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July 30th, 2015

New Zealand demographic trends leading to skills shortages

The aging of New Zealand’s workforce is continuing to challenge employers across the country to find new ways to bridge their skill gaps and plan for the future.

“An aging workforce is typical in most of the 37 industries we support,” says Fiona Kingsford, Competenz CEO designate. “At the same time, the number of school leavers available to industry is volatile, and there’s a shortage of skilled people. So it’s a perfect storm. Planning your future workforce is becoming more important than ever.”

The issue is particularly stark in New Zealand’s manufacturing industries. According to Statistics New Zealand data, in 2006, 55% of the general manufacturing workforce was aged 40 and over. In 2014 that figure was 64%. The trend is similar in specialised manufacturing industries too, like plastics processing and wood manufacturing, and in many other industries, including printing, forestry and maritime.

“These are big numbers,” says Fiona. “And they bring with them big challenges for succession planning. These older people have built up skills during their careers. Who’s going to replace those skills when they retire? Who’s going to mentor younger people? And, if you’re a small business, who are you going to sell your company to, so you can enjoy a comfortable retirement?”

She warns employers not to rely on school leavers to plug the gaps.

“The number of young people leaving school is volatile: it’s fallen in most parts of the country since 2004 and that fall’s going to continue for a few years yet. And employers are competing for this limited pool of people.”

Bringing in skilled immigrants can help, but it introduces new challenges like language and a lack of familiarity with New Zealand practices. Poaching another company’s employees is self-defeating. “It becomes a vicious circle.”

The solution? According to Fiona, employers need to look at this issue at an industry level and invest in technical and business skills for the long term.

“Training is a sustainable way to lift productivity, quality and safety. It has lots of spin-off benefits too, like increasing your employees’ confidence and loyalty.

“The government subsidises workplace training to keep the costs manageable. They do this because they recognise that New Zealand industries benefit from having a skilled workforce. And those benefits are long-term and lasting.”