How can tertiary education deliver better value to the economy?

Publication Details

This paper asks how tertiary education can deliver better value to the economy. It is based on a presentation given at the New Zealand conference of the Association of Tertiary Education Management in Auckland in July 2010.

Author(s): David Earle, Tertiary Sector Performance Analysis and Reporting Division [Ministry of Education]

Date Published: December 2010

Does New Zealand have a skills or qualification shortage?

All of these factors suggest that the attainment and supply of qualifications and skills are just one part of a much bigger economic and global picture. However, the question of whether New Zealand has sufficient people with skills and qualifications in the workforce is still important.

There is little evidence for wide-spread qualification shortages.  Analyses of the supply and demand for trade, technical and professional qualifications only found a few areas where there was strong evidence for qualification shortages (Earle 2009a).

The Department of Labour forecasts indicate there will be limited overall employment growth over the next decade. Growth is likely to be stronger in the skilled occupations, leading to greater demand for higher-skilled workers in the workforce. This will be matched by continued growth in the number of tertiary-qualified workers (Department of Labour, 2010a, 2010b and 2010c). Research in 2008 found that the increase in demand for tertiary qualified workers was running just slightly ahead of the increase in supply (Razzak and Timmins, 2008)

There has been a lot of discussion over the last five to ten years about skill shortages. However, skill shortages are often confounded by labour shortages. That is: has the demand for skilled labour exceeded the supply? Or are we genuinely short of specific skills?

Figure 5 below shows that the demand for skilled labour closely follows the economic cycle. This means that recent skilled labour shortages have been closely linked to high economic growth rates. The question for tertiary education is whether we are meeting the long term demand across the cycles – and providing the skills that are relevant to changing work demands.

Figure 5:  Difficulty of finding skilled and unskilled labour compared with economic growth in New Zealand

Image of Figure 5:  Difficulty of finding skilled and unskilled labour compared with economic growth in New Zealand.

Source: NZIER (2010)
Note: Figures have been transformed to an annual rolling average to smooth out seasonal variation.