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MonitoringReport2005 Skills in the Labour Market ← Develop the Skills New Zealanders need for our Knowledge Society | Home Page | Meeting Skill Needs in Industry → This section provides an updated summary of the current labour market context for skills demand. The latest Department of Labour report on skills in the labour market1 concludes: “Labour market conditions have improved considerably in recent years. The unemployment rate was an equal 20-year low of 3.6% and the labour force participation rate was the second highest on record in the December 2005 quarter. Wage growth has increased in response to this tightening of labour market conditions. Net migration inflows are much lower than in 2003, but they have stabilised at around 7,000 per annum over the past year.
“Skill shortages have eased over the past year, mainly as a result of slowing economic growth. Higher labour force participation, net migration inflows, training, and wage growth also had a role in reducing shortages.
“Lower economic growth will continue to dampen employment growth and skill shortages. The February 2006 National Bank Business Outlook shows a net 9% of firms expect a fall in staff numbers in the year ahead, the worst result since October 2000. Despite a small reversal of recent labour market improvement, there will be continued pressure in the short to medium term as unemployment remains at or below a relatively low rate of 4.5%”.
The implication for tertiary education is that while employers will be experiencing some easing of skill shortages as the economy slows, there will still be an ongoing need to meet skill demands. So long as unemployment remains low, much of this demand will be for education and training within the workplace. A recent OECD review of New Zealand’s economy2 concluded that: “while the country is now reaping the benefits of earlier reforms and real GDP growth has been very strong, it cannot afford to rest on its laurels if it wishes to catch up to the living standards of the top half of the OECD. The first challenge is to realise more rapid productivity growth, which provides the basis for real income gains. The second challenge is to improve labour utilisation among under-represented groups, not only to lift GDP per person but also to reduce the invidious social effects of benefit dependency”.
The report notes that lifting productivity growth is a multidimensional problem and “there is no ‘smoking gun’ to explain New Zealand’s sub-par productivity performance”. Improving human capital through education is just one dimension. The report notes that while New Zealanders are relatively well educated at tertiary level, there may be factors impeding this translating into higher economic productivity, including variable quality and relevance of the tertiary education being provided. The report also emphasises the need to raise the skills of those with low qualifications and poor foundation skills, both to improve productivity and to reduce social inequalities and intergenerational disadvantage. 1 Department of Labour, Skills in the Labour Market, March 2006. (↑) 2 Organisation for Economic Co-operation and Development, Economic Surveys — New Zealand, 2005. (↑) ← Develop the Skills New Zealanders need for our Knowledge Society | Home Page | Meeting Skill Needs in Industry → Page last modified on 26 November 2006, at 06:29 PM |
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