are under-qualified - vocationally qualified workers are best matched to their occupations, many people with degrees are working below their skill level
• The extent of skills mismatches may be increasing over time.
Summary
• Strong service sector employment growth is forecast with mixed implications for productivity growth but higher levels of qualifications required.
• The ageing population will constrain labour force and economic growth
• Labour supply forecasts show strong growth in the number of degree-holders…
• But weak growth in higher level vocational qualifications due to strong emigration
• Skills utilisation is essential to retaining skills in an open labour market
• Skills retention is a key issue
Supply of skills in the w orkforce
D em and for skills from em ployers
ProductivityRegulatoryenvironm ent
Em ploym ent practices
and conditions
Industry and firmstructure and
culture
M igration
Accidents reduce supply
(e.g. w orkplace injuries
fatalities)
O ccupational licensingand requirem ents
O ngoing D evelopm entInform al and form al learning.
In educational institutions both before and during em ploym ent
and m id-career retraining.In w orkplaces, households, voluntary organisations
and other contexts.
Labour m arketparticipation choices
Em ploym ent andw elfare policies
Firm strategy andinvestm ent decisions
A conceptual fram ew ork of Skills and Productivity
InnovationSom etim es new skills
are developedthrough innovationand innovation canchange the nature of
dem and
U tilisation of Skills by W orkplacesApplication of people’s skills in com bination w ith other
resources like capital, technology,natural resources etc
The labour m arketm atches skills to jobs
Traditional focus
New Focus
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