Skills key to productivity

Investment in research and development and lifting workers' skill levels are key factors in boosting productivity, a Government report says.

The Workplace Productivity Challenge report is aimed at helping to overcome skill shortages caused by an 18-year low in unemployment. It was put together by a working group that included Business NZ and Council of Trade Union representatives.

The Government has set aside up to $2.5 million a year to implement the group's recommendations.

The report highlighted figures showing the private sector and Government-funded R&D is low compared with other developed countries.

Private sector R&D totalled $524 million in 2002. As a proportion of GDP, 0.42 per cent, this is well below the OECD average of 1.44 per cent.

At $667 million, research funded by the Government was 0.54 per cent of GDP in 2002. That's also below the OECD average of 0.64 per cent.

To match Australia's public sector R&D rate, the Government would need to spend an extra $120 million a year.

The report says awareness of the importance of continued investment in the right technology for firms facing labour shortages ought to be raised.

About one in five adults are at the lowest level of literacy.

This means they cannot calculate the total cost of a purchase from an order form or are unable to find a specific intersection on a street map.

There is a concentration of such people in the primary and manufacturing sectors representing a "significant problem as skills shortages choke off growth potential".

"There is a critical need to lift the skill levels of the workforce if New Zealand is to achieve a more productive economy," the report says.

The Government ought to focus on meeting the needs of workers with low levels of foundation skills.

A "substantial" increase in funding should be targeted at learning delivery, including workplace-based training, co-ordination and capacity building, plus support for providers, practitioners and workers.

The impact of low unemployment - New Zealand's stands at 3.8 per cent - is the second lowest in the OECD, and key legislation, such as the Resource Management Act and Employment Relations Act, were not considered by the working group.

Productivity drivers

Building leadership and management.

Creating productive workplace cultures.

Encouraging innovation and the use of technology.

Investing in people and skills.

Organising work.

Networking and collaborating.

Measuring what matters.