Enrolments are up in training institutes as Covid-19 forces thousands of Kiwis to rethink their futures - but what kind of tertiary education and skills will lead to secure jobs? As school leavers and older workers alike consider their options for 2021, Simon Collins and Kirsty Wynn report in part one of a three-part series.
For 17 years, flying was Luke Emerson's passion.
The Air NZ pilot lost his job when New Zealand's border closed in March. Like thousands of others, he has been forced to rethink his future, and he has enrolled at Unitec to pursue a new passion - architecture.
Emerson, 36, flew for seven years with Jetstar in Australia before moving back to Auckland to work for Air NZ three years ago. He got married last year, just before the world - and his job - started closing down.
"Catherine, my wife, is from Melbourne. I convinced her to move to New Zealand for my dream job at Air NZ. Then Covid hit - so it hasn't been the easiest start to creating a life in New Zealand," he says.
"The best thing I could have done was to just focus my attention on something else and keep my brain active. This course I'm doing at Unitec, I had thought about it for a while, but I literally enrolled the day before they closed the enrolments."
He developed a passion for architecture when he and his wife started renovating their Mt Eden house in January. They finished it themselves during the first lockdown.
"Our architect was a good friend and we couldn't have done it without her. I would love to be able to provide the same service to clients, or be able to do similar renovations in the future."
He has signed up for a two-year Diploma in Architectural Technology, which normally costs $7200 a year but is free under the Government's $1.6 billion post-Covid package that has wiped fees for all courses below degree level in six target fields until the end of 2022.
He will then have the option of adding a third year for $8200 to earn an architecture degree and would like to run his own business.
Enrolments at polytechnics up and down the country - merged since July 1 into a national institute, Te Pūkenga (The Skill) - have jumped since lockdown.
Second half-year enrolments are up 60 per cent on last year at Manukau Institute of Technology (MIT), up 50 per cent at Waikato Institute of Technology (Wintec), and up 21 per cent at the online Open Polytechnic.
Early applications for next year by September 30 were up 57 per cent above the same day last year at Unitec and up 78 per cent at MIT. By November 2, MIT had received 4678 applications compared with 2615 by the same date last year.
The $1.6b post-Covid package that has made many polytech courses free also pays employers $1000 a month for every apprentice they employ in the first year and $500 a month in the second year up to $16,000 in total through to April 2022 - fuelling a leap in on-the-job training.
New apprentices signed up by the Building and Construction Industry Training Organisation more than doubled from 2200 between July and October last year to 5684 in the same period this year.
Universities NZ says second-half-year enrolments are up between 2 and 5 per cent, and this year's Budget has funded projected increases in 2021 of 9 per cent at universities, 32 per cent at polytechnics, 34 per cent at wānanga and 24 per cent at private institutes.
Where are the jobs?
Emerson is not the only Kiwi whose job has been destroyed by closing our border. Infometrics forecasts that a net 186,000 jobs, or 8.5 per cent of all the jobs that existed in June this year, will have gone by next June.
Its detailed forecasts for the next five years, updated for this series, project a continued decline in total jobs out to 2022, assuming that a Covid-19 vaccine will allow the border to reopen in that year, and then a slow recovery from 2023.
Even by March 2025, it forecasts that jobs in accommodation and food services will still be 8000 (4.6 per cent) below March 2020, with overseas tourists still only three-quarters of pre-pandemic numbers.
"The world will have gone through a recession, so there just won't be as much money to be spent on overseas travel, and New Zealand, being a more expensive place to get to, will not recover as quickly as other places," Infometrics economist Brad Olsen says.
Already jobs have dropped in the year to September this year by 9000 in transport, 4000 in administration and support services, 3000 in food and accommodation, 1300 in arts and recreation and 800 each in education and the media.
Surprisingly, however, those losses have been more than offset so far by new jobs, mainly in state-funded areas such as public administration and safety (up 11,300) and health and social services (up 9000), so total jobs in September were still 20,000 more than a year before.
Infometrics forecasts that by 2025 we will have a net 107,000 more jobs than in March this year, including continued growth in public administration and safety (up 10,400 or 8.3 per cent) and health and social services (up 20,400 or 8 per cent).
The fastest growth will be in Emerson's new field of "professional, scientific and technical services", which includes architecture, accounting, engineering, information technology (IT), law and research - up 27,500 jobs, or 11.2 per cent.
"There is going to be more investment, with interest rates staying low, and that will allow for a greater focus on those medium- to high-skilled jobs," Olsen says.
"There is also a shift away from purely selling goods towards services. That is the place we would expect to see people coming through thinking and designing new solutions."
Growth in these areas, and in public administration, is forecast to create another 11,000 net new jobs by 2025 in "administrative and support services" such as office work and cleaning.
Net extra jobs are also expected in manufacturing (12,000), education (10,000), agriculture, forestry and fishing (7500), other services such as repairs and hairdressing (6500) and retailing and wholesaling (4000).
"The focus is going to be on more medium- to high-skilled work, and that is going to shift through towards higher qualifications," Olsen says.
"There is an element that will want to have practical skills as well.
"The other change is that the workforce is going to want to be a lot more mobile. New Zealanders will want to be able to redeploy themselves more than once as the economy unfolds and opportunities rise and fall - so people might be looking for broad-based degrees."
However, slower population growth driven by net immigration halting until 2022 and then rising only to about 30,000 a year by 2025, compared with a net 91,317 in the year to March this year, will lead to less demand for housing and consequently 2500 fewer jobs in construction than in March this year - down 1 per cent.
Infometrics also estimates that the people doing 540,000 of our existing 2.2 million jobs will retire, change jobs or take time out to care for children over the next five years.
Adding that to the net 107,000 new jobs, that means about 647,000 jobs will open up for jobseekers in those five years, including opportunities even in the declining sectors.
Costs and benefits
Training costs money. At degree level, fees are typically $6000 to $8000 a year, or $18,000-$24,000 for a three-year degree, or $25,000-$29,000 for a four-year degree in engineering or law.
A seven-year medical degree at Auckland University costs $102,276 in fees alone.
On top of that, most students have to give up fulltime work to study. A 2017 survey found that students work an average of 13 hours a week, or 27 hours less than a fulltime 40-hour week.
At a minimum, they are losing 27 hours a week at the minimum wage of $18.90 an hour for 40 weeks, or $20,412 a year - $61,236 for a three-year degree.
About a third of fulltime students get student allowances of up to $237.90 a week ($9516 a year) for a student under 24 living away from home, depending on their parents' incomes, which could roughly halve their income losses.
Almost half of fulltime students cover part of the income loss by taking out student loans for living costs of up to $239.76 a week, or $9590 a year. Overall, 72 per cent take some kind of student loan, mostly for course fees.
But the loans, unlike allowances, have to be paid back later through the tax system, so they do not offset either the fees or income lost while studying.
In exchange for these costs, Ministry of Education research shows that young people with bachelor's degrees earned a median $55,400 a year in 2016 five years after leaving study, compared with a median $38,900 for those with a trades or similar qualification.
But what you study matters. Median incomes for bachelor's graduates ranged from $42,000 for people with degrees in visual and performing arts up to almost three times as much - $118,000 - for medical graduates.
People who do degrees start on incomes that are well below those who go into trades. The ministry's data shows that it takes until age 24 for a bachelor's graduate's annual income to pass a tradesperson's income.
Cumulatively, by age 24, the average level-4 tradesperson in 2018 had earned $199,600, compared with only $141,600 for the average bachelor's graduate, since age 15.
On average, the Organisation for Economic Cooperation and Development (OECD) estimates that getting a bachelor's or a higher degree cost Kiwi men an average of $104,700 in fees and foregone income in 2017, but that their lifetime incomes up to age 65 would be $485,000 higher than they would have been without tertiary study - an inflation-adjusted net benefit of $380,300 over their lifetimes.
For women, average costs and benefits are lower because of the gender pay gap. Getting a degree cost Kiwi women $87,900 and earned $423,300 in higher future income, a net gain of $335,400 over their lifetimes.
On average, investing in a degree pays off. The OECD calculates that the internal rate of return, or payback, is 12 per cent for NZ men and 16 per cent for women - much better than putting the same amount of money in the bank.
But it is no sure thing. A net financial gain of 12 to 16 per cent over a lifetime is fairly modest considering the huge differences that can stem from other factors such as the subject you study, how long you spend on often-low-paid overseas experience, time caring for children or aged parents, spells of unemployment or illness, capital gains on your house or investments, and all the other vagaries of life.
In fact, modelling by Business and Economic Research Ltd (Berl) in 2017 found that, assuming that people buy a house as soon as they can afford one at what was then the national median price of $530,000 and pay it off over 20 years, the average bachelor's graduate would be only $76,700 better off by age 65 than a level-4-to-6 tradesperson with the same "innate skill level".
(The study looked only at people with at least NCEA level 2, assuming that people without level 2 had a lower "innate skill level").
Universities NZ chief executive Chris Whelan scoffs at Berl's assumptions, which included taking out students loans for four years to do a bachelor's degree.
"The methodology was so dodgy," he says. "If you went down to a three-year degree, the formula went immediately in favour of university graduates."
Universities NZ has done its own calculations, based on census data, showing that degree level graduates can expect to earn about $1.4m more over their working lives than people with just school-level qualifications. This varies significantly from subject to subject. For most subjects, graduates break even and overtake school-leavers in their 30s.
But the real point of the Berl analysis is that a degree, in most subjects, is no sure path to riches because so many other factors come into play.
Making a choice
Despite the pandemic, Waikato University careers adviser Heather Lowery-Kappes says we still have skill shortages in most fields which will only get worse as the Baby Boomers born in the two decades after World War II retire over the next few years.
"If you are coming to university and you are getting a degree, you are going to get a job. It's the same if you are going into a trade - you are going to get a job," she says.
"I'm seeing a lot of panic, but to a certain extent it's false panic."
At the end of October, Seek NZ and Trade Me Jobs each listed just under 20,000 jobs. The biggest category in both was "trades and services", followed by information and communications technology on Seek and construction on Trade Me.
"There are a lot of trades recruitment companies who can't fill positions at all and are crying out for anybody for construction work, factory work, traffic control work," she says.
She says Covid showed that food and health are our "essential services", so are perhaps the safest fields to get into.
"But that shouldn't stop you if you love the arts. We need everything. Demographically, we actually don't have enough people," she says.
"There are also value questions. What do you value? What do you want to contribute?"
Ian McPherson, of the Recruitment, Consulting and Staffing Association, says jobseekers need to "think laterally" at a time when whole sectors are unable to function, but that most people like Emerson who have worked in hard-hit sectors such as travel already have "transferable skills".
"If you look at say House of Travel or Flight Centre, they invest a huge amount of money in training people, so those people that are sales-focused and very resilient and often earned their reward through commission-based structures so understand the most important thing to do for the day, those sorts of people might naturally think I need to retrain, but they are actually highly skilled," he says.
"Degrees are helpful, but they are not what they were from an employer perspective. They are helpful, but employers are as interested in attitude and resilience."
'Do the mahi, get the treats'
An apprenticeship with an "old school" builder and a "work hard play hard" attitude has set the foundation for success for business owner Charlie Bailey.
His company Salamander Build specialises in high-end renovations and new builds and despite the challenges of Covid-19 has projects booked for a year in advance.
His "do the mahi, get the treats" work ethic has also allowed him to climb the property ladder, buying humble homes and transforming them into high-end luxury pads.
His latest renovation in the Auckland suburb of Meadowbank started seven years ago as a run-down 1970s home and has just gone on the market as a "masterpiece" with a CV of close to $2.5m.
"We did it in stages because being a builder your client's homes always take first priority, but we are truly happy with how it turned out," Bailey says.
Bailey's journey to success didn't come from folders filled with high school and tertiary qualifications but rather plenty of hard work and a passion for his craft.
The 42-year-old left Kaitāia College at 15 - as soon as he was legally allowed to - and went labouring and bricklaying locally in the Far North town.
"When I was bricklaying we worked with the teams of builders and when I was about 17 one of them approached me and offered me an apprenticeship," he says.
"Concrete laying was quite hard on the body so I thought I could do a change so they signed me up."
Bailey spent the next four and a half years with the same company under the guidance of a skilled builder who ran a strict building site.
As part of his apprenticeship, he attended block courses of study that ran a few weeks at a time.
Everything else was learned "on the job."
"I was fortunate enough to have an old school builder, a bit of a grumpy old dude, but if it wasn't for him instilling those skills in me, I wouldn't have the business I have today."
"I could never focus at school but the block courses were with like-minded guys and we were finally doing something we were interested in so I was really motivated."
Bailey spent three years in London running a group of builders before returning to New Zealand.
In 2004 he started Salamander Build, eventually bringing on a business partner to give additional support and flexibility.
Salamander Build has a staff of 12 split into two gangs working on different projects.
When hiring staff, Bailey looks for motivated and hard workers over qualifications.
"I do look for people who have at least done sixth form and ideally seventh form because you need to be able to read and understand plans," Bailey says.
"Otherwise, it's the motivated and hard-working guys who stand out."
Apprentices do their study at home through BCITO, and there are night classes for those who are struggling.
Bailey recommends building to anyone looking for a trade.
His skills have allowed him to own his own business and bringing on a partner has given the flexibility to holiday with family.
"It's a great career, I always loved it and I still love it now. It's outside, you are doing something different every day."
'You don't need a student loan'
Thinking ahead and bringing New Zealanders new technology before they need it has been Aliesha Staples' business.
The founder of emerging-tech business Staples VR specialises in high-tech equipment and virtual and augmented reality.
Staples VR helped develop a fire-resistant 360-degree camera for the Fire and Emergency Escape My House campaign, has produced VR for Warner Brothers, Paramount and Disney and has created software to train doctors.
Through 360 cameras and filming, Staples has taken people front of stage at a Six60 concert and had them join the homeless on the side of a city street.
The 33-year-old has a swag of awards and was named "young achiever of the year" at the High Tech awards in 2017 and 2018.
"I was in South Africa in 2014 and a lot of the skills I learned weren't in New Zealand yet," she says.
"When I got back to New Zealand I started Staples VR purely because I knew there was a need for the tech skills that would be coming."
Staples started to rent out equipment like camera stabilising gimbals, which were not heard of in New Zealand.
"Now you would be hard-pressed to find a film set without a gimbal - drones as well," she says
"I used to go overseas to conventions to see what was happening - I'd look at new tech and trends and then bring it here and teach people what to do."
Despite two years spent studying film and media in Hawke's Bay, Staples says she never used the technical skills learned.
"I loved my film course but I never used any technology from my course in the real world," she says.
"I would suggest young people straight out of high school go and get a job in the industry, any job. Pack up equipment, make coffees, clean tables but just be there to learn."
Staples is passionate about young people learning about technology without racking up a lot of student debt.
She says technology changes so quickly the skills learned on long courses can be out-of-date by the time the certificate is issued.
"We need to change the way we teach technology and skills and have more micro credentials - teaching people in two months what is currently taking a year," she says.
"We can teach 3D modelling in a week. If they go to university, they can learn it in a year and it will cost them $20,000."
She says gaming, creative tech and film have the potential to be New Zealand's top industry.
"When 5G becomes more successful there is going to be huge growth in creative tech and the Government has started to realise this," she says.
"Trying things out, developing systems and developing staff is easy in New Zealand."
She says people from industries such as travel and agriculture that have been disrupted by Covid should be looking at creative technology.
"The skills they have can be pushed across," she says.
"The film industry is crying out for production assistants, runners, and assistant directors - they have the same skills as executive assistants in other industries."
When hiring staff, Staples hardly looks at someone's CV.
"I look at attitude and willingness to learn before any of that," she said.
"They must have done something right to get themselves in the door and in front of someone for an interview."