Tackling new issues in the Bay of Plenty labour market

Comments to the Bay of Plenty region Employment and Skills Forum. Rydges Hotel, Rotorua.

Introduction

[Slide one]

Work is not merely the path to economic independence. It provides the opportunity to gain a sense of achievement. It offers self-worth and self-pride.

Work, then, is a worthy target. Something of value to aim for.

Providing people in the Bay of Plenty with the opportunity to participate in the workforce is the path to long-term and sustained economic health. To achieve this takes action. Action focused on practical solutions. Action that addresses causes not symptoms.

Success will take commitment by us all. The government knows we need to continue building strong links with all the parties represented here if we are to answer the challenges this country faces.

The drive for employment

[Slide two]

In presenting the Employment Strategy in 2000, the government’s desire was to widen the doorway for more New Zealanders to enter the workforce. The Strategy’s initiatives are designed to create the conditions to maximise employment.

Strong economic growth has since seen unemployment reach an historic low, with increases in both the number of available jobs and the rate of labour force participation.

Other initiatives are now helping to strengthen the effectiveness of the Strategy:
·the $131 million ‘Making Work Pay’ package offers incentives to help people move off a benefit, and get into - and remain in - work. It targets sole parents, long-term beneficiaries with dependent children, low-income families already in the workforce and seasonal employment requirements;
·established this year, the Tertiary Education Commission is focusing on ensuring tertiary education and research better supports strategic priorities - such as developing the skills New Zealanders need;
·we’re also strengthening our commitment to improve youth transitions from school to work. By 2007, we aim to have all 15-19 year olds engaged in appropriate education, training, work or other options, which will lead to their long-term economic independence and well-being;
·we further refined the Employment Strategy this year to place a greater focus on sustainable employment. We’re not interested in generating just any job. We want jobs that will build the economic independence of job seekers. And we want job seekers to have access to high quality jobs; and
·just recently we’ve added the $104.5 million Jobs Jolt package. This initiative includes 10 specific strategies that will work to meet industry needs while getting 22,000 people into paid employment over the next 3 years. Jobs Jolt covers the unemployed, people with disabilities, long-term sickness and invalid beneficiaries, mature job seekers and youth, and people who’ve been made redundant. This initiative recognises that people’s lives are best improved through work and community participation.

[Slide three]

It is a pillar delivering on this government’s vision for the country as a prosperous, inclusive and environmentally sustainable society. A society characterised by opportunity for all.

Such a society must be fuelled by economic growth and innovation. And our competitive advantage in the future global economy is affected by our ability to encourage a wide range of people to participate in the workforce.

Why we’re here today

[Slide four]

This Employment and Skills Forum is one of series we are running throughout the country to progress the Employment Strategy and tackle the new issues of the labour market.

A strong and growing economy has brought different challenges to the employment sector. The labour market forecasts have all pointed to the bite of labour shortages. And not just of skilled labour, but also of unskilled.

Low unemployment across New Zealand is creating difficulties that we have not experienced for some time. Some firms are saying that a lack of staff is constraining their potential for growth.

At the same time, a pool of people looking for work lack the appropriate entry-level skills for these industries.

Looking further out, there’s a need for government, community and industry to work together as the labour market shrinks with an ageing population, and as economic success boosts demand for skilled, motivated workers.

While a challenge, these factors present us with a real opportunity to make further inroads in getting more New Zealanders who are currently outside the workforce into jobs.

New issues mean new remedies are the order of the day.

New remedies

[Slide five]

We’re already on the path to developing new remedies to address the current and future challenges. Earlier regional development plans set out the first steps, and we now need to consolidate our efforts on that journey.

This is the purpose of today. It’s the platform for robust discussion and debate about what we – together – need to do; and about how the government can help you move forward.

Firstly, information is power - we need to take stock of where we are. And quality information on the labour market is one area in which the government has invested to support regional growth activity.

So let’s take a look at the Bay of Plenty region:

[Slide six]

·Growth in employment has weakened recently after a very strong performance in 2002. The level of employment fell by 1% in the year to September 2003. Despite the fall the region’s employment rate is still high, buoyed by the 8.6% surge in 2002 – a nationwide high at the time.

While the region’s job growth has been one of the country’s most volatile it’s also been one of the strongest with an annual growth rate of 2% since 1997.

·The region’s overall economic growth peaked in late 2002. Since December 2002 Bay of Plenty economic growth has dropped from 5.8% to 4.2%. However, this rate is the top equal of the country’s 14 main regions.

The fall is largely due to the reduction in export returns over the last year as the New Zealand dollar has strengthened and forestry and dairy prices have weakened.

·Higher population growth has resulted in part from higher net migration flows, with more people arriving in the region from overseas and fewer people leaving. People moving from other regions has also fed the growth with 44,000 people moving to the region between 1996 and 2001.

And this is likely to continue. The population is expected to reach 307,700 in 2021, 25% higher than in 2001. Only the Auckland population is expected to grow by more.

·The rate of the region’s labour force participation rose to a record 64.4% over the year to September 2002, falling to 62.8% as at September 2003. This is considerably lower than the national average of 66.3%. Only Northland rates lower.

·Despite this, there’s been a remarkable fall in the region’s unemployment rate – dropping from 7.6% in September 2002 to 5% in the September 2003 quarter. The quarterly average for 2003/04 was 6.4%. Feeding this decline, however, has been more a fall in the labour supply than an increase in people employed.

·Retail sales have grown considerably – rising by 7% in the year to July 2003 following 10% growth over the same period in 2002.

·After weak performance in 2000–2001, the region’s construction industry has more recently boomed. The number of new dwelling units authorised increased 27% in the year to September 2002. The rise nationwide was 23%.

·The real estate market, too, has been strong. House sales in the wider Waikato-Bay of Plenty- Gisborne region rose by 35% in the year to September 2003.

Cumulatively, this data paints a picture of a region that’s enjoyed reasonable growth over the last few years. However, it also telegraphs the need for action as the conditions fueling that growth appear on the decline.

A varied region

[Slide seven]

For most New Zealanders, think of the Bay of Plenty and you think of golden beaches and fabulous weather. You think farming, fishing, and horticulture. You think of a recreational mecca—from boiling mud pools and steaming geysers to shopping, cafes, and culture.

This diversity is reflected in the region’s occupations and industries. The manufacturing, retail and primary sectors are the industries that dominate the local economy. The largest number of employees, however, are service and sales workers, all of whom are well represented in Taupo, Tauranga and Rotorua.

Manufacturing accounts for 13% of the local workforce and is concentrated in the processing of the region’s primary produce – horticulture, pastoral farming and forestry. Manufacturing outside the primary sector is also key.

The Western Bay of Plenty is the horticultural powerhouse of the region - 57% of New Zealand’s kiwifruit hectares and 42% of avocado hectares are planted here.

Dairy, sheep and beef farming are features of the entire region and production forests are also a major land use, especially in Taupo and Whakatane.

Retail trade is a significant employer in Tauranga.

Not surprisingly, agriculture and fishery workers feature in Opotiki and Western Bay of Plenty and plant and machinery operators and assemblers in Kawerau.

It seems that your laid-back lifestyle lends itself to a certain type of entertainment. You have more singers, clowns, magicians and acrobats here than any other region in the country.

The outlook

[Slide eight]

Much of the region’s growing economic health over recent years can be directly attributed to the good returns experienced in farming and its support industries.

However, a fall in export incomes is likely to dampen economic growth.

The strong rise in the New Zealand dollar over the last year and the fall in world commodity prices since 2001 will take a bite out of export earnings. The forestry sector has been one of the most severely affected. In turn, this bite will likely affect local spending.

In just recent months we’ve seen the kiwi dollar reach 6-year highs against the US dollar.

Encouragingly though, world dairy prices are lifting from their trough of late 2002 - as to a lesser extent are forestry prices. And the world economy is predicted to recover over the next year. Combined, these upturns should make things a little brighter for exporters.

Several factors are expected to help keep the local economy reasonably positive. Consumer spending is expected to continue at a strong level through the rest of 2003. This will be supported by low employment, relatively low interest rates and population growth.

Reflecting this outlook, around 23% of local firms, while pessimistic about general business conditions, expect an improvement in their own activity.

Longer term, strong population growth and tourism will fuel the region’s economic health. Especially tourism - the Tourism Research Council forecasts growth in visitors of 22% by 2009. This growth is being aided by factors like the diversification into new attractions such as the Pacific Highway and health spas.

However, while population growth will boost the local construction industry, much of the growth appears to come from young people and retirees. These population bands are unlikely to bring businesses with them. One end result may be a high unemployment rate in otherwise prosperous areas.

The tension between demand and supply

[Slide nine]

In essence, long-term, sustained economic well being is the central goal of social development. The key to that development is the careful balancing act of the supply of skills to the demand for labour.

For New Zealand to thrive economically, each region must attempt this balancing act according to their own unique circumstances.

So what is the demand situation in this region?

The Rotorua Employment Skills Project commissioned by Work and Income, Waiariki Institute and the Rotorua District Council surveyed employers on their needs in 2002. A plan of action is now in place - and I’ll talk abut some the initiatives shortly. Similar work is underway elsewhere in the region, so the Bay of Plenty’s skill shortages are well scoped. Employers are experiencing shortages in:
·nursing
·mechanics
·horticulture – there’s a lack of orchard skills right across the board
·drivers – heavy trade and bus drivers
·trades.

And on the supply side?
Slide ten

Generally speaking, the pool of available labour currently outside the workforce includes:
·just over a third who have been unemployed for under 6 months
·just over a third who have been unemployed for between 6 months and 2 years
·18% have been unemployed for between 2 and 4 years, and 13% for over 4 years.

Across the board, qualifications do not feature. The proportion of the Bay of Plenty population without a qualification is higher than the proportion across New Zealand as a whole. Only 6% of the population has a university degree. This though, is somewhat offset by a higher proportion who have a vocational qualification.

Significantly, some 29% of unemployed Bay of Plenty people are aged under 24 years.

At 28%, people claiming a Maori ethnicity are a higher proportion of the population than the national average. This proportion balloons when it comes to those out of work, with 62% of unemployed people claiming Maori ethnicity.

So, now we have a picture of what employers need and a picture of the available pool of labour and skills. The task before us is to find solutions to bridge the evident divide.

Solutions in action

[Slide eleven]

The recognition of a need for a different solution was behind the establishment of the Ministry of Social Development two years ago. The Ministry has been founded on the adoption of a different approach; an approach where we tackle the causes behind people’s problems rather than throw money at the symptoms.

Such an approach requires a focus on the long term. It means working in partnership with New Zealanders to help them find their potential as productive people in society. It requires providing help across a wider range of areas in peoples' lives.

In responding the Ministry has worked hard to gain a better understanding of the economic drivers in each region; to assess the opportunities and barriers. Its efforts in this area are encapsulated in the various regional economic development plans.

Plans are one thing. But people mobilize them. The Ministry is also increasing its efforts to build genuine partnerships with other government agencies, community leaders and groups, industry and individuals. People who share a common vision and who are committed to working together to achieve it. And working together is the key.

[Slide twelve]

Work and Income here in the Bay of Plenty understands this. They know that we can only achieve sustainable employment through industry-driven, demand-led strategies. This requires improving connections with industry and employers. This requires putting employers in the driver’s seat.

A key component of the regional strategy builds on the successful industry-based opportunities for job seekers, which provide employers with a workforce trained and educated to their specific needs.

Other programmes increase the marketability of clients to employers.

Let’s look at some of the specifics…

[Slide thirteen]

In conjunction with the Taupo District Council, Work and Income have recruited people for Gourmet Mokai Ltd. Gourmet Mokai is a joint venture between Gourmet Paprika, New Zealand’s largest capsicum grower, and the Huhangaroa and Tuaropaki trusts.

The venture is building 5 state-of-the-art glasshouses in Mokai for hydroponic cultivation of capsicums and tomatoes. Pre-recruitment training sessions were run at the Mokai Marae and in Mangakino. And to date 38 people are employed by the venture. It is working so successfully that it will be expanded to provide 150 jobs by this time next year.

Work and Income have introduced Straight Up to Bay of Plenty secondary schools. The presentation gives students an insight to the reality of being unemployed, discouraging them from viewing it as a career option. Providing information on the labour market, Straight Up encourages students to think about their attitudes to school and their future.

Over two and a half thousand Year 10 and 11 students have seen the presentation this school year. It pushes the message that attitude that determines how far or how high a person will go in life.

In association with a Housing New Zealand Community Renewal Project, clients from Te Arawa Youth Unit living in Fordlands are preparing homes for painting. The Housing New Zealand initiative works with communities to promote safe, healthy and confident communities. Work and Income has identified and put forward the young people involved in what is proving to be a very successful project.

Working with the Waiariki Polytechnic, Work and Income has been running a 12- week carpentry pre-employment pilot. Some 15 participants commenced the programme in September. Mindful of the shortage of skilled construction workers Work and Income has arranged for another 12 clients to undertake practical carpentry skills training.

A partnership with the Tertiary Education Commission is getting Opotiki clients into general roading skills training and licensing for heavy machinery.

This drive to upskill the unemployed to ready them for available work is also channelling people into the region’s significant horticulture business.

After one day’s training, 23 Western Bay of Plenty clients have been employed in the kiwifruit industry as graders.

A further 15 clients underwent 4 weeks general orchard skills training, 12 of whom moved into employment in avocado orchards.

After going through a combined theory and practical course, 8 clients found employment as tractor drivers.

And over 600 clients gained seasonal employment on kiwifruit orchards after attending a 4-hour seminar covering the industry’s new health requirements.

On the retail front, 24 clients have been employed following an one-week basic customer service training course.

A suite of pruning training programmes has resulted in 14 clients employed in the forestry industry. A further two clients moved on to other development activity.

Wood processing is an industry with the capacity to add billions of dollars to the New Zealand economy. Wood products like mouldings, laminates and composites have big export margins, but also require high-level skills and technology.

Yesterday, my colleague Jim Anderton opened the Radi Centre here in the Bay of Plenty. New Zealand’s National Centre of Excellence in Wood Manufacturing will accelerate New Zealand’s wood processing industry by providing a highly skilled wood products workforce and technical expertise.

A partnership between University of Auckland, Waiariki Institute of Technology, and Forest Industries Training, the Radi Centre is unique in New Zealand and internationally. Students are due to start enrolling in its first Bachelors and Diploma courses next year.

A lack of drivers is a nationwide phenomena and one that’s being addressed under the Jobs Jolt initiative. Some 30 clients in the Western Bay of Plenty will be involved in a driving training package. A number of programmes providing heavy truck and bus driver training have already commenced in the region.

Also under the Jobs Jolt banner, 40 Rotorua clients will be taking part in hospitality and tourism training.

These are just some of the collaborative initiatives laying the foundation for genuinely sustainable employment in the region.

The common thread through all is that success depends on the involvement and co-operation of all parts of the community.

Helping the momentum

[Slide fourteen]

To help build the momentum in forging stronger links with the community at large the government has developed particular tools that can be used to work alongside other initiatives. One tool - specifically available to employers and others such as training providers - is the Skills Action Plan.

In a nutshell, the Skills Action Plan aims to reduce skill and labour shortages, now and in the future, especially in the regions. It incorporates a range of initiatives:
·industry and regional initiatives
·education and training initiatives
·information matching initiatives
·immigration initiatives.

The plan recognises that no one response will meet all needs.

Time to move forward

[Slide fifteen]

As I said in my opening, providing people in the Bay of Plenty with the opportunity to participate in the workforce is the path to long term and sustained economic health.

The principal reason why we are all here today is to build on the journey already begun; to take knowledge that we gain and apply it.

Our success will depend on the strength of our partnership and our commitment to realising the vision for an enduring, strong economy for the region.

Today we need to identify further what we think needs to be done.

And we need to identify and commit to what we’re going to do.

It’s time that we gave everyone in the Bay of Plenty the opportunity to enjoy the rewards of participating in the workforce.

[Slide sixteen]