NZ skills shortage to worsen as OZ pull across the Tasman strengthens

New Zealand may become a training ground for skills which end up in Australia.

New Zealand faces an interesting and present dilemma: an Australia who’s economy remained strong throughout the Global Financial Crisis, and one that is heading towards what many economists recognise as full employment.

Unemployment in Australia has been consistently falling and now stands at 5% – a far cry from the double digit figures predicted as the Global Financial Crisis took hold in 2008. Australian unemployment peaked at just under 6% in 2009.

For those New Zealanders who keep a close watch on what is happening in Australia, you will also see a return to near full production, with the exception of Queensland, in the mining sector.

What you may not see is what impact the floods, in particular those in Queensland, will have in the coming twelve months. For the time being the focus is on plans to rebuild the State’s infrastructure from roads and bridges to homes and commercial property. Also, for the time being, there is an immense spirit of volunteerism that will subside as those who have helped freely with the initial clean-up effort have to return home to resume their own jobs and lives.

In the coming 12 month period we will also see a return in production from the agricultural and horticultural sectors. There is no doubt that primary producers will be hurt initially by the floods, but after ten long years of drought the rain that has fallen will have immense positive flow-on effects such as high crop yields.

A large number of skills sets sought after in the mining sector are the same as being sought in the construction, infrastructure and agriculture sectors: namely technical and vocational trades. 

Unlike many western and developed countries, Australia is a country where the domestic skills market will come under heavy pressure. The fact is, there are just not enough skilled workers, particularly in the trades and vocational skills areas, to accommodate the significant growth in demand that will occur over the course of the next 12 months to 5 years.

The reality is, Australia does not have the current skills capacity to meet expected demand.

Increasingly Australia will have to turn to regional labour supply channels and, no doubt, there will be a debate to increase skilled migration from countries such as the United Kingdom, the United States, Canada and South Africa. But often overlooked in the debate and discussion about the future of Australia’s workplace is just where a great number of skilled workers come from that require no permanent residency permits or visa’s – New Zealand.

In a 2005 OECD report it noted that more than 24% of New Zealanders with a tertiary degree lived outside of the country with the majority residing in Australia. In 2007 alone, more than 24,000 New Zealanders settled in Australia reaching the most recent peak of 48,500 kiwis in the 12 months ending January 2009.

With that outflow has also gone large numbers of workers not only with degrees or trade certificates, but also those who have accumulated a significant amount of work experience that makes them much more valuable in terms of earning potential in Australia versus New Zealand.

The fact is, New Zealanders can earn up to an extra third on top of of what they currently earn at home in Australia. Wages in Australia are expected to grow at pace over the next five years.

That begs the question: do we really understand what the sustained impacts will be to New Zealand’s own economy in the coming five years and will the nation have its own skills capacity to grow domestically?

Or, will it be the case that skilled migration continues and, at its very worst, this skilled migration becomes permanent?

As the Philippines is known for its contribution to the unskilled domestic worker market will New Zealand simply become the training institution for skills that will eventually end up in Australia?

Currently there are debates over asset sales, levels of student debt and loans. There are policy settings being developed to strengthen and grow the New Zealand economy, to relieve it from recession.

But, you can only succeed at these things in the medium to long term if you have the skills base for New Zealand business and industry to evolve, grow and innovate. With so many New Zealanders now calling home is this the time to take a hard and cold look at finding a solution to a problem that is often discussed but never tackled?

The dilemma for New Zealand is that entire generations now live in towns and cities across the Australian continent: the majority of whom would return to New Zealand if the opportunity was there; but with few opportunities more and more kiwis are leaving with many never to return. 

This blog is based on, and uses excerpts, from an opinion piece originally published in New Zealand’s The Dominion Post.

Matthew Tukaki is CEO and Executive Chairman of The Sustain Group of Companies, an organisation dedicated to identifying business solutions to climate change and corporate citizenship, social responsibility. Matthew is also the former Head of Drake Australia, the nation’s oldest, and one of the largest, employment services companies. Matthew was, also responsible for a number of other Drake operations across the Asia Pacific including Drake Medical, Solutions, HR, Services and Recruitment. A former Chairman of the WorkWise Group’s Executive Committee, Matthew is also Australia’s elected Representative to the United Nations Global Compact, the world’s largest corporate citizenship programme with more than 7,700 signatories. Recently, Matthew was called the most influential person in the employment sector in Australia by Radio 2GB and appears regularly on television news and current affairs commenting on the links between employment and the economy.