Specific advice for the business practices of Crown Entities

Why be a 'good employer'?

There are many reasons why an organisation would want to be a ‘good employer’ and provide equal employment opportunities for all staff. The most important reason is that it is the fair and reasonable thing to do. Other reasons include to:

Attracting and retaining employees

Being a ‘good employer’ and having an EEO programme is a powerful way to increase workplace efficiency, competitiveness and profitability. By supporting EEO strategies that encourage merit-based appointment and people-focused management practices, organisations are more likely to attract and keep the people they need to be successful.

EEO strategies ensure organisations maximise the benefits of a diverse talent pool which will improve business success. A ‘good employer’ encourages employees to develop in ways that respect their abilities and needs as individuals, and values them as a critical strategic asset to the organisation. An inclusive and tolerant workplace motivates employees to perform to the best of their ability. It promotes understanding between people, creating a stronger and more focused organisation, and cohesive teamwork.

Like other OECD countries, New Zealand currently has a skills shortage and at the end of 2006 had the fourth lowest unemployment rate of all OECD countries at 3.7 percent. However, the four target groups referred to in the Crown Entities Act are much more likely to be unemployed or under-employed and will form a growing proportion of the future workforce. For example the Māori unemployment rate at the end of 2006 was 7.9 percent and the Pasifika unemployment rate 6.4 percent whereas the New Zealand Pakeha rate by contrast has remained in the 2.6 to 2.8 percent band.

One in three mothers do not come back to the workforce after having children when their children are young. This is partly because of the lack of flexibility available to them in workplaces.

Below is a summary of factors influencing labour market participation in New Zealand:

The New Zealand workforce participation rate in December 2006 of 67.9 percent is the fifth highest rate recorded by the Household Labour Force Survey (HLFS).

The unemployment rate as measured in the December 2006 quarter was 3.7 percent, up from a record low of 3.6 percent in December 2005. The 2006 figure maintains New Zealand's position of having the fourth lowest unemployment rate in the OECD – the club of economically developed nations – and it indicates a further reduction in the capacity of the labour market to meet employers’ demands.

Substantial differences in unemployment rates persist for different ethnic groups. Māori unemployment rose from 11 percent in 1986 to a peak of 25 percent in 1992 but had fallen to 7.9 percent by December 2006. This is the lowest rate recorded for Māori  unemployment since the Household Labour Force Survey began but still over three times the Pakeha rate. Between 1986 and 1991, the unemployment rate for Pasifika rose from 6.6 percent to 28 percent, the highest rate for any ethnic group. It has declined significantly since the mid-1990s and was 6.4 percent in December 2006. In 1997 the unemployment rate for people with a disability was 7.7percent but by 2001 it had risen to 9.2%.

The annual birth rate for 2006 was 2.05 births per woman. This is below the replacement level of 2.1 births per woman.

Worker shortage
Over the next 25 years, the OECD workforce is expected to grow by only 5 million (in the past 25 years it rose by 120 million).   However, the number of people retiring will rise by 70 million (in the past 25 years it rose by 45 million). This reversal in ratio is likely to produce strong labour demand over the long term.

Demographic projections
In 2001, 76 percent of New Zealand’s potential workforce over 15 years was Pākehā/European. In 20 years time this will fall to 67 percent. This shift is due to the substantial percentage increase in the percentages of Māori, Pasifika, Asian and other overseas workers among those who will be entering the workforce.

The female workforce participation rate is steadily increasing, whereas the male workforce participation rate is steadily declining. In 1971 women’s labour force participation rate was less than half that of men (39 percent compared to 82 percent). Thirty years later in 2006, there were 60. 7 percent of women in the labour force compared to 75.6 percent of men. Since the mid 1990s participation of workers over 60 years of age has increased significantly.

The 'brain drain' is likely to worsen as New Zealand's smart, healthy and skilled workers increasingly become part of the global labour market. In the 2005 briefing papers to its incoming Minister, the Ministry of Social Development notes that 'increased globalisation and an ageing population mean New Zealand's ability to attract and retain skilled people will be a significant issue in coming years'.

ASB Bank chief economist Anthony Byett has noted that 'global trends mean New Zealand's labour market will remain tight and more needs to be done to improve the lot of workers in New Zealand. It makes it very important that we have good working environments for people and that we have got the latest technology in the workplace.'

'We may be close to the limit of our labour utilisation in New Zealand, and the gains to be made are around ensuring that the best matching between skills and jobs is happening, for example highly qualified women are able to work in high skilled jobs rather than low skilled (often) part time jobs. And that skill levels rise generally and they are effectively used.'

Many New Zealanders are currently being under-utilised and would want paid work if workplaces were willing and able to accommodate their needs. This includes part-timers (mainly women) who want longer hours or higher-skilled work; people with disabilities; and parents who are currently out of the workforce and need flexibility. Across the health sector there are massive recruitment and retention problems and at the same time, about 30 percent of nurses with annual practising certificates are not actively nursing. The New Zealand Nurses Organisation spokesperson Rob Haultain says 'We need to look at what would attract these nurses back to nursing and for many who care around the clock having flexible working hours is a key factor.'

Māori, Pasifika and workers who have migrated to New Zealand will increasingly become a larger proportion of the labour force. Employers will need to adequately address the needs of these workers, if they wish to attract them to their workplaces, utilise their skills effectively, increase productivity and retain them. A survey by recruitment agency Hays NZ has shown that due to the skills shortage far more employers now believe retaining staff is more important than recruiting new talent.

Improving productivity and innovation and utilising the talent, creativity and energy of employees

The first strategic overview of EEO across the public to private sectors in New Zealand stated that 'One of the government’s objectives in New Zealand has been to promote the economic conditions whereby the country could return to the top half of the OECD rankings, when judged in terms of per-capita income. To achieve the permanent income gains that would allow for such movements up the OECD rankings, two things must happen. First, more people must enter and remain in the paid labour force.

Second, productivity gains must be achieved within the workplace, so that there is continual growth in the levels of income generated by each worker. Although it may seem counter-intuitive to some members of the businesscommunity, efforts to promote EEO can contribute significantly on both counts'.

'The emerging approach to achieving high performance sees managers as responsible for creating the environment which enables employees to perform through focussing on the needs of employees – and this in turn is what drives improved organisational results.'

Workers who are treated with respect and dignity, and whose differences are accepted and celebrated, are much more likely to be loyal to the organisation. Committed workers are productive workers. People are the driving force for excellence.

People will be drawn to workplaces that treat them as individuals. Without recognition of employees' unique qualities, their contribution is often minimised or lost. Employees from diverse backgrounds are happier and more productive if they are appreciated and included, not assimilated or ‘tolerated’.
Improved innovation and creativity are documented benefits of diversity. Teams that are diverse and inclusive find innovative, feasible and effective ways to overcome challenges. They bring a variety of perspectives to a situation and thus offer a wider range of solutions.

There is a correlation between societies and workplaces that are socially diverse and the degree of creative intellectual and technological endeavours occurring within them. For example, Richard Florida who conducted research in this area, has found that cities with a large ‘creative class’ also happen to have large socially integrated gay communities.

Meeting the needs of diverse customers, clients and members of the public

If employees identify with the customers or clients they service, the employer benefits. Diversity enriches the knowledge base of the workforce, and brings a broader range of personal networks and resources to work. This makes it more likely that staff will understand the needs of clients, and be able to draw on the skills required to provide excellent client-focused services. Also, if employees feel respected and valued, they are much more likely to deliver great service to customers. Providing equal employment opportunities for employees is linked to improved staff satisfaction, and ultimately to better service.

Diversifying business management style

In 2004 the US research organisation Catalyst conducted a survey of 353 Fortune 500 companies. [16a] The research examined the return to shareholders by the gender of the companies’ senior executives.

Catalyst found that companies with the highest representation of women on their senior management teams achieved a 35 percent higher return on investment and a 34 percent higher total return to shareholders than companies with the lowest women’s representation.

The diversification of management is more likely to lead to creative thinking, technological innovation and a greater return on investment, as ‘group-think’ is diluted.

Improving organisational reputation

A ‘good employer’ can brand and position themselves as an Employer of Choice. They can use this terminology in their recruitment, advertising and other promotional material. This is a powerful way to attract talented people in a competitive marketplace. Being a ‘good employer’ allows organisations to differentiate themselves from other organisations and achieve public acknowledgment for providing equal employment opportunities.

The New Zealand State Services Commission 'is focussed on improving the overall performance of the State Services to ensure the system can meet the needs of New Zealanders, whilst serving the government of the day.' They have established a set of Development Goals for the wider State Services, which were launched in March 2005. The goals are 'aspirations for how the State Services will be arranged and perform'. Being an Employer of Choice is the first of these Development Goals. By June 2007 the Commission expects to have a 'comprehensive guide to good employment practice developed with input from State Services employers and unions, in place for use across government agencies'. By June 2010 it expects 'all government agencies to have a strong commitment to developing skills and knowledge across all staff.'

Ensuring legal compliance and reducing risk

The legislation relevant to ‘good employer’ obligations can be found by clicking here.