The NZ techonology sector is a key engine of job creation and economic growth
Posted on 01 July 2016
The New Zealand Technology Industry Association last week published the most comprehensive analysis of the NZ technology sector to date. It makes for an encouraging read, particularly for those employed in the sector or with aspirations to join it. It outlines the growing importance of technology to employment and economic growth.
Creating employment opportunities
The NZ tech sector currently employs 100,000 people directly and 20,000 indirectly (ie tech workers working in other sectors) nationally. Given the strong growth prospects for this sector, the number of employment opportunities will continue to rise.
How we develop and employ highly skilled people to fill these jobs is crucial to support strong growth. Immigration will only get us so far due to global tech shortages, so it is important to develop a workforce with the right skills to fill these roles. We are seeing positive changes in the public education system to include more tech-facing or –focused elements in the curriculum (particularly coding) from primary schools through to universities.
Key driver of economic growth
Rapid growth in the NZ tech sector means it now accounts for 8% of GDP and employs about 5% of the total workforce. The increasing importance of the technology sector is crucial for the diversification of the NZ economy away primary products. Contributing $16.2bn to the NZ economy annually, the tech sector has risen from a much lower ranking traditionally to be the third largest contributor to GDP, equal to Meat and behind Tourism and (of course) Dairy.
Auckland has the most jobs with 1 in 2 technology jobs based here
Roughly 50% of the tech sector is based in Auckland in terms of number of jobs, GDP share and level of products and services exported. For hirers and jobseekers, this is good and bad news. Good for job seekers in Auckland because as demand for skilled workers increases so do salaries. Potentially bad news for Auckland employers as the cost of doing business is likely to increase and businesses outside of Auckland will face strong competition for skilled workers. This is compounded with the inflow of immigration to Auckland, but also may provide Auckland employers with a stronger supply of skilled workers.
Growth in the Auckland tech sector is spread across two major areas. ICT products and services make up roughly two thirds of the GDP contribution with the other third made up by high-tech manufacturing. The latter comes as a surprise as the trending decline in manufacturing sector in Auckland and NZ is now contrasted by the national growth in high-tech, digital manufacturing. Good news for wrestling this back from offshore, perhaps?
Spotlight on growing technology segments
Potentia’s experience over the past 6 months correlates with the findings highlighted in the report and this blog post. Hiring activity is strong, with businesses specialising in the following areas experiencing strong, on-going demand for skilled workers and we expect this to continue over the next 12 months:
- Product Development
- SaaS Vendors activity
- Data & Analytics
- Digital Transformation
- Cloud Services and Integration
While there are likely to be headwinds from the global economy, the outlook for the NZ tech sector overall is positive. We continue to see strong growth across segments that have traditionally performed strongly, in addition to growing demand for digital skills beyond the tech sector (e.g. finanacial services).