PLAY TO OUR STRENGTHS TO ACHIEVE BEST RESULTS

A multi-faceted approach is required for New Zealand businesses to produce their best, writes

Robertson says.

‘‘Being in paid work helps take the pressure off their day-today living costs and gives people a sense of pride and belonging.

‘‘They also gain valuable new skills and knowledge, and build relationships that are beneficial to the businesses they work for while enhancing their future employment prospects.’’

But Robertson puts a brave face on forecasts that unemployment will gradually rise from its historically low level, pointing out that it ‘‘does not necessarily mean that those who have found work after being out of employment for some time will be affected’’.

‘‘The Reserve Bank has operational independence over monetary policy and how it balances its dual mandate of price stability and maximum sustainable employment,’’ he also makes clear.

To the extent that wage rises driven by labour shortages in certain sectors of the economy are posing an ongoing inflation risk, is there a better method of controlling them than suppressing overall demand in the economy by raising the official cash rate?

That’s a question that appears to interest Conway, who acknowledges that controlling monetary policy through the official cash rate (OCR) is a ‘‘very blunt tool’’.

The Reserve Bank has more specific tools to target demand for credit in the housing market in the form of loan-to-value ratio controls in the mortgage market and soon, perhaps, debt-toincome ratios as well.

And the Government is understood to have responded to the evidence of rising profits among big businesses by escalating its consideration of competition policy.

It is conceivable that one upshot of the bank’s current review of monetary policy could be a recommendation that it places less reliance on big levers such as the OCR and quantitative easing, and more on more targeted interventions.

Conway says trying to use migration settings to stabilise the business cycle in specific sectors of the labour market would be challenging, given they probably have an even longer time lag between tweak and effect than monetary policy.

But Rebecca Williams says there are other agencies that are thinking through the options.

‘‘Hopefully, that’s what the Ministry of Business, Innovation and Employment is looking at; that is what Treasury’s looking at.

‘‘I don’t think these are tools that just need to come to the bank,’’ she says.

In keeping with that, Conway says that just because the Reserve Bank doesn’t currently view the 3.3% unemployment rate as ‘‘sustainable’’ doesn’t mean it could never do so.

‘‘We could have a labour market that had a ‘neutral’ unemployment rate that was three-point-something if those structural aspects of the labour market were really humming, if skills mismatches weren’t a thing, and if flexible employment practices meant people were able to work more productively.

‘‘That would be great and we would totally welcome that.’’

As a large business bank, we know the number one issue for businesses today is access to labour.

It’s the great leveller. Small businesses. Medium businesses. Large businesses. Virtually everyone is struggling with worker shortages.

It’s also the one issue that stands out as the leading threat to our nation’s prosperity. It is choking economic growth, denying us the ability to take advantage of new opportunities, and buffeting inflation.

But our challenges aren’t unique.

Our population is ageing, but outside of India and Africa, so is the rest of the world.

Our net migration levels are negative for the first time since 2013, but Australia is also fighting a net negative rate.

With most of the world facing the same challenges, we’re also all looking to many of the same solutions – immigration. The reality is we’re in global battle for talent and won’t prosper unless business and the government come together to develop an enduring strategy.

New Zealand will always have a lower international profile than much larger nations, but our size is an asset. We can be nimble and adjust quickly.

Our country is a great place to live, work, and raise a family, and we live a lifestyle many around the world envy, so let’s maximise our natural advantages and play to our strengths.

We must tilt our settings and be more deliberate about targeting the kinds of workers and sectors we need.

Our focus needs to go beyond agriculture and healthcare and into creative industries, high productivity, and hi-tech businesses with a global focus.

In the short term, we’re going to need higher levels of migration to plug our skills gaps.

The Government has done a great job in reforming the investor migrant visa category, but an expansion of the accredited employer work visa, adding more countries to the visa waiver list, and expanding critical worker roles would help further.

We also need to make better use of the people we have, so we can reduce our reliance on migration over time.

The Government’s reform of vocational training is positive.

We need a stronger focus on employers and delivering the kinds of skills they need but doing it in a high-quality and consistent way across the country.

We also need to be focused on how we can lift Ma¯ori and Pasifika skills and education. As the youngest parts of society, it’s crucial we do everything we can to equip them with the skills they need for the high-skill, highproductivity jobs of the future.

Some jobs will also be destroyed by technological change.

This will be hugely damaging to people working in lower-skilled roles, so we need to be working proactively now, getting around them to help them transition to higher-productivity parts of the economy.

But while this takes time to bed in, there’s plenty business can do right now.

It’s never been more important to be communicating a clear value proposition to employees. If they understand why what they do matters, if they feel invested in and rewarded, they will reward businesses back with tenure and higher productivity.

All New Zealand businesses, big or small, need to get better at induction and training. In a hot labour market, businesses can’t let their good people dawdle.

A strong focus on getting them bedded in, upping the skill curve, onto the tools and adding value quickly and effectively is crucial.

It means less time lost to a low-productivity period and employees will feel valued and invested in, which means they’re more likely to stick around and less likely to leave after having crucial time and money invested in them.

Businesses can also invest in themselves to lift their productivity. New and more efficient plant and equipment, new digital processes and tooling, lifting employee digital skills, and using the internet to access new domestic and international markets will better help position many businesses for the future.

Tapping into global remote workforces to access high-skilled pools of workers can be a great way to plug the gap and resource projects, but businesses need to be aware of the opportunity costs and how to balance them.

It may mean senior employees get tied up managing these teams rather than focusing on training and crucial, high-value work, and businesses need to be sure their valuable intellectual property is safeguarded.

While New Zealand and the rest of the world are facing into increasingly uncertain times with worker shortages, skills gaps, ageing populations and rising inflation, there are also opportunities.

If we are prepared to come together, to work collaboratively across government, public and private sectors, create enduring plans, lift our skills and invest in our people, be deliberate and targeted in our approach, we can not only endure these difficult times but position ourselves to thrive into the future.

We must tilt our settings and be more deliberate about targeting the kinds of workers and sectors we need.

Brandon Jackson is general manager of growth sectors at Bank of New Zealand.