Key Points:

Businesses will be expected to teach workers reading, writing and maths under a complex new plan to raise the skills of the workforce.

The literacy level of about 800,000 workers is such that they might struggle to transfer printed information to an order form - a deficiency cited as a factor stifling the country's economic growth.

While teaching reading, writing and counting is largely the task of primary schools, the combination of a tight labour market and the high number of workers struggling with skills means the work lunch-room could become the new classroom.

The scheme's potential cost to employers, many already under pressure from the high dollar, is set to become clearer in May, when a Budget funding announcement is expected.

But Business New Zealand chief executive Phil O'Reilly - who, with Government and New Zealand Council of Trade Unions, is part of the new Skill New Zealand Forum developing the plan - didn't want a "bureaucratic nightmare" for business.

"We've got a problem in terms of functional illiteracy and innumeracy in our workplaces. We are poor by world standards," said Mr O'Reilly.

He said business repeatedly claimed the lack of skilled staff as the top long-term barrier to growth.

Mr O'Reilly said a few businesses already trained staff but faced barriers such as the cost to the employer and a perceived stigma preventing some employees from asking for help.

An official report showed attempts to develop skills and enhance productivity had been going on but was not as effective as it could be because of a lack of co-ordination. Top talent was also being lured overseas.

Tertiary Education Minister Pete Hodgson said it was crucial to raise the skills of those already in the workforce.

"Eighty per cent of the workers we will have in 2020 are already working, so to raise our skill levels, work needs to be targeted across a wide range of society from people already in employment, educators and industry, to those who have just started school."

In addition to the workplace training, the scheme will encourage managers to upskill. It will encourage links between schools and business and try to match training with industry demands.

Mr Hodgson said the skills strategy was still in an early phase and more details would be released after consultation over the next four months.

A report to Cabinet by Mr Hodgson, made public yesterday, showed there were not enough skilled workers to drive increased productivity.

It said the main driver of GDP growth in the last few years came from high numbers of people working long hours but the record low unemployment rate - combined with New Zealanders' habit of working some of the longest hours in the developed world - meant the change was needed.

It said upskilling had wider benefits, including improving health and reducing crime.

Rick Fala, group chief executive of showerware and tap maker Methven, applauded the move but wanted more detail. He said the company currently upskilled staff by moving workers across departments.

"If we can teach another level of maths to help staff progress, they become more valuable," Mr Fala said. "Why wouldn't we want to do that?"