New Zealand needs to do more to improve our workforce's literacy, numeracy and language skills if we are to achieve significant economic growth, according to business leaders.

As is the case in many Western countries, low workforce literacy and numeracy skills are a pervasive problem, with around half of New Zealand adults aged 16 to 65 years not having all the skills they need to fully contribute to performance improvements in a changing environment.

Katherine Percy, chief executive of adult literacy, numeracy and communication support provider, Workbase, says workforce literacy is a complex issue. "Workforce literacy issues are overlooked because most adults with literacy and numeracy issues can read and write but they don't have all the skills needed for lean manufacturing, quality or productivity improvements."

"The impact upon business profitability - and therefore our wider economy - can be profound," she says.

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Percy commented that during more than 20 years of helping organisations improve workforce literacy and numeracy, Workbase had consistently seen gaps in employees' skills, including supervisors and team leaders. This typically results in poor customer service, high levels of errors and rework, inability to reduce workplace accidents and reduced profitability.

Often businesses don't realise the extent to which low workforce literacy affects their profitability, mistakenly blaming other factors for problems such as poor employee engagement and ongoing production errors.

Karl Pointon, human resources manager at Tasti Products, agrees. Workforce literacy at the West Auckland nutritional snack manufacturer came to the fore after a period of rapid growth and technological change.

The company realised it had a problem when it noticed employees failing to fully complete compliance documents, follow written instructions and correctly weigh ingredients.

"The penny dropped when I noticed many participants were confused during in-house quality training that was designed to rectify these problems.

Twenty-nine employees attended an hour of workplace literacy and numeracy training a week over a 12- month period. Tasti Products quickly saw changes, including significant improvements in documentation being completed accurately, reduced wastage and lower employee turnover.

Pointon says improving employees' literacy skills has better equipped them to do their jobs properly. This has enabled the company to give some employees more responsibility, helping them to advance their careers and improve job satisfaction.

Many members of the business community recognise adult literacy's importance to their own businesses and the wider economy, with more than 86 per cent of around 1000 business participants in the recent Deloitte Business NZ Election Survey saying that improving workforce literacy skills should be a Government priority.

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Phil O'Reilly, Business NZ's chief executive, says Tasti Products' story is mirrored in many other organisations and believes low basic literacy, language and numeracy skills in New Zealand's workforce is holding back growth and constraining productivity.

"Businesses are subject to many opportunities and challenges in adapting to complex and rapidly changing technologies, and meeting increased local and global market demands.

"We need a skilled and productive workforce if we are to rapidly respond, yet it is impossible to be agile if a large proportion of the workforce finds it difficult to fulfil everyday work requirements," he says.

Even jobs described as low skilled require considerable literacy and numeracy proficiency for effective communication with customers and colleagues, solving problems, understanding instructions and completing paperwork.

Adult workforce literacy issues affect people from all walks of life because jobs, processes and technology constantly change, says Percy.

"Employees need to be proficient in many different types of literacy, including financial and technological literacy - just ask any white-collar worker who has had problems getting to grips with a new production, purchasing or logistics system."

Issues such as skill gaps and shortfalls will only worsen once an improved global economy boosts local and international demand. Add an increasing reliance on immigrants and an ageing population to the mix, and it becomes even more important to ensure those entering our workforce - and those already in it - have the literacy and numeracy skills they need.

Percy says good workforce literacy skills are the cornerstone for success and addressing our workforce's needs requires the Government, tertiary education sector, industry bodies and individual businesses to take positive action.

"The amount of funding for workplace literacy training has been eroded in recent years so we were pleased with the Government's pre-election announcement that it will provide a big push to improve workplace literacy and numeracy."