Alarm Bells Ringing Over Skills Shortage -- Survey

Media Release
28 June 2007

New Zealand Sets Alarm Bells Ringing As Country Most Concerned About Skills Shortage - International Survey Findings

New Zealand businesses are the most worried in the world about a shortage of skilled workers, according to the latest findings of the Grant Thornton International Business Report.

There is an ongoing concern about this at a time when manufacturing units are being shifted offshore, according to Peter Sherwin, New Zealand spokesman for Grant Thornton, the accounting and business consultancy firm behind the international survey.

"When you dig into the situation, you would have to say the economic alarm bells should be ringing loudly," he said.

When asked to rank constraints on their ability to expand, 60% of New Zealand businesses surveyed said they felt most pressure from skills shortages. This was the highest reading for this element among all countries. Two other southern hemisphere nations, Australia (59%) and South Africa (58%) were not far behind.

Grant Thornton's international survey commentary said that all three countries had not been able to benefit in the way that the European Union had in terms of substantial inflows of skilled migrants from Eastern Europe.

Peter Sherwin said that while New Zealand had itself had migrant flows, the skills of those coming in were often not in appropriate areas or of the same level of those that northern hemisphere countries were able to enjoy from their influx.

"There has been a huge jump in this concern about a shortage of skilled workers. Last year, it rated 38%; now it is 60%.

"Most commentators point the finger at the rising Kiwi dollar and interest rates as being a major factor in manufacturing businesses moving operations overseas. These elements have probably been compounded by the fact that New Zealand's migrant flows have not always had the desired worker quality.

"A continuation of this will cause further problems in our economy and we may well see more businesses leave New Zealand to solve their skilled worker shortages or exchange rate problems," said Mr Sherwin. "We need a more balanced economy and we won't get that with a lack of truly skilled workers."

Peter Sherwin said there was some light in the survey.

"Regulation or red tape usually rates highest in New Zealand as a major constraint to businesses expansion, and we are normally right near the top of the global table on this particular score. But the concern, while still high, seems to have stabilised at the same time as the skilled worker shortage has escalated."

New Zealand was still in the top group when it came to worrying about red tape, but the red-tape table was headed by Brazil, Russia, Poland and Greece.

Three countries in Asia, Japan, Thailand and China, had the most significant concerns about shortage of orders and lack of demand constraining their ability to expand.

ENDS

About the IBR
The International Business Report surveyed 7,200 owners of medium sized businesses in 32 countries, during September and October 2006. In New Zealand, Consumer Link surveyed 150 businesses. For the purposes of the IBR survey, a medium-sized business in New Zealand was seen as employing between 10 and 149 people. The research was conducted by Experian Business Strategies Limited and Harris Interactive. All figures were correct at time of going to press. To find out more about IBR and to obtain details of IBR reports and results please visit www.internationalbusinessreport.com.

About Grant Thornton International
Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist business advice to privately held businesses and public interest entities. The strength of each local firm is reflected in the quality of the international organisation. All Grant Thornton International member firms share a commitment to providing the same high quality service to their clients wherever they choose to do business.

About Grant Thornton in New Zealand
In New Zealand, Grant Thornton has independent firms in Auckland, Christchurch, Dunedin, Wellington and Whangarei. From market-leading services for the owners of private businesses, to audit, to insolvency and capital markets services for corporations, and to innovative taxation and wealth management services for individuals, Grant Thornton in New Zealand helps business owners achieve success and realise their ambitions.

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