At Competenz we value research. The results of our research help us understand how we can best work with companies, learners, government and our training partners to build skills across New Zealand.
For all the employers we work with, training an apprentice is a big investment. Every one of these employers wants the same from this investment: a skilled, productive employee who adds value to their business as soon as possible. And they’ve all got practical tips and suggestions for achieving this result to get the greatest return on their investment (ROI).
So we asked our employers for their views. One hundred and eighty companies responded – and you’ll find their suggestions in this report.
About this research project
Competenz commissioned this research with our research partner, the University of Auckland Business School, to help us understand how we can help our Māori and Pasifika learners build their skills in the workplace.
We wanted to answer two questions for the 37 industries we support:
- How relevant is a learner’s ethnicity in predicting how likely they are to enrol in and complete a qualification?
- How can we help our Māori and Pasifika learners build their skills?
What we learned
The compelling issue for our Māori and Pasifika learners is participation
- Outside forestry, our Māori learners are enrolling in industry training at a rate that is considerably lower than the rate at which they participate in the workforce. (3.9% in trades, 7.7% in traineeships, 12% in the workforce)
- Our Pasifika learners are enrolling in workplace trades training at a rate that is considerably lower than the rate at which they participate in the workforce, and in traineeships training at a rate that is well ahead. (3.2% in trades, 14% in traineeships, 4.9% in the workforce)
Ethnicity does not predict whether our learners complete their trades or traineeships qualifications
- Our Māori and Pasifika learners complete their qualifications at the same rate as learners of other ethnicities.
- Other factors such as the learner’s age, prior qualifications or programme of study are more relevant than ethnicity in predicting whether the learner will succeed.
Most of the factors which help our Māori and Pasifika learners complete their qualifications, and the factors that make it hard for them to complete, are common to all our learners
- This means the approach Competenz has taken in the past five years of identifying and supporting all struggling learners, regardless of their ethnicity, has been (and continues to be) the right one.
How we are acting on the results of this research
We have three clear priorities. Most of these activities will benefit all our learners, whatever their ethnicity.
Priority one: career paths
We need to promote workplace learning and careers in the trades by:
• lifting the perception of the trades as worthwhile careers
• working with Māori and Pasifika communities in appropriate ways
• using successful Māori and Pasifika learners as role models and ambassadors
• contributing to a smooth transition between school and the workforce for trades.
Priority two: assessments and book work
We need to improve our assessment and study materials and our assessment processes by:
• making our assessment materials simpler
• making our assessment processes and tools more accessible to learners
• making our study materials more engaging and relevant to learners.
Priority three: support for our learners
We need to continue to identify and support our struggling learners by:
• supporting them with appropriate pastoral care
• helping them build their literacy skills
• working closely with employers to model and promote good work practices and work ethic.
We need to support all these activities by building stronger cultural partnerships and understanding
• We need to develop stronger partnerships with Māori and Pasifika community groups and training providers
• We need to broaden and deepen cultural understanding across Competenz.
The way to get more companies to take on apprentices is to provide management support – not money in the form of government subsidies.
A concerning 75% of companies in the metal, engineering and baking sectors do not hire apprentices. This leaves just 25% of companies in these sectors with the job of educating newcomers to their trade and imparting skills to the next generation.
And yet the benefits of up-skilling the workforce are significant both for industry as a whole and individual companies. “Skills convert immediately into productivity increases and profitable improvement,” says John Blakey, Competenz CEO.
So why are 75% of companies not hiring apprentices? The study found that two thirds of companies in these sectors do not currently hire a qualified tradesperson – and cannot therefore hire an apprentice either.
“You can’t take on an apprentice if you haven’t got the qualification yourself,” says John Blakey. “Otherwise the transfer of skills can’t effectively take place. It’s a situation that perpetuates the low wage, low skilled economy.”
Yet while many companies are simply unable to hire an apprentice due to not hiring a qualified tradesperson, 27% of these non-apprentice hiring companies are in fact in a position to take on an apprentice – something that needs to happen if we are to meet the expectation of school leavers for employment, and close the skills shortage gap.
It is management support that will convert non-apprentice hiring companies, that hire a tradesperson, into apprentice hiring companies – by providing a pool of suitable candidates to recruit from, more help with supervising, and an online system to track apprentices in real time. Small businesses in New Zealand are weak in people management skills and are less likely to hire an apprentice – they have the most to gain from a management intervention.
Subsidies are easy – give a company money and hope they deliver – but they only make a small difference in converting a non-apprentice hiring company into an apprentice hiring company.
Government subsidies such as Job Ops with Training and Skills for Growth that come with conditions can be deterrents for many businesses. The requirement to hire someone off an unemployment benefit or the DPB, with low or no skills, is just taking on one issue too many for most companies.
The message is clear. Without interventions, the number entering apprenticeships is likely to remain static, a dedicated few training for the needs of the whole nation. But with the right supports, more companies would be likely to take on an apprentice, enriching their own companies and building a more highly skilled, highly productive environment sector-wide.
If New Zealand manufacturing companies think they are going to be able to hire skilled staff to fill their skills gaps without an investment in training, they’d better think again.
In 2011, 270 companies were asked about their on-the-job training needs now and in the future, and how they might meet those needs. The results paper entitled ‘Do we have the skills?’ highlights the need for companies to train staff to meet their increasing skills gaps.
The research sheds light on whether industry will have enough people with the right education and skills to meet the government’s strategic growth target – trebling the export value of our high-value manufactured goods over the next 15 years. Unless we act now, says Jim MacBride-Stewart, General Manager of Traineeships at Competenz, the answer is no.
To illustrate the looming issue, 64% of engineering manufacturers and 53% of food manufacturers believe they’ll need more skilled staff over the next two years. However, the vast majority of engineering manufacturing companies also reported a staff turnover rate of 10% or less, suggesting simply hiring staff with the right level of skills will not be sustainable to meet the skills needs of employers.
Worryingly almost half the engineering companies surveyed indicated they would prefer to hire skilled staff to meet their skills needs while only 18% said they’d prefer to train staff. In comparison, 41% of food manufacturers had a preference for hiring skilled staff while a third acknowledged they’d need to train people.
“It’s time for businesses to address the skills shortage through a focus on training. Employers must invest now to build capability for the future,” says Mr MacBride-Stewart.
The good news is 99% of food and beverage manufacturers and 97% of engineering and metal manufacturers train their staff, and companies in both sectors have a significant history of investing in on-the-job training. Companies in the food manufacturing sector are particularly committed to training as they typically employ large workforces.
Furthermore most engineering manufacturing companies and 61% of food manufacturers see the skills of their staff as a cornerstone of their competitive advantage.
Across both sectors the majority of companies agreed they faced training challenges, including downtime for supervisors and learners, finding good trainers, engaging learners, language barriers, and numeracy and literacy issues.
“Despite these challenges companies must be prepared to train their staff as a long term solution to NZ Inc’s skills needs – hiring skilled workers here or from overseas is not a sound, long term solution,” says Mr MacBride-Stewart.
“Training is vital for the success of individual businesses and for the New Zealand economy. With this sector increasingly lacking in the number and level of skilled workers, it’s only going to become more difficult to fill the needs to manufacturers.”
Across the manufacturing sector companies believe they stand to lose customers and experience declining profits if they cannot find the skilled staff they need.
The survey results support the assertion that companies should take the lead in hiring staff with the intention to train them, to upskill their existing staff, and promote the wider economic value of skilled workers.
For its part, Competenz is dedicated to ensuring high quality trainees are attracted into these industries and trained to a high standard.
“Government needs to look at how it invests in apprenticeships and other on-job training – and recognise the contribution companies make to industry training and the value they place on training staff to stay competitive,” says Mr MacBride-Stewart.
The Government’s rethinking of vocational education is timely – the current system is not serving the needs of learners, industry, government or NZ Inc. Nor does it deliver on the Tertiary Education Strategy. We need a system that is simple, structured and focussed on skills, with funding supporting co-operation and completions and delivering value for money.
To achieve this, Competenz would like to see a seamless transition from school to work with young people entering the workforce with solid numeracy and literacy skills and with a basic knowledge of the skills needed to enter the industry of their choice.
The recently produced discussion paper by TEC on the Future Shape of the Industry Training Organisation (ITO) Sector has produced a flurry of activity – the view is that the proposed amalgamation of ITOs is, in fact, fact. The only proposal on the table tends to become reality but we have an alternative view.
For some time there has been talk of reshaping the ITO industry. In response to this, Competenz has had discussions with industry associations and industry leaders who have expressed support for a rationalised ITO structure and we believe to achieve this, the Government must play a leadership role.
“Investing in upskilling people should therefore be an attractive proposition for business owners,” Mr Blakey said.
“While investment in processes is important, investment in people is paramount for the long-term health of a business as well as reaping the full benefits of investment in processes.”
Worryingly, the survey also found that 78% of respondents would seek advice on lifting productivity but did not know where to turn for help; the remaining 22% said they would not even ask for assistance for a range of reasons, including that it was unaffordable, unimportant or the firm was too small.
The paper says New Zealand currently has no co-ordinated leadership from Government or the tertiary education sector around productivity improvement issues for businesses.
“Companies face a confusing array of consultants, gurus and disparate agencies when they are looking for sound and objective advice on improving their staff and processes,” says Mr Blakey.
“This presents a strong case for industry-owned training organisations (ITOs) being tasked to present independent and well-researched guidance.”
The Government’s new Productivity Commission which began operating in early April could be good for industries if it provided leadership and direction.
“The challenges faced by businesses to remain competitive have led to growing demand from medium-sized manufacturing employers for external support and advice on improving productivity and performance,” says Mr Blakey.
New Zealand faces a major challenge to improve its global competitiveness and lift productivity rather than continue to lag behind producers such as Europe and Australia, and ignoring the issue will only put us further behind.
“The effective development and utilisation of workplace skills is vital to improving New Zealand’s competitiveness and requires a focussed effort and strategic approach across training institutions, industry, unions and government,” says Mr Blakey.