Regional Skill Leadership Groups (RSLGs) and Workforce Development Councils (WDCs) are tasked with understanding skill needs in their regions and industries, and communicating this back to tertiary education providers to ensure that local education and training provision is shaped to meet those needs. Immigration New Zealand would also benefit from getting a deeper understanding of skill needs, preferably from the RSLGs and WDCs. In fact, this was a recommendation in the Productivity Commission’s recent Immigration - Fit for the future report. But what information does New Zealand have about skill needs in the labour market?

The suite of labour market information available to us means that New Zealand tends to rely on forecasts of occupational employment to estimate skill needs because occupations give us a rough approximation of the skills needed in jobs. We use the Australia and New Zealand Standard Classification of Occupations (ANZSCO) framework which gives us the skill level of an occupation and a description of what the occupation entails.

Some industries also carry out employer surveys which can be useful for the sector of the economy they cover. But sector surveys don’t give us a perspective on skill needs across the economy as a whole. And a perennial issue with forward-looking skills surveys is that some employers struggle to articulate what their skill needs are going to be in the future beyond the next couple of years.

Our suite of skills data simply isn’t sufficient to inform education and immigration policy. We need more detailed information about the particular skill needs of each occupation. The Australian Skills Classification (ASC) gives us this. And while it has its limitations, it is a vast improvement on what we currently have and will only get better.

The ASC includes skills profiles for ANZSCO occupations, comprising: core competencies, specialist tasks, and technology tools. It is based on the O*Net system in the US and has been adapted to the Australian labour market.

There are ten core competencies. Occupations are assessed as requiring basic, intermediate or high proficiency for each competency. Each competency is also scored between 1 and 10 - with 10 being the highest proficiency.

There are over 2,000 specialist tasks which describe day-to-day work within an occupation. Specialist tasks are grouped into 284 specialist clusters which in turn are grouped into 29 specialist families. Each occupation includes a list of the specialist tasks it requires as well as the percentage of time spent on each task.

There are also 74 technology tools which describe the software, hardware and equipment types (not specific products) used within occupations. Each occupation has a list of the technology tools it requires.

Specialist tasks and technology tools can also be flagged as ‘emerging’ or ‘trending’. Trending skills are skills that have grown in demand over the past five years. Emerging skills are trending skills that are also new to an occupation.1 Table 1 shows you an example of what the ASC contains using mechanical engineers as an example.

Chart 1 shows a breakdown of skill needs in New Zealand based on the 29 specialist families in the ASC. For example, just over 70% of jobs involve business operations and financial tasks. This family includes tasks such as analysing business or financial data, collecting fares from customers, and directing administrative or support services. Other specialist families in broad demand include communication and collaboration, human resources, and records, documentation, reports and research. These are the types of tasks that you would expect to find in jobs across a broad range of sectors and occupations.

At the other end of the scale you can see specialist families that are very specialist or in limited demand. Just 1% of jobs require fashion, grooming or cosmetics tasks, 2% require art and entertainment tasks, and 3% archiving, recording and translating. I expected more than 2% of jobs to require art and entertainment skills. But when I checked, this did cover all the arts and media professional occupations in ANZSCO.

Tasks can be transferable across occupations and sectors. The ASC can give us insights into this, albeit cautiously as tasks applied in different work contexts are not necessarily immediately transferable.

Table 2 provides an example. There are a number of specialist tasks common to the ICT business development manager and sales assistant occupations. But could someone with sales assistance experience easily transition into an ICT business development role? The ANZSCO codes tell us that the ICT role is higher skilled, and the ASC tells us that our sales assistant would need to learn a number of additional tasks such as studying product information, developing content for sales presentation, and discussing technical features of goods with technical staff.

Our ambitious sales assistant might also be expected to perform certain tasks more frequently than they are used to. For example, a typical sales assistant spends 3% of their time explaining technical product information to customers. An ICT business development manager spends 9% of their time doing this.

Like any data framework, the ASC has its limitations.

The ASC does not yet cover all ANZSCO occupations but will do in future.

• Of the 993 ANZSCO 6-digit occupations (the most detailed level of the ANZSCO hierarchy), the ASC currently has specialist task information for 606 (61%) of them.

The ASC also has specialist task information at the 4-digit ANZSCO level.

• Of the 358 4-digit occupation groups in ANZSCO, the ASC currently has specialist task information for 258 (72%).

The 6-digit and 4-digit specialist task information overlap. So, there are some areas of ANZSCO where the ASC has specialist task information at the 4-digit level but no information at the 6-digit level. There are also instances where the ASC has specialist task information at the 4-digit level as well as for some or all of the 6-digit occupations that lie within the 4-digit group. Table 3 offers some examples.

We can combine the skills information at both 4-digit and 6-digit levels. If a 6-digit occupation has no specialist task information, but its ‘parent’ 4-digit occupation does, we could apply the 4-digit skills information to the 6-digit occupation. We could do this for 246 6-digit occupations.

• This leaves 141 6-digit occupations that have no specialist task information.

But many of these occupations have relatively few people employed in them.

• So, on an employment basis, the ASC provides specialist task information for 95% of people employed in New Zealand.

How accurate is it to apply 4-digit specialist tasks information to 6-digit occupations? In those cases where there is specialist task information for both a 6-digit occupations and their 4-digit parent, we compared the specialist tasks information. There was a match 53% of the time.

The alternative would be to use 6-digit specialist task information where it is available, and 4-digit where it is not. However this would sometimes be problematic. Our Sector Profiles interactive dashboard, for example, requires sectors to be defined using 6-digit ANZSCO occupations. So a framework that combines 6-digit and 4-digit occupations may not map seamlessly to some of our sectors.

The coverage of information about core competencies is more limited. Of the 993 6-digit ANZSCO occupations, 536 (54%) have core competency information in the ASC. These occupations made up 65% of employment in New Zealand in 2021. Occupations not covered include accountants, receptionists, human resource professionals and child carers, in which large numbers of people are employed.

The coverage of information about technology tools is more limited still, covering 46% of 6-digit ANZSCO occupations which made up 56% of employment in New Zealand in 2021. Occupations not covered include a number of trade and labourer occupations for which the use of technology tools are arguably not central to the role. But coverage also excludes occupations such as accountants and advertising, public relations and sales managers for which the use of technology tools are central.

Over time, this coverage issue will be less of a concern. The ASC is currently in its build phase with additional 6-digit and 4 digit skills information being added all the time and new releases planned every 6 months. Ultimately, the plan is to have coverage across all 6-digit and 4-digit occupations.

Is the skills information in the ASC accurate? Occupations and skills are difficult to quantify at the best of times. Jobs requiring similar skill sets can have quite different titles. When occupation data is collected, such as through the New Zealand Census, Stats NZ has a challenging time classifying what people say is their job title on their Census form to one of the 993 ANZSCO occupations.

When you add skills information into the mix, things get even harder. There’s a point at which you have to say no two jobs are the same. Different businesses in different industries create different contexts which in turn create different skill needs. Even within a single business, jobs are shaped by the person in that role. So, when we group together jobs that are relatively similar and classify them into a single occupation compromises need to be made in terms of classifying their common skill needs.

The Australian Skills Commission is putting considerable resources into building and reviewing the ASC, and ensuring it adequately reflects skill needs in the labour market using feedback mainly from industry and occupation associations. The conclusion I keep coming back to is that the ASC is a significant improvement on what we currently have in New Zealand.

Are the skills required in the Australian labour market similar to those required in New Zealand? New Zealand is probably more similar to Australia than any other country but there will be differences. Australia has higher labour productivity than New Zealand so they must be utilising their labour differently and therefore using different skills.

This is not a deal breaker. The ASC gives us a framework to work within. A Workforce Development Council, for example, could consult its stakeholders on the skill needs relating to the occupations within its coverage and adapt the ASC as necessary.

The degree of accuracy required depends on what the skills information is going to be used for. I wouldn’t expect a qualification to be reviewed purely on the basis of data from the ASC. Or immigration settings for that matter. My view is that as long as the ASC is capturing the top most frequently used skills in the jobs grouped under an occupation, that is a big improvement on what we have currently.

The ASC gives us a contemporary picture of skill needs. It is tempting to apply the ASC to historical employment data and employment forecasts to see how skill needs have changed over time and how they are likely to change in future. This would be a very useful, albeit partial, picture of changing skill needs over time. It would tell us how skill needs have changed because of the changing occupational makeup of the workforce. It wouldn’t tell us about changes in skill needs resulting from changes in the tasks and tools involved in occupations. Technology related skills in particular are likely to change over time.

The Australian Skills Commission wants the ASC to be a dynamic dataset that is responsive to changes to occupations in the Australian labour market.2 So far, there have been three releases each containing additional information and reviews to existing information. The ASC will continue to be reviewed regularly and once the build phase is complete, more focus will be put on capturing changing skill needs. We could apply versions of the ASC to the years they were released. This would capture some of those changing tasks within occupations depending on which occupations have been reviewed.

Taking on board the potential uses and limitations of the ASC, are you interested in working with Infometrics to apply it to a sector or region? We are keen to see how well the ASC works on the ground. So, please get in touch.

1 Source: National Skills Commission, Australian Skills Classification Release 2.0 – March 2022

2 Source: National Skills Commission, Australian Skills Classification Release 2.0 – March 2022