Shortage of skilled digital workers is holding the country back - and seriously troubling CEOs.

New Zealand CEOs are being 'kept awake at night' as a nation-wide shortage of people with digital skills threatens local businesses.

Mark Averill, CEO of business advisory firm PwC, says a digital "skills shortfall" - identified in the second part of the company's 2018 CEO Survey released this month - is making it harder for Kiwi companies to stay competitive and relevant.

The survey shows more than half of the CEOs questioned say they are struggling to find the talent their organisation needs, while 62 per cent think New Zealand is lacking the digital skills to stay competitive in the 21st century.

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"Similar to our results last year, the availability of key skills is still top of mind for CEOs," Averill says. "It is one of the issues keeping them awake at night, coming in as the second highest threat to growth after cyber security.

"As the future of work evolves, CEOs are thinking about the new and different skills they'll need – how they'll rebalance skills for the digital age."

And there is some evidence the problem is even more acute in Auckland where the housing crisis and transport woes are combining to make the city a less attractive place to live and work.

"As CEOs look for ways to attract the very best talent, they can't ignore things such as changing workforce demographics, increasing wealth disparity and pressures on cities to provide better infrastructure and transport," he says. "All of this impacts or contributes to quality of life and will have a direct impact on where people choose to work.

"What this does however is put more pressure on businesses around what they can control internally – flexible working, the right working environment, giving staff access to the right tools and technologies and great learning opportunities."

Averill says despite New Zealand having benefitted from reversing migration in the past few years, the survey shows the country is still grappling with serious talent shortages: "We are now well past the point where strong data skills are nice to have; they're now at the core of what is going to keep our businesses ahead in 2018 and beyond."

He says the shortages - data scientists, designers and programmers being particularly hard to find – highlight the speed with which the digital space is changing and developing (a report released last year by the New Zealand Digital Skills Forum showed that while 14,000 new jobs were created in the tech sector in 2016, only 5,000 tech students graduated in 2015).

"We're all looking to get ourselves fit for the future – and this means getting digitally fit."

Almost 1300 CEOs from New Zealand and around the world took part in the online survey - PwC's 21st annual CEO Survey - held between September and November last year. The global results were released at the World Economic Forum in Switzerland in January.

Averill says the survey identified a number of ways in which the problem can be tackled including better partnering with universities and other education providers.

"CEOs are telling us we're not as good at this as our overseas counterparts and that's got to change; collectively we've got to build a smoother pathway from studying to working while businesses have to be more explicit with education providers on the mix of skills they need."

Upskilling staff was also identified in the survey as a way to beat the talent challenge, with 68 per cent of the CEOs expecting to retrain staff whose work is replaced by technology.

But the survey says "businesses can't expect employees to take on retraining themselves, equally they (companies) can't be expected to provide all training in a formal structure."

It says employers ought to provide the structure and freedom for staff to reskill with staff also taking responsibility for their own learning.

"In my mind it's about striking a balance between organisations defining the skills they need and supporting staff as they pursue them – and staff putting in their own time to undertake self-directed learning," Averill says.

He says it is also important for CEOs themselves to "stay across new technologies and invest in their own learning. If you don't know about blockchain, AI (artificial intelligence) and emerging technologies now, you're already becoming irrelevant.

"We must get used to working in a world where people and machines work together – it's not about one replacing the other," Averill says. "This is where trust is so important in organisations – leaders need to be open and honest about the role technology can play now and in the future."

The survey also identified the need for companies to both re-think the human resources structures for best managing their people and to developing "corporate purpose" in order to make companies attractive employers.

For more information: pwc.co.nz/CEOSurvey

• Understanding Gen Z, a diverse, digitally-driven generation now entering the workforce, will be the focus of the next series of PwC Herald talks. The breakfast sessions will be held in Wellington (July 24), Auckland (July 25) and Christchurch (August 1). PwCHeraldTalks.co.nz