New Zealand is top of the list of 31 countries when it comes to wage pressure in high-skill industries, according to a new report.
New Zealand has been given the highest possible score for wage pressure in high-skill industries in the 2014 Hays Global Skills Index. It means New Zealand’s sector-specific skills shortages are the main pressure point in the local labour market and the highest in the 31 countries in the Index.
The Hays Global Skills Index, produced in collaboration with Oxford Economics, ranks New Zealand 10th on the list of 31 countries overall for efficiency of the skilled labour market. However deeper analysis of the findings show that New Zealand's employers are facing a tight labour market.
While all seven of the indicators in the Index (education flexibility, labour market participation, labour market flexibility, talent mismatch, overall wage pressure, wage pressure in high-skill industries and wage pressure in high-skill occupations) are either the same or higher than last year, the score of 10.0 for wage pressure in high-skill industries shows that wages in high-skill industries such as engineering, technology, construction and finance, are experiencing skills shortages.
Jason Walker, Managing Director of Hays in New Zealand, explained that these industries require highly-skilled staff but it takes time to undertake the necessary training which makes them more vulnerable to skill shortages as the number of people qualified to start work cannot be changed quickly.
“We’re seeing particularly high demand in finance and IT, and also in engineering and construction. This is the result of increasing private commercial development, large public ‘anchor’ projects and the residential rebuild in Christchurch, as well as an increase in high value civil projects in Auckland and Wellington. Residential development is also strong across all the major regions,” Walker said.
“The shortage of talent has seen employers in these industries offer competitive wages to secure and retain suitably experienced professionals. The economic expansion is now well underway and increasingly broad based.”
While the country tops the chart for wage pressure in high-skill industries, it received low scores for both overall wage pressure and wage pressure in high-skill occupations (2.9 and 1.2 respectively) which suggests that wages for highly-skilled candidates (such as managers, senior officials or skilled trades) in all industries bar high-skill industries, are rising at the same rate as those for low-skilled candidates (such as process, plant and machines operatives, and administration workers).
New Zealand also received a moderately high score of 6.7 for labour market participation which shows that the proportion of working age people isn’t increasing, which gives less scope to boost overall participation rates.
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The country's overall score rose from 4.3 in 2013 to 4.9 in 2014, further demonstrating that employers in high-skill industries face more competition for key talent.
“As a result, candidates with in-demand skills can be confident of securing their next career move,” Walker said. “But for employers in high-skill industries, there is a need to look at more innovative strategies to attract and retain top talent.”