Chronic skills, labour shortage a 'handbrake' on capital's Covid recovery

Have you struggled to get that big project done around the house? Maybe the cost has exploded, the tradies aren’t getting back to you and the end date is fast fading into the distance?

You are not alone.

Wellington, along with much of the country, is in the grip of a chronic skills and labour shortage that is stripping businesses of millions of dollars in revenue and the jobs to help produce it.

Beneath our feet, water and sewage is continuing to seep through broken pipes because a dearth of skilled staff is potentially delaying infrastructure improvements and driving up costs.

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Wellington Water admits it is short of 20 frontline staff but says it remains on track with its work to fix the city’s failing pipes.

One recruiting company has labelled the staff shortages as “insane” and another suggests it will get worse before it gets better. With the opening on the trans-Tasman bubble, eager Australian companies eyeing the Kiwi talent now within their reach.

At least one economic expert says the skill shortage is a “handbrake” on the economy, just as the country tried to forge a path to recovery. Others are worried that some of the skilled staff we have are struggling with the impacts of a pandemic, facing greater workload and stress.

Government figures show that as of April this year, there were 86 roles across 10 industries with an under-supply of talent.

Not coincidentally, that undersupply of talent has come as number of people moving to New Zealand from overseas has plummeted.

As part of New Zealand’s response to Covid-19, net migration has plunged 93 per cent in the past year, taking with it access to skilled migrant workers to plug the gaps.

The capital’s Chamber of Commerce has highlighted an A to Z of labour pains being experienced in practically every business and industry throughout the region.

It runs the gamut, from administrative staff and automotive technicians, bakers and biometrics specialists, through IT developers and teachers, to veterinarians and welders.

Industries struggling the most in the Wellington region include the primary sector, particularly in the Wairarapa; construction; healthcare; manufacturing. It will come as no surprise to Wellingtonians coping with cancelled bus services, that transport is also on the list.

Adecco, one of the country’s biggest recruiters, says its Wellington region job ads surged in April, up 65 per cent on the previous year. The growth was driven by the construction and manufacturing industries.

But job applications per advert had fallen 14 per cent month on month.

Some city businesses are even cutting opening hours as they struggle with shortages. One prominent Wellington company says missing out on millions of dollars because of lack of skilled staff.

Growing game developer PikPok has almost 190 staff producing mobile games played around the world.

But chief publishing officer, Karah Sutton says the skills shortage is holding it back and stopping it from developing more products and jobs.

The company had always struggled to fill highly skilled roles, including senior programmers and producers.

But that had become “100 per cent worse” since Covid-19, the closure of New Zealand’s borders, and Immigration NZ’s harder line on those entering.

And now it is “definitely hampering our growth”, Sutton says.

The company took eight months to fill the highly specialised role of advertising activities director.

“There’s probably only a couple of hundred people in the world who can do this role,” she said.

But Immigration NZ refused the successful candidate’s entry into the country, and he walked away when the time difference with London became too hard.

“This is a role that could have an enormous impact on the revenue of the business,” said Sutton. “It’s well into six-figure impact of growth that we are not able to take advantage of.

“It has been extremely frustrating watching how inconsistent Immigration NZ has been, declining our applications while the government is letting in dozens, if not hundreds, of people for the film industry.”

That frustration is shared with the agriculture industry, which has been struggling to find workers in the region, as well as nationally. This is despite the number of people on a job-seeker support benefit in the Wellington region growing from 15,500 pre-Covid to nearly 20,000 people now.

Federated Farmers Meat and Wool chair William Beetham says the shortage has been “hugely challenging” in the Wairarapa, which has struggling to find skilled contractors, including tractor drivers and machine operators, but also sheep scanners and veterinarians.

Farmers and other rural businesses “know things need to be done, but they literally can’t find the people to do it”.

That is causing “significant emotional stress...when we can’t deliver products to the rest of the world and operate our businesses”.

So bad is the shortage that well-known Wellington eatery Charley Noble is struggling to deliver food to its tables.

The restaurant has cut its opening hours because it can’t find enough staff, manager Sarah Watters says.

The eatery is short of staff across the business, with close to 10 positions unfilled, especially managers and wait staff.

“We’ve cut 4.5 hours every weekday morning and around six hours of service on a Sunday morning,” says Watters.

The decision was made, in part, to protect “exhausted” staff being “stretched too thin”.

It had had an impact on revenue, but she declined to say by how much.

That stress is being felt across the region, according to the Chamber of Commerce.

“Businesses are telling us that staff workload is increasing, there’s additional stress on staff and management, they’re unable to meet customer demand, have a lower staff headcount than needed, are turning down business, and have in some cases serious wellbeing concerns for staff,” says Chamber chief executive Simon Arcus.

“Skills gaps increase the likelihood of lower co-ordination in large infrastructure projects. Fewer workers are available, so they aren’t doing projects in a cohesive way. As a result, we see...delays in key areas as we wait for skills to become available.”

Like the many businesses it represents, the Chamber is concerned about the Government’s recently announced immigration reset, which appears to question the country’s reliance on migrants to fill skills and labour shortages.

“We are continuing to advocate for the Government to increase the capacity for MIQ, seek progress for those with skills who are already here, an extension of the critical worker border exemption and further extensions of the border exemptions for classes of workers and investors,” says Arcus.

Infometrics senior economist Brad Olsen says the Government’s move on immigration presents “more questions than answers”.

That lack of access to migrants and the shortage of skills and labour is “a handbrake” on the economy, he says.

“It’s going to restrict some of our ability to recover, and to recover with pace. We are travelling down the motorway and someone has put a temporary speed sign – 70kmh rather than 100.”

It is full speed ahead for recruiters, however. And the few job seekers lucky enough to take advantage of the chronic shortage of talent.

Ben Pearson, Wellington managing director of Beyond Recruitment, says shortages are “severe and people are getting a bit desperate”.

Evidence of that is the “re-emergence of sign-on bonuses, sharp increases in demands for salary and contractor rates, people willing to wait a lot longer for people to start, and a lot of showcasing of benefits”.

Pearson says transformational change in business and the public sector, including digitisation and industry disruption, has created many new roles and “the most sudden spike in demand that I can remember”.

“The last time we had a spike was after the Global Financial Crisis, when everybody stopped doing anything and a whole lot of work just kept backing up and backing up.”

But in that crisis, the planes kept flying and people could cross borders for work easily if they had in-demand skills.

This surge has crashed against the seawall of “a latent skills' shortage, which is getting worse, then you’ve got Covid, combined with a lack of immigration coming in, also general reluctance to make moves because of security concerns”.

All of which meant that the three to four candidates Beyond would normally find for its mainly professional, “briefcase belt of Lambton Quay” roles, was now often just one.

Sometimes that process could take two months, where before it was two weeks.

And those slim pickings had other suitors across the Tasman.

“Australian companies are actively headhunting in the New Zealand market,” says Pearson. “We haven’t seen it for a year, but now that the bubble is open it has come on thick and fast.”

That’s confirmed by Erin Devlin, managing director of Australian recruitment agency people2people.

She says Pearson and others should be looking over their shoulders.

“We just posted a job ad in New Zealand for recruitment consultants,” says Devlin. “We are experiencing shortages as much as any other industry is.”

Devlin and other Aussie recruiters are scouring New Zealand for “receptionists, administrators, customer service and legal support (staff) ... very short of candidates at the moment”.

And Pearson believes “it’s going to get worse before it gets better” – unless New Zealand puts together a better plan.

“We’ve been living in a skills-short world for a long time. There’s not enough happening in terms of a long-term strategy to address it.”

That, he says, should involve the Government and tertiary education working together.

But the long term is a long way down the road.

In the short term we need to find the people to build it.