A rapidly growing tech sector

The tech sector is a rapidly growing segment of the New Zealand economy and accounts for approximately 8% of the country’s GDP and 9% of the exports. The top 200 tech exporters sold NZ$7.3 billion internationally in 2016, an increase of 8.5%. In the past year, the revenues of these fast growing, top 200 tech exporters, exceeded NZ$10 billion, a growth of 7.9% from the previous year.

Consisting of ICT and high tech manufacturing firms, the tech sector’s 21,411 organisations employed 120,350 people in 2016. This is less than the 28,749 firms counted in 2015. However, according to the 2017 Information and Communications Technology Report, an analysis of ICT firms by the Ministry of Business, Innovation and Employment (MBIE), 76% of firms in the sector have no employees and are likely to be contractors. Therefore, it is assumed the reduction in the numbers of firms, are contractors now in permanent employment within the sector, accounting for about 7,300 of the growth in employment numbers in 2016.

Based on this calculation, we estimate that approximately 14,000 new tech sector jobs were created in 2016. While some of these new jobs will have been managerial or sales roles, many would have required advanced digital skills such as programmers and engineers.

Increasing digitalisation across all sectors

It is not just the tech sector that requires staff with digital skills. With increasing digitisation occurring in all sectors, even traditional businesses need staff with advanced digital skills. While all sectors are showing an increase in the number of IT roles, most of the growth outside the tech sector is from professional services, media, finance, construction and public administration sectors.

Jobs in IT services related occupations in all sectors grew to 72,208 of which the majority (35%) are software and applications programmers.

Strong demand resulting in high pay

Digital and ICT roles are some of the highest paid jobs in New Zealand. While the median annual income from wages and salaries across all jobs in New Zealand was $49,868 in 20177, the national median base salary for ICT employees was $82,000. In addition to higher pay rates, tech employees also receive excellent benefits with 41% having flexible working hours, 27% a phone allowance, 25% paid training, 23% healthcare and 22 % are eligible for bonuses.

In 2016, the New Zealand Institute of Economic Research (NZIER) examined data on qualifications and earnings of employees throughout the economy. They also found that employees in the tech sector have higher qualifications, on average, than other industries and that the ICT sector in particular has a very high proportion of tertiary qualified employees. This research found that ICT employees are paid well above the national average regardless of their qualification levels.

Global demand growing

Claims of a digital skills shortage are not unique to New Zealand. Almost every developed nation has identified that the growing demand for people with digital skills is outpacing the ability for the traditional education systems to develop them.

In 2016, the UK Government estimated that the digital skills gap was costing their economy an estimated £63 billion a year in lost GDP. An additional 745,000 workers with digital skills would be required by the end of 2017.

Even though the European Union (EU) has made tackling a shortage of ICT workers a political priority in the past, the latest 2017 forecast indicates that they expect to be short of 500,000 IT specialists by 2020 and will need a further 50,000 new high tech leaders each year until 2025.

By some estimates, there are currently over 500,000 computer software developer job openings in the United States (US) today, and there will be over 20 million jobs in software and technology related jobs in the next 20 years.

The digital economy has added 40,000 jobs to the Australian economy in the last two years and will be worth $139 billion a year by 2020, but its growth is being impeded by a worsening skills shortage according to a recent study.

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