This paper summarises the available information on skills matching in the information and communications technology (ICT) sector. It draws from statistics and research in the area, and from recent systematic discussions with representatives from the ICT sector and from tertiary providers. It does not address any policy implications.
The ICT sector is dynamic and growing fast, with employment increasing at nearly twice the rate per year as the economy as a whole between 2002 and 2012. Employers are increasingly demanding higher qualified people (an estimated 75 per cent of all ICT employment in 2012 required a degree or higher qualification); while demand for lower qualified people is decreasing. Wages in the ICT sector are higher than average.
Enrolments in degree level ICT courses have grown since 2008, and the past year has shown strong growth in the number of students completing qualifications at this level. Around 60 per cent of enrolment in information technology courses was at degree or higher levels in 2012 (this has increased from around 50 per cent in 2005). A considerable amount of this degree-level study is taken by students who are not majoring in information technology. The share of qualification completions in information technology at degree or higher levels in 2012 was only 30 per cent.
Given this fast growth, and the high rate of technological change in ICT, evidence shows that the ICT sector currently faces skills mismatches that could potentially limit the future growth of the sector. These mismatches go beyond insufficient supply of graduates, and relate to the quality of the skills available, and the ability of employers to retain and effectively utilise the skills that are available. Specifically, current information and recent engagement with the sector shows that:
- Employers find that graduates often lack critical non-technical skills – the types of skills that are also important for those involved in ICT start-ups. Many firms said there was a misperception about what a career in ICT involved, and that more was needed to be done to attract a wider range of students, including women, to the sector. ICT firms find it difficult to engage with the tertiary providers, which may reflect the relative youth of the sector.
- Employers also report increasing difficulties in recruiting managers and professionals with the right skills. ICT occupations are listed on the skills shortages lists, and the sector is making extensive use of work visas to address skills needs. Wages for ICT occupations have been increasing strongly since 2009.
- A high proportion of ICT graduates leave New Zealand after completing their study. At the degree level, 36 per cent of 2003 computer science graduates were abroad seven years after study and had been abroad for at least three years, compared to 23 per cent of all graduates.
- A relatively high proportion of ICT graduates do not work in ICT occupations. Those that do, earn substantially more than those which do not. This could be due to ICT firms cherry picking the more skilled graduates. It could also reflect a mismatch between the growing demand for degree and higher qualifications, and the traditionally high numbers of ICT graduates at below degree level. There is good evidence that young information technology graduates at certificate and diploma level have poorer employment outcomes than their peers in other fields of study.