Kiwis dubbed overqualified but underpaid
"Mediocre" management practices are holding the country back.
Many Kiwis are overqualified for their jobs and low productivity has resulted in ‘‘subdued’’ pay rises, the Organisation for Economic Cooperation and Development says.
‘‘Mediocre’’ management practices are holding the country back, it says.
The OECD said in a 173-page report that low productivity was also down to weak competition rules and low savings and investment.
It noted that booming tourism and immigration were contributing to strong economic growth, which averaged 3 per cent over the past three years.
The OECD also acknowledged that New Zealand’s historically low productivity growth was in part due to healthy increases in the proportion of people who were employed.
But it said families’ disposable income was below the OECD average, despite a high share of Kiwis working very long hours – providing ‘‘exceptions’’ to New Zealand’s success.
People’s skills were not primarily to blame, the reports suggested.
Kiwi workers had strong literacy and problem-solving skills and older workers’ skills were among the highest in countries that had been studied, it said.
But it said the mismatch between people’s abilities and the skills that were actually required by their jobs was also the highest it had seen.
‘‘The preponderance of employment in small firms appears to be the major factor accounting for [New Zealand’s] relatively high rate of overqualification.’’
People who had to settle for jobs for which they were overqualified earned on average 14 per cent less than their ‘‘wellmatched’’ counterparts, the report said.
It suggested a range of measures to improve productivity.
These include changing the tax regime to boost savings – and therefore investment – and sharpening the country’s competition rules by allowing the Commerce Commission to intervene in markets even if it could not prove anticompetitive intent.
‘‘The existence of a substantial number of firms with mediocre management is suggestive of a lack of competitive pressure.’’
Other suggestions to improve productivity include cutting company tax and loosening the Overseas Investment Office’s oversight over foreign investment.
New Zealand could also do more to cut greenhouse emissions.
The Government should develop a long-term vision to transition New Zealand into a low-carbon ‘‘greener’’ economy and set a date for including agriculture in the Emissions Trading Scheme, it said.
Other findings in the report.Living standards are high and Kiwis report a superior feeling of well-being
New Zealand has one of the smallest gender pay gaps in the OECD
Economic growth will ease back to 3 per cent in the year to July 2018 as migration slows.
Risks to the economy include a ‘‘disorderly’’ housing market correction and threats to global trade
Investment could be increased by cutting company tax from 28 per cent – above the average OECD rate which is 25 per cent.