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SKILLS & EMPLOYMENT BRIEFING FOR THE INCOMING MINISTER 8 October 2014 Purpose The purpose of this initial briefing is to give the Incoming Minister sufficient information to meet their initial requirement. It is not intended to be a detailed analysis of the portfolio or of policy issues. The briefing is part of a wider process. Ministers will be able to call for a fuller briefing on issues of interest and importance to them during that process. This allows the initial briefing to be wide ranging, enabling the Minister to see the breadth of the portfolio, while still being concise. Contents
1. Portfolio overview ................................................................................................................... 3 2. Portfolio responsibilities .......................................................................................................... 4 Portfolio functions and responsibilities ........................................................................................... 4 Key MBIE officials ............................................................................................................................. 5 Legislative responsibilities ................................................................................................................ 6 Crown entities .................................................................................................................................. 6 Statutory or advisory bodies ............................................................................................................ 6 Other State agencies ........................................................................................................................ 6 3. Focus for the first 100 days ...................................................................................................... 7 Upcoming publications ..................................................................................................................... 7 4. Beyond the first 100 days ........................................................................................................ 9 5. Major links with other portfolios ..................................................................................................... 11 2 1. Portfolio overview
Skills and Employment is critical to New Zealand’s economic growth A workforce with the right knowledge and skills – and the effective utilisation of these skills in workplaces – drives economic growth by lifting the competitiveness and profitability of our firms, and facilitating innovation across the economy. Work in the Skills and Employment portfolio supports New Zealanders to develop the skills they need to engage in employment, and employers to access the skills they need to be productive and competitive. We have a broad skills system and a dynamic labour market… Our skills system is composed of a broad range of actors, including firms and employees, the education and tertiary education sectors, and our immigration and welfare systems. Our labour market is dynamic, encompassing a multitude of reciprocal relationships between these actors and systems – as well as substantial movement between jobs and between industries, and up‐skilling and cross‐skilling by those already in work. …and we perform well by international standards… New Zealand’s population is highly qualified and skilled compared to the OECD average. We also have relatively high rates of labour force participation; relatively low unemployment; and our labour market is generally considered to be flexible and effective at matching people to jobs. …but there is still progress to be made However, our high levels of qualification have not led to as great an increase in productivity as might have been expected. And some groups are still being left behind ‐ roughly 20 per cent of our workforce lack foundational skills such as numeracy and literacy, and there continue to be groups at higher risk of long periods of unemployment. We need to look to ways to improve the economic outcomes of tertiary education, and the integration of the immigration, welfare and skills systems. Further, social and technological advances are driving changes in our industries and workplaces, requiring learners and workers to upskill and adapt. Our school‐leavers, graduates, and those already in the workforce need to be equipped with the right skills, including soft skills, to meet the evolving needs of employers. To help achieve this, we need to place firms at the centre of our understanding of skill development. To help ensure the greatest scope for economic growth between now and 2025, we aim to raise New Zealand’s long‐run productivity growth rate while maintaining and increasing our high rate of labour force participation. This will mean boosting the economy’s skills base across the board, improving returns on the skills we already invest in, and ensuring that the correct matching tools are in place to aid both employers and jobseekers. We will also need to consider how best to use migration to supplement our domestic supply. 3 2. Portfolio responsibilities
Skills and Employment currently forms part of the Tertiary Education, Skills and Employment (TESE) portfolio. MBIE works closely with the Tertiary Education Commission (TEC) and Ministry of Education on TESE issues. You will be receiving briefings from the TEC and the Ministry of Education focusing on the Tertiary Education component of this portfolio. Portfolio functions and responsibilities Your key areas of responsibility relating to Skills and Employment are as follows: 
the functioning of the labour market, and its role in improving employment, social, and economic outcomes in New Zealand 
bringing a labour market perspective to discussions with the education, social development, economic development, immigration and Māori and Pasifika sectors 
leading coordination of government initiatives on skills and workplace issues (as Chair of the Safe & Skilled Workplaces Ministerial Group) 
you are also involved in the labour market issues associated with the Canterbury Earthquake Recovery, for beneficiaries, migrants, trainees, and existing workers. From 2014/15, Skills and Employment is funded from Vote Economic Development and Employment. In practice, identifying and addressing barriers to good performance of the labour market generally involves working across portfolios – particularly Education, Tertiary Education, Labour, Immigration, and Social Development. For example, the Minister of Employment is currently Chair of the Skilled & Safe Workplaces Ministerial Group, one of six key cross‐portfolio areas identified as crucial to the Business Growth Agenda (BGA). The Skilled & Safe Workplaces Ministerial Group currently meets monthly. Identifying and addressing labour market issues also often draws on engagement with employers and sector leaders – working with them to determine how labour market issues they face may be resolved. 4 Key MBIE officials Advice on Skills and Employment is provided by the Skills and Employment Policy team, the Labour Market and Business Performance team, and the Cities and Regions team. These sit within MBIE’s Science, Skills and Innovation Group and are concerned with: 
the functioning of the labour market, and its role in improving employment, social, and economic outcomes in New Zealand 
working with the Safe & Skilled Workplaces agencies, comprising the Tertiary Education Commission, ACC, the Ministry of Education, the Ministry of Social Development, Immigration New Zealand and Te Puni Kokiri 
working with other groups and agencies who form part of the Tertiary Education, Skills and Employment (TESE) portfolio, including the Tertiary Education Commission and the Ministry of Education Skills and Employment Policy provides policy advice. Labour Market and Business Performance provides: 
data, information, and analysis for ministerial servicing and ad hoc enquiries, 
periodic reports on the state of the labour market, including on job vacancies, and for Māori and Pasifika 
modelling and forecasting of employment nationally and for the Canterbury rebuild. Key contacts are set out in the table below: Contact
Role
Priority Area
David Smol
Chief Executive, Ministry
of Business, Innovation
and Employment
All
Paul Stocks
Deputy Chief Executive
(Science, Skills and
Innovation), Ministry of
Business, Innovation and
Employment
All
Peter Crabtree
General Manager,
People, Skills and
Enterprise Policy, Ministry
of Business, Innovation
and Employment
Skills and
employment
policy
Michael Bird
General Manager,
Institutions and System
Performance, Ministry of
Business, Innovation and
Employment
Labour market
monitoring and
performance
Andy Jackson
Manager, Skills and
Employment Policy,
Ministry of Business,
Innovation and
Employment
Skills and
employment
policy
Contact details
Information withheld consistent
with the Official Information Act
1982
Information withheld consistent
with the Official Information Act
1982
Information withheld consistent with
the Official Information Act 1982
Information withheld consistent with
the Official Information Act 1982
Information withheld consistent with
the Official Information Act 1982
5 David Paterson
Manager, Labour Market
and Business
Performance, Ministry of
Business, Innovation and
Employment
Labour market
monitoring and
performance
Information withheld consistent with
the Official Information Act 1982
Legislative responsibilities As Minister of Employment, you are not responsible for any legislation. Crown entities As Minister of Tertiary Education, Skills and Employment you are responsible for monitoring the Tertiary Education Commission (TEC), the Crown entity responsible for funding tertiary education in New Zealand. MBIE and the Ministry of Education jointly monitor and report to you on the TEC. Statutory or advisory bodies As Minister of Employment, you are not responsible for any Statutory and Advisory bodies. Other State agencies As Minister of Employment, you are not responsible for any State Agencies. 6 3. Focus for the first 100 days
The Employment portfolio has no current legislation in the house, and no decisions that must be made in the first 100 days of the new government. However, there are several high‐priority pieces of work that you may wish to turn your attention to during the early days of the new government. The Government has committed to holding Job Fairs in Australia to recruit skilled New Zealanders for jobs back in New Zealand, and help remove skills constraints for key sectors of our economy. These are part of the refresh for the Business Growth Agenda. Information withheld consistent with the
Official Information Act 1982
Contracts for new and continuing Māori and Pasifika Trades Training (MPTT) consortia for 2015 will be negotiated between October and December 2014. MPTT funds regional consortia of employers, tertiary education organisations and Māori/Pasifika organisations to deliver fees free trades training to Māori and Pasifika learners aged 18 to 34. Your manifesto commits to increasing places available for MPTT, and expanding the range of trades offered. Information withheld consistent with the Official
Information Act 1982
The Government has allocated $28.6 million for the development and delivery of three ICT graduate schools in Auckland, Wellington and Christchurch. The procurement process for partners is now underway, with an Expression of Interest process closing on 31 October 2014. Current funding for the Canterbury Skills and Employment Hub will end in June 2015. You will shortly receive advice on options for the future of the Hub. Information withheld consistent with the
Official Information Act 1982
You may also wish to resume meetings of the Skilled and Safe Workplaces Ministerial Group. These meetings, which you convene, are typically held monthly. There are also several labour market reports (listed below) which are due to be published during this time. Your approval of these reports will be required prior to publication. Upcoming publications Name Description Timing Jobs On Line Report Skilled vacancies report for August 2014 17 September 2014 Jobs On Line Report Skilled vacancies report for September 2014 15 October 2014 Short‐term Employment Prospects Employment demand forecasts to 2017 mid‐October 2014 Quarterly Labour Market Scorecard Household Labour Force Survey 5 November 2014 results for September quarter 7 Name Description Timing 2014 Quarterly Labour Market Report Analysis and commentary on 14 November 2014 Household Labour Force Survey results for September quarter 2014 Jobs On Line Report Skilled vacancies report for October 2014 19 November 2014 Medium‐Long Term Employment Outlook Employment demand forecasts to 2023 mid‐November 2014 8 4. Beyond the first 100 days
As outlined in the portfolio overview, the skills system and labour market face both challenges and opportunities over the near term and into the future. We recommend the following four key focus areas. Firms at the centre of skill development A changing world is leading to changing demands for skills, and we need to ensure that our skills system – from firms through to education providers – delivers workers with skills that meet modern demands. Further, despite the significant investment we have made in education over the last twenty years we have not seen a commensurate lift in productivity, and we continue to have relatively low returns to qualifications by OECD standards. In combination with ensuring the education system delivers the right skills, addressing the transmission from qualifications to productivity will require greater emphasis on how skills are developed and used in the workplace. This will require broadening the focus of skills policy to emphasise not only supply‐side interventions but skills demand and utilisation. Areas for further investigation include: 
Shaping an agenda focused on how government can support and encourage more widespread firm investment in better skills utilisation – e.g. through sector engagement initiatives and use of government’s existing demand‐side levers such as New Zealand Trade & Enterprise and Callaghan Innovation. 
Establishing a better understanding of the scale of in‐firm workforce development in New Zealand, and an evidence‐based case for the benefits to firms of engaging in workforce development – e.g., developing a headline measure of firms’ training expenditure. 
How government can best support firms to meet the evolving nature of skills needs, particularly for key sectors such as ICT. Refining how the system responds to skill shortages As the level of economic activity increases in line with New Zealand’s economic recovery, region and/or industry‐specific skills shortages are likely to become more apparent. In the short term there is scope to further improve the supply‐side response, including streamlining access to temporary migrant workers where necessary while working to improve the take‐up of New Zealand job seekers. In the medium to longer term, ensuring our education system delivers graduates with the right skills, improving labour mobility, developing tools to better match the unemployed to suitable employment, and supporting a better mix of domestic and migrant labour (as discussed overleaf) can help ensure that New Zealand is well‐placed to respond to shifts in skills demand. Areas for further investigation include: 
Front‐loading labour market tests, and integrating these with domestic supply 
Regional trials of changes to welfare and immigration settings 
Ongoing trans‐Tasman marketing of New Zealand opportunities in key sectors 
Supporting sector leadership of labour supply‐chain management. Optimising the net labour market effect of immigration 9 Immigration plays an important role in our flexible labour market, and as such is an important portfolio interface when considering the performance of the skills system. As the economic recovery further increases the demand for skilled workers, immigration provides an effective way to meet these short‐term demands. Through the Immigration portfolio, there is scope for Government to refine aspects of its approach in order to ensure optimal long‐run outcomes for the New Zealand labour market. In the short term, new labour matching approaches could be trialled in selected regions or occupations with particularly high incidence of temporary migrant workers relative to domestic workers. In the medium to longer term, there are opportunities to better integrate the immigration and tertiary education and training systems to ensure a good balance between “making” and “buying” skills. Areas for further investigation within the Immigration portfolio include: 
The impact of temporary migration on our labour market 
Ensuring our skilled migration system helps to meet the skills needs of New Zealand both today and in the future 
Forming partnerships with key sectors to meet New Zealand’s skills and labour shortages. Improving the economic outcomes of tertiary education Like immigration, tertiary education is a critical interface with the skills system. As outlined above, New Zealand has achieved high levels of participation and achievement in tertiary education. The next step is to deliver a lift in outcomes, and ensure qualifications are delivering the right skills for our changing world. The current system could better incentivize providers to deliver economic relevance and better outcomes for at‐risk groups, and to contribute to wider economic growth. Building on recent reforms, there is an opportunity to reset the tertiary system so that it focuses on improving tertiary educations contribution to economic growth, and improving achievement and outcomes for at‐risk students. Areas for further investigation include: 
Information withheld consistent with the Official Information Act 1982

Information withheld consistent with the Official Information Act 1982

Information withheld consistent with the Official Information Act 1982
10 5. Major links with other portfolios
Skilled & Safe Workplaces A Business Growth Agenda (BGA) priority, Skilled & Safe Workplaces (SSW) comprises multiple workstreams centred on actions to build a more productive and innovative workforce and a more responsive labour market. The other portfolios involved in SSW are: 
Education 
Labour 
Tertiary Education 
Social Development 
ACC 
Immigration Tertiary Education, Skills and Employment The Tertiary Education, Skills and Employment (TESE) cluster predominantly focuses on optimising the “supply” of skills into the labour market (including improving its responsiveness to the “demand” side). The other portfolios involved in TESE are: 

Tertiary Education Education Canterbury Recovery A wide range of portfolios are involved in the Canterbury rebuild. Those most closely related to Skills and Employment’s role in the rebuild are:

Canterbury Earthquake Recovery 
Tertiary Education 
Immigration 
Social Development 
Housing 
ACC 
Labour 
Economic Development Welfare/Education/Immigration interface There are a range of initiatives in place or in development testing ways to improve the balance between domestic and migrant labour in regions/industries with a high reliance on temporary migrant labour. The other portfolios involved in this work include: 
Social Development 
Labour 
Immigration 
Tertiary Education 11 Annex 1: Funds and Appropriations
12 From 2014/15, the Employment portion of the Tertiary Education, Skills and Employment portfolio is funded from Vote Economic Development and Employment. The annual operating appropriations for Vote Economic Development and Employment in 2014/15 total $418,582m, of which the following are relevant to the Tertiary Education, Skills and Employment portfolio: 
$7,205m (1.72% of the total Vote) is for employment policy advice and ministerial services. Of this, $1.6m is spent on the Canterbury Skills and Employment Hub. Of the $5.701m provided for policy advice, approximately $1.3m is spent on advice provided to the Minister of Tertiary Education, Skills and Employment. This is part of a Multi Category Appropriation (MCA) ‐ Policy Advice and Related Outputs which is the responsibility of the Minister for Economic Development. The MCA is $22,968m (5.49% of the Vote). 
$2,894m (0.69% of the Vote) is for coordination of employment sectors analysis and facilitation. 
$2,319m (0.55% of the Vote) is for funding the Maori and Pasifika Trades Training consortia. This is a non‐departmental output expense. 13