It's time big business and the government collaborated to introduce effective long-term upskilling programmes to relieve skills shortages affecting small and medium enterprises (SMEs) in New Zealand, according to a senior SME adviser.

Harry Ferreira, Head of Small Business for BNZ, says the problem facing SMEs is global, well-known and difficult to solve - but a focused series of programmes would address the shortage hindering the growth of many companies.

"New Zealand is a growing country - we have a settled economy that is just ticking away nicely. But we just don't have enough people with the skills we need to service the growth we are experiencing."

SMEs employ one in three New Zealanders; 97 per cent of all companies in this country are composed of 20 people or less.


"So if these skills shortages continue and we don't fix the problem, some smaller companies may go out of business - and that is not a palatable thought for big business here. They need to keep the country and the economy growing.

"SMEs are important not just because they service local communities, they also service big business; some are involved with technology and innovation that will help big business," says Ferreira.

"So big business is very focused on what is good for the country; they must work with government to facilitate means of making sure we can attract the right type of person here and upskill our own people - not just for now but with a view to 20 and 30 years ahead."

"If that means some adjustment to immigration to get it right and make it easy for SMEs to find the right people in the short-term, so be it. In the long-term, big business needs to get stuck in with government and help develop the skills and work programmes - and the funding - that will help the companies in the sectors with real skills shortages."

New Zealand is not alone - the problem of people's skills not matching job opportunities is global. Staffing firm Manpower reported late last year 40 per cent of employers worldwide were experiencing difficulties filling vacant positions - up from 38 per cent in 2015.

The Hays Global Skills Index 2016 rated New Zealand 20th in a table of countries worst affected by a widening gap between skills possessed by employees and those required by employers. The problem increased from 2015 levels with the Hays report saying of New Zealand and Australia: "...indicators all point to increased skills shortages. Talent mismatch has increased, indicating firms are finding it harder to fill posts, in spite of easing demand."

Sweden, the US, Luxembourg, Spain, Germany and Ireland were rated the top six countries facing a talent mismatch by Hays, with the UK not far behind.

Ferreira says remedial action to solve the skills shortages is not fast enough: "There will be all sorts of ramifications if productivity and growth is affected - affecting GDP, imports, exports, unemployment, even interest rates."

Main sectors affected were SMEs in construction and trades, engineering, education and hospitality and tourism. The Hays report also identified a growing gap in knowledge workers, particularly those technologically savvy.

"The SMEs I am talking to are telling me they are spending about 40 per cent of their time over a week interviewing, securing and training staff. That figure should be about 15-20 per cent," says Ferreira.

"If companies are distracted by that, the growth engine we all want operating efficiently will only be idling.

Meanwhile Greg Wallace, CEO of the Master Plumbers, Gasfitters and Drainlayers Association, says while there is a huge construction boom providing many positive opportunities for his members, "the problem is fulfilling the work."

There were not enough plumbers (600 short in Auckland alone last year) and not enough apprentices coming through: "We think we are about 2000 short - and it's not just an Auckland, Wellington or Christchurch problem."

Apprentices needed six years to become fully certified, he says - "the same amount of time a GP takes to qualify".

Wallace says immigration cannot solve the plumber shortage as no overseas qualifications are recognised here except those from Australia; immigrants from South Africa, for example, have to re-train here.

"There is no government incentive for SMEs - and many of our members are in the 5-15 staff bracket - to take on apprentices. That needs attention as a plumber's biggest challenge with an apprentice is that their first year is 100 per cent learning; there's no money coming in from that particular person.

"Yes, upskilling and work programmes are sorely needed and the BNZ have been incredibly supportive - they make interest-free and reduced-fee loans available to young people who need help with funds to go towards the $6000 you need to sign up to Master Link [an apprenticeship programme owned 100 per cent by the Master Plumbers]."

Ferreira says the skills issue could be classified as a "good problem" but adds: "It'll get worse if we don't move quickly. We have, as a country, the opportunity to be in the forefront of economic growth if we can take advantage of technology and other opportunities - and if we can educate our people to have the skills needed."

Follow the journey on The Mike Hosking Breakfast on Newstalk ZB and at