Peter Griffin: Where are the workers to power the digital revolution?
BusinessDesk article - Thu, 17 Feb 2022
By any measure, our tech sector has had a stellar run over the last decade.
It employs over 115,000 people, who earn a relatively high median salary of $92,250. The digital sector alone, defined as including software, game development and interactive services, but stripping out telecommunications and hi-tech manufacturing, was estimated to have added $6.6 billion to the economy in 2019.
It has achieved a solid 10% compound annual growth rate since 2015 and is considered the real engine of tech in New Zealand. Video game development has been a particular highlight, with the small but prolific sector increasing game exports from $76m in 2014 to $272m in 2020. The likes of Xero, Vend, PushPay and Timely have waved the flag internationally for our innovative software as a service (SaaS) industry.
We should be poised to make the most of the huge wave of digitisation the pandemic sparked all over the world. But the Digital Technologies Industry Transformation Plan (ITP) 2022-2032 which the government released last week for public consultation, raises some big issues that threaten to derail our digital progress.
Our broken talent pipeline
The digital sector, it points out, has had “no cohesive domestic policy framework” to guide its development. Our approach to key emerging technology such as artificial intelligence is piecemeal and uncoordinated. Government procurement processes don’t encourage innovation and collaboration, as Sir Ian Taylor has vividly illustrated in his ongoing series on the government’s woeful approach to securing and deploying covid testing technology.
With the exception of Weta Digital, which appears in the credits of many Hollywood blockbusters and has just been sold to 3D game engine developer Unity for $2.3b, our digital sector isn’t on the world’s radar. We have a diversity problem in tech which sees Māori, Pasifika and women underrepresented and therefore missing out on opportunities to pursue high-paying jobs in the knowledge economy.
But the biggest problem identified in the Digital ITP is our broken digital and technology skills pipeline. It was failing us prior to covid’s arrival. Then the border closure removed a vital supply of foreign talent the tech industry has been reliant on for years to supply specialised skills and senior-level experience.
We’ve long benefitted from being, as the late Sir Paul Callaghan put it, a place “where talent wants to live”. But the government is only now responding to desperate pleas from the industry to expand border exemptions for skilled tech workers, with 600 places opening up from this week. At least 3,500-4,500 new arrivals, the level of skilled tech workers granted visas each year prior to the pandemic, will be needed to meet the current skills shortages, which are particularly acute in areas like cybersecurity, artificial intelligence and specialties within software development.
Our domestic efforts to foster skills and talent is beset by bad behaviour. Our tertiary providers have been too slow to adapt to new technologies and ways of teaching digital skill sets. Employers have underinvested in internships and upskilling programmes. We haven’t done enough during the pandemic to retrain workers in covid-impact industries to move into digital sector roles.
The bottom line is that without an urgent, well-coordinated effort around skills and talent development across employers, education providers and the government, with an accompanying loosening of immigration restrictions to meet the immediate skills shortages, the goals of the Digital ITP “accelerated growth, strong foundations and greater Māori participation” will be difficult to achieve.
It’s particularly concerning that at the top of the digital skills pipeline, the flow of talent is sluggish, to say the least. According to the Digital ITP, the number of students taking technology standards over the past five years has declined by 2%, despite the double-digit growth of the digital sector. In 2019, only 352 students were able to get internships out of 2,699 who applied for them.
As the Digital ITP points out: “The mismatch between the skills industry needs versus the skills available in New Zealand has led to an environment where graduates from digital tech courses, and other professionals with skills outside the areas of shortage, often struggle to find work. Yet the industry struggles to find people with the right skills.”
The saving grace is that the industry has already made a start on the digital skills and talent issue off the back of work that has been done by IT professionals and other groups over the last couple of years.
They include a bigger focus on apprenticeships, internships and micro-credentials, benchmarking skills and tech positions with global standards so we are in line with the rest of the world and taking an all-of-government strategic approach to skills. Newly established Workforce Development Councils are creating sub-degree qualifications to “help shape the curriculum of vocational education, to ensure it meets industry needs”.
The Digital ITP draft suggests the establishment of a National Digital Skills Agency within an existing government department. That would require cabinet approval and offer a focal point for coordinating the extensive efforts required to fix the skills pipeline.
Reimagining tech education
Many tech-related entry-level roles don’t require a computer science degree or even a diploma. Technology vendors are now offering free training and credentials just to get people competent using their products. Universities need to get real about the role they play in developing a tech-savvy workforce as more flexible alternatives emerge.
The online course platform Coursera last year served up courses to 152,000 New Zealanders according to its 2021 Global Skills Report. The third most popular course was in machine learning. Coursera’s report found that “in recent years, Australia and New Zealand have fallen behind the rest of the Asia Pacific region when it comes to business agility, tech skills, and communications infrastructure”. It rated NZ 36th out of 105 countries when it comes to our tech skills.
Kiwis are looking for more flexible options to learn and these need to be increasingly on offer, particularly when it comes to reskilling people for digital roles and upskilling the existing workforce to embrace new technologies.
The action on digital skills needs to be industry-led. The companies crying out for talent have underinvested in skills development so it is now incumbent on them to lift their game and work more effectively with education providers. The need for experienced people skilled in the technologies that will power the digital economy for the next decade means we’ll have to open the door further to highly-skilled migrants for years to come.
The plan the government has come up with to transform the digital sector will need money behind it to gain any traction, so expect to see some funding earmarked for it in May’s Budget.
The Digital ITP details some worthy initiatives and a few of dubious value. But the centrepiece has to be addressing the digital skills issue. Without progress on that, our digital ambitions will be hard to realise.
Have your say on the Digital Technologies Industry Transformation Plan 2022 - 2032. Submissions close 5pm, March 31, 2022.
ABOUT THE AUTHOR
Peter has been keeping a close eye on the tech sector and the digital revolution for the last 20 years. After a stint in London dissecting the tech wreck for a number of computer-industry publications, he joined the New Zealand Herald eventually running the paper's tech section before leaving to found the Science Media Centre in Wellington. He has been a tech commentator for the New Zealand Listener, Newstalk ZB and RNZ. His passion is exploring the impact technology and innovation have on business, society and the environment. Follow him on Twitter @petergnz