It was great to hear that the Otago Chamber of Commerce is wanting to understand the future employment and labour needs of the region.
When we did the research for our book, Rebooting the Regions, there were a couple of aspects that were sorely missing from many regions. One was an appreciation of the current and future demographics that employers and industry organisations were facing. Allied to this was any consideration of future labour needs in a regional economy.
What used to be called "manpower planning" is sorely missing at both the national and regional level. We know how many will be entering and exiting the labour market over the next two decades. And we are able to predict with some confidence how many we will educate and train.
But the Otago Chamber of Commerce will struggle on a number of fronts. The first is that our labour market will change significantly over the next decade or so. We repeatedly warn that about 40% of jobs which currently exist will not in a decade’s time because of the impacts of digitisation, the possibilities of artificial intelligence and the globalisation of production.
There will be new jobs and we need to prepare for those by ensuring that our school leavers and graduates have transferable and generic skills. The content that we teach will become redundant in many instances.
But another challenge is that our employers, including some of our industry organisations, are very poor at identifying what their future skill and labour requirements will be. One reason is that many are small and medium enterprises which are very focused on earning a living here and now. The other is that we tend to backfill shortages by using immigrant labour, so there are few incentives to think about the future.
When we did surveys of employers, we discovered that even getting them to identify their skill and labour requirements in five years’ time was a challenge. We reduced the timeline to three years — and many still struggled.
I would suggest that the Chamber of Commerce might need to provide support and encouragement for employers and industries to think more proactively about how they might provide the required data — before creating a picture of what will be required over the next 10 years or more. That sort of future scenario building is in short supply in New Zealand.
There is also Otago’s demography to consider. Otago’s fertility rate, at 59 births per 1000 population, is the lowest in New Zealand by some margin. (The national average is 79 and the next region is Wellington at 73 per 1000). One of the results is that Otago’s population growth is modest to say the least (+745 between 2005 and 2014) and the younger age cohorts will contract in the next decade, with only 17% of the population under 15 years of age, again the lowest in New Zealand.
These rates and trends have implications for Otago. Retention of young adults is important. Recruiting young adults who come to study in the region is important.
But even with strong policies on both counts, those entering the labour force will contract and supply will provide a challenge for employers. Then there is the possibility of supplementing both skills and population by attracting immigrants. Note the point above — this should not be at the expense of local schemes to upskill and employ. But — as with most of New Zealand — immigration will become the most important source of population growth in the future. It is already a key source of talent and skills.
I hope that the Otago Chamber of Commerce considers what it might do in relation to immigrants. The Otago labour market is an extremely unusual one — Central Otago is absolutely reliant on immigrant labour, typically on short-term work visas. With some exceptions, such as the University of Otago and the DHB, Dunedin has very low net migration gains.
Given that the Minister of Immigration might invite regions to contribute to a discussion about regional skill shortages lists as a way of specifying the sort of immigrant required, I would strongly urge the Chamber to consider a regional immigration policy.
It will be interesting to see what emerges and whether the Chamber of Commerce is able to overcome many of the challenges faced by regions in ensuring an adequate supply of skills
- Distinguished Professor Paul Spoonley, Massey University, heads a research project looking at economic and social change in New Zealand.
