A More Useful Model of Tertiary Education

11 April 2016

By Dieter Adam, Chief Executive of the NZMEA

Education is key to ensuring our people will be the best they can be and creating the most productive, capable and innovative economy we can. Human capital is just as important as any other input in a manufacturing business; if not the most important one. However, current research suggests that our return on investment in the tertiary sector is low compared to other OECD countries. Anecdotally, many businesses feel the reality of this when they have trouble filling skilled positions, and at times have to look overseas to find skills that just are not being delivered by the current system.

The Productivity Commission is now looking into this problem and how new models of tertiary education could provide better outcomes. Generally, discussions about tertiary education can be dominated by established views and self-serving PR – it is great to see the Productivity Commission undertake a wide and data-driven examination.

A root cause of the problems in our tertiary sector lies in its overarching focus on quantity over quality, ‘bums on seats’, in large part due to the funding policies that reward maximising the number of students enrolled, independent of what and how these students are doing. There is also a drive towards enrolling international students, which brings income to the institution and export revenue to the country, but can be driven by offering courses that attract large numbers of students and not necessarily what we need to grow our economy.

Forecasts for domestic student numbers show a drop due to demographic factors. It is no coincidence that we currently hear a lot about the financial benefits of a university education, without real consideration for other options that may have better career pathways and opportunities, such as Polytech, trades or apprenticeship education.

Many people will be better suited to a well-paid and rewarding career in manufacturing, but simply never see it as an option. The NZMEA has a role to play in changing perceptions – countering what appears to be a major PR campaign by the university system that feels it has its back against the wall financially. New Zealand is full of talented people with potential – the challenge is to create an education system that effectively enhances ability and channels skills into areas of need and opportunity.

While the education system plays a huge part in filling skills gaps and continuously lifting the skills levels to keep New Zealand manufacturing globally competitive – the challenge extends to our manufacturers. We can take the initiative to develop skills of our people, through on- and off-the-job education.

Retention of staff is another factor – improving working conditions, providing opportunities for personal growth through training and other factors such as work flexibility, can all help retention, and improve productivity at work. What works will vary depending on business activities, but there are a lot of ideas worth exploring, many of which are already being done by our members.

The NZMEA is working with the Productivity Commission on their research and we have already made an oral submission.

We encourage any interested members to look at the questions asked by the Commission and provide comments back to the NZMEA to be included in our submission. Manufacturing businesses should have their say at this early stage to help ensure the Commission can best understand their skill needs, now, and into the future.

It is widely believed that skills shortages can be addressed by importing people, while training and upskilling our own people takes a long time – if it can be done at all. There is no doubt about the benefits of bringing talented and skilled people into the country, especially in the short term, where business needs are immediate.

We believe, however, that, while this is important, it should be a complement, not a substitute for effectively training and educating our own people. A recent MBIE paper also shows that current high level of immigration is largely driven by foreign students. “A relatively small proportion of migrants enter through policies for which the main objective is to supply skills and labour into the labour market”, the paper says. If the primary purpose of our immigration policy is to alleviate skills shortages in the short term, it’s not achieving it7s goals.