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Opinion: Why improving skills is crucial if NZ is to catch Australia

Posted in News

By Rick Boven

Government has set a prosperity target, to match Australia’s GDP per capita by 2025. Achieving the target requires a huge improvement in economic performance. There is an emerging consensus that New Zealand needs to do more than expanding primary output and relying on commodity price increases.

Efforts to increase the availability of capital for productive firms and to innovate more effectively are important steps in the right direction, but skills improvement should contribute too.

Labour productivity, the output per hour worked, is the most significant driver of a nation’s GDP per capita. New Zealand performs relatively poorly on measures of labour productivity, ranking 22nd of 30 OECD countries, whereas Australia ranks 13th.

Improving labour productivity can be achieved by improving, amongst other factors, contributions from innovation, capital and talent. Skills enable managers and workers to find ways to produce more valuable output per hour worked.

Growing New Zealand’s prosperity depends on developing successful international businesses, and businesses will only be successful if they are competitive. Achieving competitiveness, by providing more valuable products and services or by having lower cost structures, requires world-class skills.

Complacent people who think that skills already learned will be sufficient for the future are likely be unpleasantly surprised when they come up against competitors from other countries. Lifting skill levels requires people to have an appetite for learning.

Within families, schools, businesses and countries, it is leadership and culture that establish the desire for learning. New Zealand scores well on some skill measures such as high school reading and numeracy, and the proportion of the population with tertiary qualifications.

However, there are also many areas of weakness and worthwhile opportunities for improvement. New Zealand has a large pool of low-skilled people. The easiest strategy to addressing a low skilled population is to grow sectors that can employ those people.

A more difficult but better strategy is to increase skill levels and expand higher value sectors. This high skills strategy requires more effort but it is better in two ways; it provides more income and more rewarding jobs for the people, and it lifts the average GDP per capita for the country.

The New Zealand Institute’s work on economic opportunities has identified a range of skill development priorities that would support such a high-skills strategy and have valuable benefits.

The proposed skills agenda includes two kinds of opportunities. The first opportunity is to increase skills; for example:

* Improving educational outcomes for New Zealand’s most disadvantaged people;

* Managing the school-to-work transition more effectively to reduce youth unemployment and provide workers who will better meet the needs of employers;

* Improving adult literacy, numeracy and financial skills;

* Training more people with valuable skills in short supply, such as scientists, engineers, operations and development managers, and entrepreneurs;

The second opportunity for New Zealand is to gain more value from skills already developed:

* Increasing engagement with the approximately one million New Zealanders living abroad; either encouraging them to bring their skills back to New Zealand or connecting with them to help New Zealand succeed internationally:

* Encouraging more academic researchers to conduct research that will improve outcomes for New Zealanders;

* Becoming far more strategic about immigration, targeting recruitment of people with the
specific skills required here and getting them established, certified and employed quickly.

For all these agenda items there are worthwhile opportunities for improvement, along with evidence for links with prosperity, and data that shows other countries are achieving better outcomes than New Zealand.

For some of the agenda items there are programs being developed or in place. What is needed though is stronger performance management; clear assignment of accountability for outcomes, published targets, sufficient resource reallocation to reach the targets, monitoring, review, and reporting of progress.

Competing countries such as Denmark, Singapore, and Australia are managing performance well.

The target to match Australia’s GDP per capita by 2025 is ambitious. Skills improvement is only part of the solution but it is very important. Choosing the right improvement agenda and managing performance well will be important for success.

* Rick Boven is the Director of the NZ Institute.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments. Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making these comments.

16 Comments

Geez I get frustrated with

Geez I get frustrated with dumb articles like this one. I venture that one of the reasons we may have low productivity is because there are too many people in the business of stating the obvious.
Where are the specifics? Everyone knows we need more export earners. As if having skills has ever been considered a low priority!
The spurious claim that because Denmark, Singapore, Australia are doing better means we can is utter bull for so many reasons.
And the best part? "Encouraging more academic researchers to conduct research that will improve outcomes for New Zealanders." The outcome of research is more research

Birkenstock is a German brand

Birkenstock is a German brand of sandals and other shoes, notable for their contoured cork and rubber footbeds which conform somewhat to the shape of their wearers' feet. Birkenstock shoes have deep heel cup to ensure proper weght distribution and foot alignment. You can wear Birkenstock sandals to everywhere you want to. Latest Birkenstocks are on nearly 50% discount in http://www.digdig-birkenstock.com . Free shipping worldwide!

What an inane title. Of

What an inane title. Of course improving skills is important. So is remembering to tie your shoe laces. So that we can catch Australia is where the title really starts to repel. Last time I looked Australia wasn't going anywhere very fast. So now it's my turn to make stupidly obvious statements, except that it seems beyond the comprehension of some people that two very different counties need not attempt to compete with one another in the same arena. Quite literally why does New Zealand need to try to be like Australia in any respect when Australia already does a very good job? New Zealanders have the option to go and live in Australia if that takes their fancy and likewise Australians can come and live here. The only thing we should be trying to compete with them in is Rugby and Netball. Thats enough.

We all want a strong and vibrant society and an economy that provides for a high standard of living for us all. In New Zealand that means making the very best of the things we can be good at not trying to. "catch up" For goodness sake tell us what we can be good at and how to go about it don't tell us to improve our "skills" so we can "catch up".

The only tertiary-level education respected

The only tertiary-level education respected and valued (and in fact taken seriously) in this country is one from Lincoln. Anything else is considered to be wasteful and an extravagance.

Most people in New Zealand believe that any education is worthless. The most "Real Kiwis" should know is how to rebuild an engine and nothing more.

It's a nation of uneducated simpletons striving to ensure that it stays that way.

The productivity of anyone reading

The productivity of anyone reading this article would improve if NZ had universal skills in how to cut and paste text.

NZ will never catch Oz

NZ will never catch Oz - we would have to have a growth rate 4% higher than theirs for at least 25 years in a row and that's not likely!

What a load of the

What a load of the same old PC clap trap that has been circulating around for the last 30yrs
Yeah we need to upgrade....no..we need to get trades skills back into schools
not messing around with bits of plastic, but get OSH out and welders, gas axe, hammers ans saws back in....
Not focus on Tertiary (which these days means uni) but on primary and secondary, so these no hoppers who cant read and write, and teach them how to work with their hand, which history shows what they are good at
It is these same people who build homes, offices, tool up the inventions of others.
Its not about "up skilling" .
Dump all those 'pre trade courses (which are just rorts) and produce kids straight from school with good work ethics and skills to go straight into trades

"* Training more people with valuable skills in short supply, such as scientists, engineers, operations and development managers, and entrepreneurs;"

Ideas dont build a country, it is those who can build those ideas that build a country.
put the horse before the cart.

"* Encouraging more academic researchers to conduct research that will improve
outcomes for New Zealanders;"

LMAO..you mean add to the plane hanger (I assume you do know about the plane hanger) of cardboard boxes of the research that has gone before saying the same thing over and over...Or more simply go to Uni study as a researcher and rort the system over and over?

I suggest you go have a good old talk to Prof. Middleton..thats 1 guy who is onto it, and has been for 40 yrs.

I find nothing new, or original, you have said, that has not been said many times over the last 30 yrs..except it is now evolved into PC BS all talk no do, by people who have spent their lives sitting behind desks, justifying there existence dreaming they will be the next Beeby
I assume you know who he is?..was.

LOL, "There is an emerging

LOL,

"There is an emerging consensus that New Zealand needs to do more than expanding primary output and relying on commodity price increases."

If I start googling a bit I am sure that I would find hundreds, if not thousands of papers produced in the last two decades saying exactly the same.

And reading above comments…

It seems there is an emerging consensus on this site that your article is a load of re-heated and borrowed bullocks!

But to be fair, I will try to be constructive. Hint, go and talk to those people who warned of abolishing the traditional trade apprenticeship schemes back many years ago.

"Rick has publications in Social

"Rick has publications in Social Welfare, the Sociology of Education, Strategic Management, Business Ethics and Mathematical Psychology"
Say no more.

Good article. Going from the

Good article. Going from the previous reactions I think you should add Napoleon syndrome to the list though

[...] Blogging On Interest Rates,

[...] Blogging On Interest Rates, Economics & Business in New Zealand [...]

PeterR Formatting issues fixed. My

PeterR
Formatting issues fixed. My fault
cheers
Bernard

Crikey <b>Bernard</b> : Get some

Crikey Bernard : Get some rest man . You're gonna have a crucial budget to cover on Thursday . We need you bright eyed and bushy boofed for the big day !

bernard--could u give us a

bernard--could u give us a heads up sometime-- re copyright issue,s with link,s -quotes
etc -especially with news papers+ company reports
cheers pw

When I lived in Brisbane

When I lived in Brisbane just a few years ago they were very close to running out of water with dams down to levels where supply would be badly contaminated by too much silt. Authorities were thinking of options regarding the possible shipment of water to many hundreds of thousands of residents. There were rumours that even the question of possible evacuations was raised in council. Talk about being caught between a rock and a hard place.
Some smaller townships to the even drier west of Brisbane were forced to bring in water by tanker. That time around they were saved in the nick of time by rain at long last.
Current plans are to add at least two more desalination plants in addition to the one they have now built on the Gold Coast.
Australia is becoming as dependant on its minerals as is the Middle East is on its oil and soon Australia may also not be able to feed itself due to its ever increasing droughts.
I tell my offspring "sure go to Australia to currently earn the far better incomes but make sure you have a property here to come back to when conditions change".

Rick you have got hammered....

Rick you have got hammered....
Dont let it put you off posting threads.
You have to realise here you have a lot of people who have been around a long time in the real world...and have seen changes in many areas and the effects good intentioned theory that has gone very wrong over the last 40 odd yrs.
Its like an architect designing a house and the builder is old school and very experienced then tells the architect "Im not going to build that, ok for the equator but for around the roaring 60s it will leak and rot."

Like the builder the guys here live in the real world...grass roots guys.
And one thing about grass roots guys...They call a spade a spade...and a shovel a shovel. A shovel is what is used in cleaning out stables, a spade is used to dig...they are blunt and to the point.