General Publications
Department of Labour Annual Report 2006
Chief Executive’s Overview
The labour market is critical to transforming the economy and raising living standards for New Zealanders. It is also about people: people in work or seeking work, how people work and how people create value from that work.
Record numbers of people are now in the workforce. More than 40,000 people have entered the workforce each year since 2000, with 336,000 more people working than six years ago. In the June 2006 quarter, the proportion of working-age people in the workforce reached an all-time high of 68.8%. Unemployment has gone from 7% in June 1999 to 3.6% in June 2006.
And not only are more people working; people are earning more, with the average hourly wage increasing from $15.40 in 1995 to $21.90 in 2006. Maori and Pacific unemployment have also fallen sharply. The unemployment rate for Maori was 8.5% in the year to June 2006, down significantly from 18.6% in the year to June 1999. Pacific unemployment fell from 14% to 6.4% over the same period.
Much of New Zealand’s economic growth of the past decade has been fuelled by more people entering work. But changes in the labour market, New Zealand’s demographic make-up and international and future trends demand a new approach for economic growth to continue.
The labour market’s contribution to economic growth is no longer about unemployment but about job growth and skills. It’s no longer about finding work but about working well.
The proportion of the population aged between 15 and 64 will decline over the coming decades. With many developed countries facing ageing populations as well as a more mobile populace, there is increasing competition between countries for skilled workers. Technological change means that the skills we will need tomorrow might not be the same as the skills we need today.
People also have changing expectations of work. Many people want to balance their paid work with other aspects of their lives – caring for parents or children, recreational activities, or community involvement. The workforce has become more diverse – demographically, culturally and economically.
At one time, businesses could respond to increasing demand for their goods and services by employing more people. Today, this strategy doesn’t work – the tight labour market makes employing the right people, and keeping them, crucial to business success.
To prosper, New Zealand businesses and workers need to act in ways that let them deal with the current and future state of the labour market, rather than acting on an historic view.
And that’s the focus for the Department of Labour over the last year and into the future. In response to a changing labour market – and thinking ahead to future changes – we’ve changed as a Department. We’ve thought hard about what is important for New Zealand’s economic growth and what our role as the Department of Labour is. We have developed a new operating model that clearly defines our role as creating value for New Zealand – helping others work well. The restructuring of the Department that began in 2004/05 has strengthened our ability to contribute to economic growth and productivity.
Over the 2005/06 year we’ve refined our long-term goals, consolidated our senior leadership structures, reviewed our strategy, confirmed our long-term outcome, and developed a new purpose statement and framework for prioritising our work.
We’ve continued to deliver our core services while developing the foundation systems, programmes and approaches that will mean we can deliver on those goals and our new operating model.
Productivity is increasingly an issue of national importance. Over the past year, we have led the Workplace Productivity Project – a joint initiative between government, business and unions. The Workplace Productivity Project has developed a range of resources and tools to help workplaces identify and put in place the changes they need to improve their productivity.
In the current labour market, it’s more important than ever to attract and retain staff. Promoting and implementing work-life balance and introducing more flexible work options are a way to provide employees with the flexibility to combine paid work with other interests and responsibilities. Work-life balance policies are an affordable way for employers to retain skilled staff and attract new employees.
We have been working with employers and employees, in both the private and public sectors, to develop tailored practical tools to address work-life balance issues in the workplace. These tools include new ways of addressing issues around rostering, flexibility, length of hours worked and work intensity.
Skill shortages remain a major issue for the New Zealand labour market and are a significant constraint to business growth. A skill shortage is a mismatch between the supply of people with particular skills and the demand for people with those skills. Both the government and the market play a role in reducing skill shortages.
Immigration and the education and training system are the two key means for the government to relieve skill shortages. We are helping businesses and individuals plan for the future by providing comprehensive labour market information. This is about enabling training providers and young people preparing to enter the workforce to know which skills and which areas of training will provide a good chance of satisfactory employment.
To help with short-term skill gaps, the government encourages people with the skills we need in New Zealand to come here to work and live. Many people who are tertiary or trade qualified, with at least two years of work experience, can enter New Zealand as skilled migrants. employers also find that work visas for people who can bring skills to New Zealand that are in short supply are readily accessible through flexible immigration policies.
In 2005/06, 77% of the 12,321 Skilled Migrant principal applicants issued with a residence visa or permit had relevant job offers. A further 37,340 work or talent applications (general, Talent and Long-Term Skill Shortage List) were issued during 2005/06. These new arrivals brought vital skills to New Zealand and have added diversity and fresh perspectives.
The Department of Labour also manages the border. This means facilitating the smooth entry of people with the legal right to enter New Zealand, while preventing the entry of those without the legal right to enter. It also involves detecting and removing people without legal permits. To carry out these functions we work closely with other New Zealand government and international agencies, and participate in regional and international security groups.
The broad range of activities that the Department of Labour works across challenges us to work better as one organisation. Our activities encompass a wide range of functions all linked by their relevance to people in work.
The Statement of Intent for 2005/06 stated five long-term goals:
- Improved labour market outcomes for sectors, regions and firms through effective partnerships and strategies
- All people have opportunities to participate in well-paid and meaningful employment
- People’s skills match the current, and respond to the future, needs of the labour market
- New Zealand’s workplaces are attractive, innovative and productive
- New Zealand’s voice on labour market, migration and humanitarian issues is effectively heard abroad and our security and prosperity interests are advanced and protected.
This Annual Report documents our progress against those five goals. however, it’s important to note that the review work we have done over the past year has provided us with the opportunity to reshape these goals to be stronger, more purposeful and tangible.
Our first revised goal is that New Zealand will prosper through its connections with the rest of the world. New Zealand is a global citizen; we trade with other nations, we welcome visitors and new migrants from other parts of the world, and we are part of the international community of nations.
We work towards this goal by facilitating short-term visits – by tourists, students and temporary workers – that create and strengthen connections. We engage with the international labour market and international policy makers to help ensure that the international environment is conducive to New Zealand’s interests and that we can extract best practice learning from international standards and practices. And, we encourage people with skills that we need to come to New Zealand to work and live.
Our second goal is about workplaces. Our vision is that New Zealand workplaces will lead the world in maximising the value of work while providing a high-quality working life.
This goal encapsulates our desire to see us achieve higher-value outputs from people’s work that still satisfies each person’s need for safety, challenge and development and a high quality of life.
The skills and abilities of our people are crucial. Our third goal is that the skills of our workers will ensure new Zealand enterprises are leaders internationally.
New Zealand is a trading nation; we need to be able to compete successfully with other countries, other firms, other economies. higher skills are a foundation for economic transformation because they increase productivity and contribute to the satisfaction that people feel in their work.
The Department of Labour works with industries, educators and training providers to increase skills in the labour force. We help them to consider the different ways they can address skill shortages, both now and in the future.
New Zealand has talent. Our businesses, schools, institutions and organisations have many innovative, smart, creative people who have the capability to drive New Zealand’s future. When we don’t have the right skills mix to meet an immediate need, we attract skilled people from overseas and facilitate their participation in the New Zealand labour market.
One of the key tenets of New Zealand culture is that we have both life and work. Our fourth goal is that all new Zealanders will be able to grow and develop through access to well-paid and meaningful employment.
Decent work enables people to prosper, financially and personally. Participation in the labour market provides an income, enhances a person’s sense of self-worth and creates opportunities in many other aspects of life.
The Department of Labour is leading work on enhancing work choices for parents and other carers. Offering people the opportunity to balance their work with other aspects of their lives encourages people with skills and talent to participate when they might not have otherwise been able to. Parents, youth and people in demographic sectors that are under-represented in the work force need support to do work that suits their abilities and their needs.
Reducing the barriers for some people to enter the labour market widens the skills and abilities our employers and organisations can access. This increases the labour market, improves income and earnings for these individuals and enhances New Zealand’s productivity.
These four goals are linked together – working towards one helps us achieve others.
The Department of Labour is all about people, and the contribution that each individual can make to New Zealand. People working together create economic transformation. That’s how we can achieve our outcome of productive work and high-quality working lives for all New Zealanders.
Our achievements in 2005/06 are set out in more detail in the following pages. We have made a significant amount of progress towards our outcome and I thank all those within the Department, and others who have worked with us, to achieve what we have over this year.
JAMES BUWALDA - Chief Executive