Blue collar workers vital to economy - Berl

PAYING OFF: Research group Berl  has found significant value in funding industry training.
Fairfax NZ
PAYING OFF: Research group Berl has found significant value in funding industry training.

Industry training groups, now the subject of a government review, have produced hard data showing the value of the low-skilled worker and industry training generally.

The data, researched by Business and Economic Research (Berl), showed that workers once thought to be unskilled or blue collar were actually a vital cog in the economy, particularly the export sector.

"What's interesting from my perspective is that 70 per cent of school leavers don't go to university," said Mark Oldershaw, chief executive of the Industry Training Federation.

"We've got a significantly funded university sector which caters for only 30 per cent of school leavers. So the key for us is, what do we do with the other 70 per cent?"

The industry training sector, which last year had about $50 million of its government funding redistributed to the tertiary sector, is about 70 per cent funded by the state and 30 per cent by industry.

Berl's report sought to establish a baseline for what industry training was worth by using several scenarios. It estimated that if all government funding for industry training – currently $156m – was withdrawn, the long-term loss could be $7.2 billion a year or 2.9 per cent of gross domestic product.

This rose to 6 per cent of GDP by 2021 if the industry also withdrew its contributions.

Berl chief economist Ganesh Nana said cuts to training funds were felt most keenly by the export sector.

This was because skill shortages crimped capacity and raised the price of labour, which in turn reduced competitiveness and export sales.

"If you reduce the amount of trained and skilled labour out there, not only are you reducing the quantity available to businesses, you are also increasing the cost of the labour ... because it's in short supply."

Primary industries and manufacturing would be hit hardest by a cut to training funds, with big job cuts in the forestry and building industries.

Berl also projected what a 33 per cent increase in training funding would do and found the gains were significantly less than the costs of reducing present funding.

The report concluded that the Government's investment in industry training was providing a significant return, and also that funding was important across all types of skill levels.

Nana said the research showed many skilled workers suffered just as heavily as blue-collar workers if their businesses were constrained by skill shortages.

"The model is saying it's not just elementary skilled labour that you can turn off if you're not going to train them, because other elements of labour are also going to get hurt."

It was also now unfair to say that blue-collar workers – machinery operators, drivers and builder's labourers – were unskilled, he said.

"Irrespective of how productive you're trying to be, you still need labour across all skill types, and I think the point I would reinforce is not to confuse elementary skilled labour with unskilled labour, because elementary labour still needs training."

Oldershaw said the data was the first tangible evidence the Industry Training Federation had to show that a "picking winners" approach to training did not work.

"In a society that pushes for high levels of skills and development, this research shows it is essential not to overlook the need to also invest in skills and workforce development at all levels."

BusinessDay.co.nz