Christchurch rebuild widens pay gap

JENNY KEOWN
Last updated 14:20 26/11/2012

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New Zealand has recorded the highest possible wage disparity between high and low skilled industries in a major global skills survey.

According to the Hays Global Skills Index, a report by recruiters Hays in collaboration with Oxford Economics, this disparity was driven by significant demand for qualified engineers and other professionals in the construction sector to rebuild Christchurch after the earthquakes.

Hays New Zealand managing director Jason Walker said trade specialists demanding higher pay had led to high wage inflation shown by the index.

The index creates a score for each country between 0 and 10 on the constraints and frictions being faced by its market for skilled labour. A score above five suggests that employers are having difficulties finding the key skills they need , while a score below five indicates a lax labour market in which there are no major constraints on the supply of skilled labour.

Overall New Zealand scores 4.8, compared to the average of 5.1, based on education levels, labour market flexibility, and high-skill wage pressures.

Within these overall scores, the scores attributed to each of the seven components can vary significantly, highlighting the different dynamics and pressures faced.

New Zealand scored 10 for wage pressures in high-skill industries.The country also posted 1.3, the lowest-possible result on overall wage pressure, meaning that other wages are not rising.

According to the report, whether the pressure on skills shortages in New Zealand will worsen or improve will depend on the outlook for the market for raw materials and energy.

"If the current slowing growth in China and other fast-growing economies proves temporary and economic growth recovers in the US and Europe, then pressures on recruiting and retaining experts in that sector will intensify," said Walker.

To combat the mismatch of skills availability and demand around the world, the Hays report proposes a long-term three-point action plan for policy makers.

First, governments should focus on the skills their economies lack and take appropriate measures to attract the relevant people through targeted immigration, according to the report.

This would in many cases require an overhaul of existing work visa arrangements.

Second, employers should be offered fiscal incentives to increase their provision of relevant training.

Third, governments should work with employers and educational authorities to implement a series of measures and incentives to persuade young people to acquire the skills that are most needed on both a country and international level.

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- BusinessDay.co.nz

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