More needs to be done to employ Maori and Pacific Islanders, more job-based training should to be put in place, and employers will have to work harder to retain their best staff. These are the views of Phil O'Reilly, chief executive of the peak industry group BusinessNZ.
He says there is a disconnect between what the education system is pumping out when it comes to students' skills and what business needs to grow.
"There will always be a gap, but the challenge is to try and make the gap smaller," says O'Reilly. "Government has done quite a few things about that, such as introduce vocational pathways - the construction industry is one of them.
"But the key thing that needs to happen is getting young people to make informed choices so their training is more relevant to what employers want.
O'Reilly is well-placed to talk about the skills shortages which CEO respondents to the Herald Survey rated as the second highest domestic concern affecting confidence in their business.
He chairs the board of the Business and Industry Advisory Committee to the OECD and is New Zealand's employer delegate to the International Labour Conference.
On skills front, he says it's not a matter of telling young people what to do "but about having them understand how valuable the skills they want to learn will be.
"We know that engineers get paid well, and the number of ICT jobs is also growing fast - very fast.
"With information such as this, people have a clue about what to study. But a lot more conversations need to go on between industry and those offering training, to make sure those training gaps are minimised."
O'Reilly wants to see more opportunities for Maori and Pacific Islanders, people who feature disproportionately high in unemployment statistics.
"We need to do something about this because by 2030 Auckland will have a majority of Maori, Pacific and Asian people," he says. "So if Maori and Pacific people are not succeeding then that will be bad for Auckland and other cities.
"We just can't afford to leave those people on the sidelines. We have to do something much more active about engaging them, we think companies need to invest more actively in workplace training.
"You can't just say to a young person who has been out of the labour market 'go find a job'.
"The fact of the matter is, the number of low skilled and unskilled jobs in our economy is dropping as more automation is used by industry."
"And when low skilled unemployed people do start work, O'Reilly wants to see they get ongoing support.
"They need pastoral care," he says. "So that if they don't arrive at work one day, someone will call them to find out why."
O'Reilly says as the economy starts to pick up, employers will need to work harder to retain their "best and brightest" staff.
He predicts the days of severe skills shortage is on the horizon.
"One of the things we'll notice as the employment market returns to health over the next three years is a little more movement among the best and brightest, and the most marketable people," he says.
"The reason is that as unemployment rose and the economy slowed down post GFC, company loyalty became a really trendy thing. So there is pent up demand by some people to change jobs.
"If companies are not thinking about retaining their best, then now is the time to start.
Companies need to develop a strategy to retain their staff because in the long run, the key factor that always gets in the way of business growth in New Zealand is not access to capital or access to markets - but access to skilled talent."
He predicts the job growth highway will have two lanes - with people who need training chugging along in the slow lane.
"There will be a dual labour market where those with low skills remain unemployed for quite a while, whereas skilled people will be in much higher demand," says O'Reilly.
Execute, execute, execute
Phil O'Reilly's top three business priorities for the next 12 months:
Make sure we capitalise on business confidence for our own growth
Make sure we retain and build our talent
Make sure we consolidate our leadership position in advocacy.
If O'Reilly could make one change to improve New Zealand it would be to Execute, execute, execute. "We still have far too many ideas that take no account of what it takes to get it done and too little pace around doing even the things we start doing."
His best achievement in the past 12 months - taking a leadership role in the sustainability debate. "It's a mission-critical issue and one of be most mainstream issues for business I can imagine."
He cites high speed broadband for voice and video applications as the single biggest factor that would help BusinessNZ remain internationally competitive from New Zealand.