7.5. Building workforce capacity and capabilities

Te whakapiki ake i te kahapupuri o te ohu mahi me te kaha

We need the right people, at the right time, with the right skills to meet our infrastructure possibilities

Delivering, operating and maintaining our infrastructure takes the combined energy and effort of hundreds of thousands of New Zealanders. These people ensure our infrastructure investments are the right ones, built as designed, operated to a high standard, safe for use and able to be returned to service quickly after disruption.

The infrastructure sector gives New Zealanders opportunities for employment, incomes and career progression and the ability to make meaningful contributions to our country’s future. However, it’s also a sector that’s constantly changing and as it does this, so do its workforce needs. Achieving New Zealand’s infrastructure ambitions requires people who are highly capable and technologically savvy. The sector needs to be internationally competitive and have the capacity to ramp up when needed. Getting it right requires coordination. We need to invest in our people to ensure we have the workforce to meet the infrastructure challenges and opportunities ahead.

7.5.1. Context

New Zealand is experiencing historic workforce shortages.

New Zealand has approximately $64 billion worth of infrastructure projects planned and in its pipeline of upcoming work.⁴³⁹ Most of these projects are planned for the next three to five years. Over the next 30 years the pipeline is anticipated to grow by as much as $140 billion.⁴⁴⁰ There’s also significant demand for residential and other types of construction that adds to our capacity challenges.⁴⁴¹

The share of construction firms reporting labour shortages is now at its highest-ever level (see Figure 35). This has been made worse by on-going international competition for talent. Australia also has a severe labour shortage and with weekly wages that are, on average, NZD$500 higher than ours, many New Zealanders are crossing the Tasman for work.⁴⁴²

These labour shortages are likely to continue for years to come. Forecasts show that New Zealand will have a shortfall of approximately 118,500 construction workers in 2024.⁴⁴³ Skill shortages are particularly noticeable in regions like Auckland, where they’re holding up work on important projects.^444,445

We also know that as well as construction, there are shortages in infrastructure planning, delivery and maintenance that are impairing our ability to provide the infrastructure we need. At the planning and investigation stage, we’re seeing a failure to include completed business cases for a large proportion of major projects.⁴⁴⁶ At the asset management stage, we see considerable variation in asset management capabilities.⁴⁴⁷ More work is needed to identify the key components of workforce shortages and what’s needed to develop the right talent to deliver New Zealand’s future infrastructure.

Net number of construction firms reporting difficulty finding labour

Figure 35: Construction labour shortages are at their highest since 1975

We need more skilled people to build and operate the infrastructure we’re planning.

While there are many skilled, capable people working in the infrastructure sector, we don’t have enough of them, and in some areas we may entirely lack the skills that will be needed in the future. These include skills in client and project leadership and management, engineering, technical professions, construction management and trades and labour.

Our workforce challenges hold us back from improving the productivity of our construction sector and limits our ability to build infrastructure at a reasonable cost. Since 2000, the number of people working in heavy and civil construction has more than doubled, but construction labour productivity has lagged behind the overall economy and even declined in both 2019 and 2020 (see Figure 36).

Labour productivity is growing more slowly in construction

Figure 36: Labour productivity, construction sector vs whole economy since 2000

Health, safety and wellbeing are key to addressing our need for a well-trained, highly engaged workforce.

Providing workplaces that promote health, safety and wellbeing is core to addressing our need for a well-trained, highly engaged workforce.

Between 2011 and 2020, the construction industry reported 76 work-related fatalities. This made construction the sixth most dangerous industry for workers.⁴⁴⁸

Health and safety is more than just avoiding serious injuries and fatalities. It’s about having healthy workplaces that support wellbeing and employee satisfaction. Non-fatal injuries in construction have risen substantially since 2016.⁴⁴⁹ Suicide rates in the construction sector are also extremely high. Between 2007 and 2017, 300 construction workers died from suicide, the most from any single industry.⁴⁵⁰ A failure to protect the health and wellbeing of infrastructure workers is a threat to our ability to develop and retain skilled people in the sector.

There’s also an opportunity for technological innovation to improve health and safety, workplace satisfaction and productivity. Innovation in the workplace can take a range of forms, including improvements in existing tools such as ergonomics, the use of new tools such as lifting equipment to make tasks safer and the automation of hazardous tasks.

Good leadership prioritises health and safety and proactively seeks to improve performance. This includes supporting health and safety and mental health programmes, promoting and adopting ‘safety in design’ principles and creating appropriate health and safety certifications and prequalification standards to better address known challenges.⁴⁵¹

Poor diversity in the infrastructure sector limits its ability to draw on the talents of all New Zealanders.

Our historic workforce shortages have been made worse by the fact that the infrastructure sector isn’t equally drawing on the talents of all New Zealanders, especially in managerial, professional and higher-skilled roles. The number of women working in the infrastructure sector is low. For example, women make up approximately 13% of all those employed in construction. Just 2.5% of construction tradespeople and apprentices are women.⁴⁵² Women are also under-represented in engineering and while women represent 18% of people completing engineering qualifications, they only represent 8% of chartered professional engineers and 8% of engineers on senior management teams.⁴⁵³ There’s poor retention of women in the engineering industry, with over a quarter of women leaving the profession in the first five years after study. Women face hurdles with employer perceptions, as well as physical and site-specific issues that act as barriers to their entry into the sector.

While many Māori and Pacific peoples work in the infrastructure sector, they’re overrepresented in the lowest-earning occupations, such as low-skilled and unskilled contract labour and self-employed trades, working as subcontractors to larger construction firms. Just over 1% of all chartered professional engineers and an estimated 4% of registered architects identify as Māori and/or Pacific peoples.⁴⁵⁴ The number of Māori and Pacific peoples in the managerial, professional and higher-skilled occupations in the infrastructure industry needs to continue to grow.⁴⁵⁵

7.5.2. What we’ve heard

We’ve heard that there’s a need to address current and future skill shortages, ensure that construction work is safe and make sure our future workforce has the necessary skills.

Submitters on our consultation document told us that the infrastructure sector needed to do better at diversity and inclusion by increasing the participation of women and improving the participation of Māori, and Pacific peoples at professional and decision-making levels.

Some submitters also pointed out that preparing for climate change would require our future workforce to have new skills, of which many will be in high demand internationally.

Many felt that building workforce capabilities in procurement, asset management and project management was necessary. There was support for the establishment of a Major Projects Leadership Academy in New Zealand, particularly if it is underpinned by a broader capability and development framework.

7.5.3. Strategic direction

Building capabilities to improve infrastructure delivery

New Zealand needs people with the skills to plan, build, operate and maintain the infrastructure we need.

We need to lift the capacity and skills of our people and organisations across all stages of infrastructure planning and delivery, including:⁴⁵⁶

• Planning and asset management: Roles such as client leadership, business case development, planning, procurement, asset management and project management.
• Engineering and technical: This includes civil and structural, mechanical, and electrical engineers, data analysts, architects and designers. It also spans specialist areas such as building information modelling.
• Construction management: Roles such as site supervisors, site engineering staff and construction managers.
• Skilled trades and labour: On-site roles such as electricians, welders, carpenters, scaffolders, steel fixers, fitters, tunnellers, plant operatives and labourers.

The skills and abilities of our contractors are increasingly important as our projects become larger and more complex.⁴⁵⁷ It’s important to retain and grow design and construction firms that can successfully deliver infrastructure projects of all sizes.

New Zealand needs to build its attractiveness for international firms and products. One way of doing this is to develop a trans-Tasman procurement market by taking a consistent approach to qualifications, product and building standards and contracting and procurement processes.

Technology can also be used to lift productivity. It may involve using robots and automation to undertake repetitive and dangerous work or using digital information and analytics to augment work undertaken by skilled employees. Higher productivity means that our workforce can deliver more and better infrastructure.⁴⁵⁸

We need to adapt our workforce to an evolving infrastructure sector.

New Zealand’s infrastructure faces a historic period of deep and intergenerational change and this means that our infrastructure must adapt to meet our changing needs and aspirations.

Key strategic shifts that will influence workforce capacity and capabilities include:

• A move to a low-emissions and circular economy: This will change the roles and skills needed to support our infrastructure (See Sections 6.1 and 6.5).
• A drive for better decision-making: The sector will need to build more capacity and capabilities in cost-benefit analysis, project management, and procurement (See Section 7.1).
• An increased use of data: The sector will need to expand its ability to collect, maintain and analyse data in coordinated formats (See Section 7.4).
• Accelerating technology use: Our workforce will need to increase its technological capabilities to unlock the productivity and infrastructure-delivery benefits of technological advancements (See Section 7.4).

While these strategic shifts may present capacity and capability challenges, they also present an opportunity to improve the diversity of the infrastructure sector. The infrastructure industry will increasingly require a broader range of skills. This provides an opportunity to recruit talent from a wider range of educational backgrounds (beyond traditional pathways such as engineering degrees) and is likely to increase gender and ethnic diversity.⁴⁵⁹

More investment is needed in standardised training and education to increase workforce skills and improve productivity.

Investment in workforce training and education must focus on the areas we’ll need in the future, including the skills required to deliver major projects in the infrastructure pipeline. The government, industry and the education sector will need to work together to provide education that’s fit for the future needs of employers and delivers the skills learners need to thrive. This will improve workplace productivity, raise skills and improve planning for the number of workers we’re going to need in the long-term.

An existing example of coordinated leadership and collaboration can be seen in the Construction Sector Accord, which brings together industry and government to improve the construction sector. The Construction Sector Accord has developed a Transformation Plan that includes the development of a construction skills strategy.⁴⁶⁰ The Transformation Plan provides a template for other important long-term workforce challenges, such as the response to climate change. Industry and the government must come together to respond to these challenges and review both the training currently on offer and the need to bring more people into the industry from either within New Zealand or overseas. The current government reform of vocational education provides an opportunity to do this.

Common procurement, delivery and asset management frameworks will lift performance and help build our competitiveness for talent.

Central government is the largest single procurer of infrastructure.⁴⁶¹ However, while a range of government agencies have roles in procuring, delivering and managing infrastructure, there are no common capability and development frameworks across these agencies. As infrastructure projects get larger and more complex, it will be increasingly important for government agencies to improve workforce capabilities and leadership.

The government should establish common capability and development frameworks for agencies that procure and project manage infrastructure projects, as well as the operation of infrastructure. These frameworks should:

• Support the development of capabilities that can be shared across the infrastructure sector.
• Encourage government agencies to be more transparent about the skills they require and make it easier for people to move to the areas in the public sector where their skills are needed.
• Help establish infrastructure procurement, management and project management as career pathways in the public sector.
• Develop capabilities and capacity across the infrastructure system for effective partnership with Māori.
• Accelerate the adoption of open data and common standards for the infrastructure sector.
• Build a trans-Tasman procurement market by ensuring a consistent approach to contract and procurement processes.

Well-regarded overseas frameworks can set the benchmark for how we create a more consistent approach in New Zealand. These include the United Kingdom’s Civil Service Project Delivery Capability Framework ⁴⁶² and the Institute of Public Works Engineering Australasia’s Asset Management Pathway.⁴⁶³ Complex infrastructure projects require strong project leadership skills. The establishment of a Major Projects Leadership Academy would grow the skills of our infrastructure project leaders by raising their planning, delivery and leadership capabilities (see Case Study 18). This should be underpinned by a competencies framework that practitioners would be required to complete before attending the Major Projects Leadership Academy.

Giving industry the certainty to invest in its people and equipment

A credible infrastructure pipeline is an essential workforce planning tool.

The infrastructure sector will face ongoing workforce pressures in the coming decades. An infrastructure pipeline, a tool that shows all upcoming planned work in the sector, will help the sector to face these challenges. It will provide certainty and:

• Enable more coordinated planning of investment in New Zealand.
• Offer a single, trusted source of information for the infrastructure sector on medium-term investments.
• Enable the construction industry to plan its resource needs accurately, so it can invest in training its people and acquiring equipment and technology

There are underlying challenges to achieving a credible and transparent infrastructure pipeline. These include a lack of wider integrated planning, fragmented and relatively short-term funding arrangements, and on-going change within government agencies. Many of the recommendations in this strategy, such as achieving longer-term funding commitments, can reduce this uncertainty.

At present, there are several construction investment pipelines in New Zealand covering different sectors and taking different approaches to the detail they include.^468,469 The Infrastructure Pipeline managed by Te Waihanga currently focuses on committed and/or funded projects from major infrastructure providers, but doesn’t yet include investment that has been signalled but not confirmed, as this is more difficult to forecast.⁴⁷⁰ There’s a need to build on and improve the Infrastructure Pipeline to provide a more credible and transparent infrastructure pipeline tool that the consultancy and construction sectors can use for workforce planning.

A priority list of planned infrastructure investment will give industry certainty.

The Infrastructure Pipeline can provide a medium-term view of planned investment, but there’s also a need to give industry and others more certainty about solutions to long-term challenges, such as addressing climate change, improving our cities, connecting all regions of New Zealand and providing infrastructure that works for our growing and changing population. Solutions may be under development or may be signalled as intentions but not yet funded. This can make it difficult for firms to invest in the people and skills required to meet these needs. An infrastructure priority list can improve how we identify and respond to long-term challenges. It’s discussed in further detail in Section 7.1.

The pipeline and priority list will help identify future workforce needs that can be addressed through trade and tertiary training, immigration policy and technology adoption.⁴⁷¹

Smoothing out boom and bust construction cycles can help us keep our skilled workers.

A credible infrastructure pipeline and priority list can help smooth out boom and bust cycles in the construction sector. These cycles make it hard for construction firms to grow and retain their staff, improve skills and invest in productivity-improving technology. We know that countries experiencing year-to-year swings in public investment tend to be less efficient than others and that New Zealand’s swings are more volatile than Australia and many other high-income countries.^472,473 Showing the industry which projects are planned well in advance and procuring them in a predictable fashion can help to smooth out boom and bust cycles.

Major infrastructure investment has a relatively limited role to play in addressing economic downturns. This is because of the long timeframes needed to plan, procure and build major infrastructure projects. By the time construction begins, an economic downturn might be over.⁴⁷⁴ Other macroeconomic policies, including the consistent application of monetary policy, automatic stabilisers and prudent counter-cyclical fiscal policy, are typically more effective in economic downturns. However, infrastructure maintenance can be a good way to stimulate the economy as it can be procured and delivered relatively quickly.⁴⁷⁵

Improving diversity in the infrastructure sector

Our infrastructure sector needs to offer attractive careers for all New Zealanders.

New Zealand’s infrastructure workforce faces diversity and inclusion challenges. For example, Case Study 19 highlights some of the barriers women experience when seeking to work in the construction sector.

A training and career development pipeline is needed to help bring groups that are currently underrepresented into the construction sector.

This will grow our construction workforce and offer many other benefits. Greater diversity has been demonstrated to improve staff recruitment and retention, innovation and group performance, reputation and responsibility and financial performance.⁴⁷⁸

The government and industry have been working to improve the participation, retention and career advancement of women, Māori and Pacific peoples within the infrastructure sector.^{479,480,481,482} This work has focused on changing employer perceptions, increasing awareness of jobs through open days, establishing cadetships (see Case Study 20), broadening public sector procurement rules, using ambassadors, building support networks and having events to celebrate success. However, more work needs to be done.

An inclusive workplace environment will improve diversity and increase workforce capacity.

If the infrastructure sector is to have a more diverse workforce, it needs to attract people with diverse backgrounds and create an environment that’s inclusive and encourages all those with talent to progress to senior and leadership roles. For example, one study found that around three quarters of female engineers in New Zealand thought there would be a time in their career when they’d have to choose between family and career.⁴⁸³ The provision of work arrangements, such as flexible working hours and part-time work options, was identified by study participants as a way to increase participation of women in the engineering profession.

There’s more work to be done to create an infrastructure sector that’s welcoming to all. Working to build an inclusive workplace environment will not only improve diversity, but also lift workforce capacity by increasing the total number of people in the sector.

Progress towards greater workforce diversity and inclusion needs to be monitored.

The Construction Sector Transformation Plan should set targets for the participation, retention, and career advancement of women, Māori and Pacific peoples. The progress made on these targets should be published annually and reviewed regularly.

7.5.4. Recommendations