Use scholarships and bonding to curb ICT skills shortages

As a sluggish New Zealand economy looks set to be hit by drought, the tech sector continues to provide a fertile environment.

Various reports note that ICT job vacancies in January up 25 percent on previous months, graduates are in the driving seat, and they and others can look forward to a variety of job offers and pay rises all round.

Yet we hear the constant cries of skills shortages, an issue of major controversy over the Tasman.

Like in Australia, New Zealand firms are helping fill the skills gap with immigrant workers.

New Zealand has been spared the outrage over 457 visa abuse, as highlighted by comments from Australian Prime Minister Julia Gillard.

The matter of skill shortages is important, especially as it seems to be a perennial problem, one that never seems to go away.

Just how can countries tackle them?

Last year, when Wellington's Weta Digital needed to bring in several hundred foreigners to help with the technical bits of movie making, New Zealand's opposition Labour Party rightfully raised the issue.

I noted that many employers in New Zealand seemed to be "too picky" in choosing staff and were too keen to see immigrants as a stop-gap, though I did report one case of a skilled immigrant who was unwanted by all. He eventually returned home to Kazakhstan.

We still see skill shortages in ICT, and we still see firms using immigrants as a ready source of labour, with some employers saying that if they cannot get them, they will have to outsource work to overseas.

It seems a no-win situation for the country, especially as it faces unemployment of 7 percent or more, and a major mismatch between the skills people have and the skills employers want.

Certainly this mismatch is something that must be addressed, and that includes action from both the ICT sector and indeed, the government, especially as the latter is a major player in the education and employment of ICT workers.

The ICT sector in New Zealand is making laudable efforts in making ICT appear attractive to schoolkids and helping schools change their curricula to something more relevant to the needs of today.

The government here, in the form of Tertiary Education Minister Steven Joyce, has also said that he would refuse calls from institutions seeking to reduce ICT student numbers in the face of declining student demand.

The former Labour government under Helen Clark introduced a subsidy to make student loans interest free, a policy a pragmatic National-led government has been forced to continue with ever since.

With the cost of this policy running into the billions of dollars, this has become a major burden to the New Zealand government and taxpayer.

And when times are tough and funds are tight, shouldn't the government paying the piper do more to call the tune?

Under a more free-market system, if people wanted to indulge in degrees and an education that offered little employability, if that cost fell solely on the participants themselves, then so be it.

But if government and the country finds itself forking out for useless degrees or skills, something that both can ill afford, then they must ensure they get a return on their investment.

Countries cannot afford to have significant portions of their population sitting idle, especially when employers are choosing to bring in immigrants instead of recruiting locally, something which also carries a cost to an economy, despite their skills; for instance, Auckland faces immigration pressures on housing.

Instead, to prevent this happening, governments must directly intervene. There should be no "halfway houses", like what we see in New Zealand at present.

I am not arguing that government should control what is taught at the tertiary institutions or controlling student numbers; there does need to be some market/student-led flexibility.

But rather than offer interest-free student loans to all, it should instead ensure that student loans are at market rates, using such savings to offer scholarships in consultation with the ICT sector to help ensure that the areas of greatest need get the most help at the least cost to the country and taxpayer.

This could be coupled with "bonding" to help prevent these graduates taking their skills overseas, something which already happens in our health sector.

This, I am sure, is not only a worthy policy for New Zealand to follow, but perhaps for Australia, too.