The recently released Household Labour Market Survey has good news for Waikato. It was a surprise for many, however, as the unemployment rate fell from 4.2 percent in the first quarter of 2019 to 3.4 percent in the second quarter, which is below the New Zealand average of 3.9 percent.
What’s surprising is that the total number of people employed in Waikato actually decreased slightly in the last quarter, dropping 0.4 percent (and was 1.2 percent lower than the same time last year). It is even more surprising considering the working age population continues to grow steadily at 1.7 percent in the last year.
As pointed out to me recently by Blair Keenan, principal economist for the Waikato Regional Council, the reason is the percentage of people ready and available to work has decreased over that period. The participation rate for employment over the past few years has been historically high at around 73 percent. We have probably seen a correction with it dropping toward 70 percent by June 2019.
So why is this happening now, given that we still have a tight labour market?
This is a question Te Waka has put on our priority list to answer. In April this year, with the Labour Market Leadership Group taking the lead, Te Waka launched the Waikato Labour Market Strategy – a refresh of the strategy released in 2014.
The key goal of the strategy is to build, attract and retain skills and talent on a sector-by-sector basis.
We have a few mechanisms to achieve this. One is to ensure businesses can attract, develop and retain the skills they need to grow. Another is to increase work-readiness and educational attainment in our youth.
We’re also aiming to promote investment in the training and upskilling of the existing workforce, and encourage sector-led engagement between educators and employers to develop new models of industry partnerships.
Initially, our focus will be on assisting the construction sector, which employs the most people in Waikato, and the fast-growing tech sector. Following this we will move to the manufacturing sector.
To assist implementation of this strategy, Te Waka has partnered with the Ministry of Social Development who will provide support in the form of seconded staff, as well as other resources.
Our aim with this strategy is to operate at the business end of the employee pipeline, working with sectors and industry to identify labour market issues and needs from the demand side. This information can better inform labour market supply organisations about the skills needed, and how we can ‘fill the gap’.
The information will also yield the ability to develop interventions such as employer training programmes, or offer support to develop and retain staff.
Through the strategy, we also aim to provide employers with the tools and understanding to support trades apprentices, workforce diversity, young workers who demand greater flexibility, migrant workers, and those with varying employment situations like interns.
The strategy recognises that the challenge in the employee pipeline lies with the transition of employees into jobs, and we believe employers can take more ownership of supporting labour market development through programmes, active recruitment or other initiatives.
Another challenge is the need to keep people in jobs once they’ve been trained and placed. For instance, the Ministry of Social Development sees an impressive average of 700 people exit off benefit and into employment a month. However, of the 700 jobs per month up to 30 percent (210) will return to benefit after six months.
These are appalling statistics, especially after the significant investment that goes into preparing people for work. From where I stand, there are two simple reasons for this: either the potential employee was not prepared well enough for the job they were about to get, or the employer has not provided enough support for the new employee, apprentice or intern.
In the process of developing the new strategy, the Labour Market Leadership Group acknowledged that the pipeline of labour market supply in Waikato is reasonably good.
With several tertiary institutions in our region, there shouldn’t be a shortage of new talent. The University of Waikato, Wintec and Te Wānanga o Aotearoa all provide graduates that businesses can link with. And we know that some businesses in the region are already doing that through graduate programmes, placements and internships in partnership with these institutions.
How this looks in the future may change, given the vocational education review with the government is underway. The aim for this is to merge polytechnics into a single New Zealand Institute for skills and technology. It is proposed that this change will integrate these merged polytechnics with industry training organisations.
This proposed new system will have a stronger focus on employers providing more support for their employees, and ensuring greater consistency in vocational education across the country.
This is good news for Waikato because it should increase the number of employers who are engaged in vocational education through industry groups, and encourage businesses to take greater ownership of developing their most important asset – staff. It will also provide a much needed lift to regional productivity.
A great example of connecting schools with local employers can be seen in the Smart Waikato’s Secondary School Employer Partnership (SSEP) programme. This initiative, which has just received a significant Provisional Growth Fund (PGF) injection, aims to enrol 10,000 students in the programme by 2021.
With a vision to help create zero youth unemployment in the region by 2030, the SSEP programme could perhaps demonstrate, in real practice, how employment gaps can be filled through links with education and industry.
