Listener 14 December, 2002.

Keywords: Education: Labour Studies;

Instead of the five percent downtime the manufacturer specified, the expensive German machinery was malfunctioning at four times that rate. The increasingly frustrated management called in its workers, who explained they had never had any training on the use of the machine. The German manufacturer would have been astonished. Their view is that each worker was a skilled technician who had a positive role in managing the machinery, not someone to do the jobs that the machine designers had not yet automated. Training for a new technology would have been routine.

This might explain why Germany has a better productivity record than Britain. By most measures British science far out performs Germany (and most other nations). But the Brits do not have the same technological superiority. The Germans probably do better because they have a better trained workforce.

Ware putting a lot of effort in improving the transmission of research into business applications. But how good are businesses at transmitting the new technologies into practical applications? Our greatest success is down on the farm. It is not just them mechanically applying someone else’s theory – doing what they are told. The theory has to be adapted, for local conditions, just like the workers with that German machine.

Because workers dont register patents and because shopfloor (or farm) adaptation is difficult to measure, we can underestimate its significance. Even so, a US study found a fifth of all patents come from supervisors, engineers and scientists at the operating end of industry (two fifths comes from industry R&D teams and two fifths from independent inventors). What would the proportions be if the blue collar workers registered their improvements?

To manage advanced technologies effectively workers need understandings and skills. The first requirement is formal tertiary training. With 36 percent of our 25 to 64 year olds with post-secondary qualifications, New Zealand is near the top of the OECD, where the average is 26 percent. (We are third equal behind Canada and the US.) However our strength is in certificates and diplomas. Only 14 percent of the age group has degrees or higher, compared with the OECD average of 15 percent. (Our average adult literacy levels were only middling according to the 1996 international literacy survey. However, the high survey response rate of New Zealand (and Australia) compared to most other countries, probably biases our outcomes down. So we are almost certainly above average in the literacy stakes too.)

Even more worryingly, we may be slipping behind. In terms of the youngest group, the 25 to 34 year olds, we are only plumb middle of the OECD rankings of those with some tertiary education.

There is also a need for on-the-job upskilling. The farm sector labour force is relatively underqualified (although probably better than any of its foreign competitors). Its formal deficit is offset by a sound core education, and an impressive knowledge transmission system based on meetings, field days, and the media. Professional workers often have upskilling as an integral part of their work process. But opportunities are rarer for blue-collar workers, and those with poor qualifications are the least likely to engage in further education and training. The OECD reckons that over a life cycle the average New Zealanders get about 1714 hours of training outside formal education. This is just below the OECD average of 1730 hours, topped by Finland at 3876 hours.

So it is not just a matter of better opportunities for those leaving secondary education. It is sobering that over 60 percent of the labour force left school before the personal computer was important; over 90 percent before Bill Gates declared the internet was crucial. Even so, a significant chunk of New Zealanders acquired computer and web skills, one way or another, coupling sound secondary school foundations with formal, informal, and on-the-job learning. How much of this occurred by serendipity and the New Zealanders’ ‘can-do’? How much have we built an upskilling strategy into our labour force policies?

The New Zealanders most likely to be on the shop floor (such as Polynesians) have relatively poor secondary educational achievement. So we do not really face a tradeoff between an ‘equity’ strategy of supporting the weakest educationally against an ‘efficiency’ strategy of putting the money into other parts of the education system. Getting our educationally weakest up to the international standard will improve the nation’s ability to operate advanced technology at the shop floor.

And if we do not? Not only will we have poor technology implementation, and lower productivity growth. In the harsh world of mobile international capital looking for the best place to locate their businesses, the quality of the workforce matters. It can matter more than rates of remuneration. Who wants to entrust the application of an advance technology to neophytes?