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New Year’s resolutions

Principal Advisor, Productivity Commission
7 January 2020

The first week back at work after the new year is the most popular time to look for a new job. Learning a new skill also features prominently in the most commonly made New Year’s resolutions.

The people looking for a new job this week form part of a half-million New Zealanders who change jobs each year.

The great majority of people moving jobs do so voluntarily. But it can be challenging to move – especially from one industry to another – when that involves learning new skills, such as getting to grips with new technology.

Moving jobs can be made easier with education and training. In New Zealand, this is largely gained while young (with nearly 100 000 people aged 24 and younger enrolling in bachelors degrees each year). But training can also happen while in the workplace.

Indeed, compared to many other countries, New Zealand has very high rates of participation in work-related education and training (with those in professional occupations who have a higher existing base of prior education the ones likely to participate the most).

Fig 1: Share of adults aged 25–64 that participated in formal or non-formal adult education or training for job-related reasons, 2012 or 2015non-formal adult education or training

The Commission’s third draft report, available online now, looked at how training can help workers deal with technological change. So, what did it find?

While there are several universal barriers that prevent people aged 25 and older participating in training (such as insufficient time, or concerns about whether training will be good quality or relevant to future aspirations), some are specific to New Zealand. The Commission found that these barriers are reducing the potential for training to help create a more dynamic labour market and productive economy, both now and in the context of potential future change.

Access to work-based education and training should be widened

Small business owners, self-employed people and volunteers are all unable to access work-based training because they are excluded from the legal definition of a “trainee”. This is because the definition of a trainee is linked to employment status under the Employment Relations Act 2000. There is no good reason to tie the statutory definition of a trainee to employment status.

Other changes that will help to widen access to work-based training and education include ensuring new migrants are eligible to government-funded vocational education, and opening up access to student loans for short courses, as this will better enable adults and workers to take part in training.

Innovative and flexible credentialing models should be supported

Second, there needs to be more flexibility and innovation in the type of credentials on offer. For example, micro-credentials have the potential to greatly encourage labour-market dynamism. Recognition of prior learning (which assesses what an individual already knows and provides the learner with credit towards a qualification on that basis) is another avenue.

However, both face barriers in terms of funding or policy rules. There are also unnecessary funding restrictions for students who do not intend to pursue full qualifications. All of these make it difficult for workers to pursue bite-sized parcels of training (and associated credentials) that would help to make them nimbler and more receptive to changes in the types of jobs or occupations on offer.

The education and training system should be more responsive

Finally, the report makes recommendations to improve the responsiveness of the education and training system for employers and employees. The current system dampens incentives for innovation – funding needs to move more easily around the system in response to user demand.

All of the report’s recommendations are made in the context of the Government’s current reforms of the vocational education and training system (colloquially known as RoVE). Putting a “future of work” lens over the changes to vocational education and training will help focus attention on the interaction between the education and training system, labour-market dynamism and productivity.

The Commission’s report is open for public submissions, and will also be followed by two further draft reports in the coming weeks – one on educating young people and one on firms. Stay tuned and have your say!

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