Investing in technology to overcome labour shortages

Business owners are facing a labour force squeeze. The employment rate is high, wages are increasing and there are simply not enough skilled individuals to take on critical roles.

Labour restraints like this can stymie growth and stoke inflation, with the New Zealand Institute of Economic Research (Inc)’s Quarterly Survey reporting that labour shortage is considered the country’s “biggest constraint to economic growth”.¹

Businesses need to offer more if they want to find and retain talent. But even those that do manage to find, hire and retain great employees are left with a shortfall – there are simply too many jobs and not enough people to fill them. While immigration is being touted as one solution, it’s not the full answer to the skills shortage.

This problem isn’t a new one.

In the 19th century, some areas in France struggled with labour shortages in the wake of the deadly cholera outbreak. The agricultural sector adopted technology like ploughs, and it innovated irrigation and other techniques to replace the low-skilled workers that were missing.²

Adopting technology to overcome labour shortages

New Zealand’s number-8-wire, “she’ll be right”, low-wage culture may have been holding growth back.

In the past, because wages have been low, business problems have often been easily solved by simply hiring more talent. This means we’ve invested less in technology and innovation than other OECD countries.

New Zealand is 11th out of 34 countries for average hours worked, but productivity is below the OECD average. To compete with the world-leading Irish on productivity, we’d have to work a whopping 10.7 hours a day longer to produce the same amount (yes, really. That's an impossible 53.4 hours per week). To match the OECD average, we'd need to work 20% more hours.³

What sets world-leading countries like Ireland apart is working smarter, not harder. Investing in technology and investing more in the talent we do have is the way forward.

Technology like a cloud-based ERP solution is a great way to do this. It reduces the time required for repetitive, time-consuming tasks, whilst simultaneously providing valuable new insights through reporting and analysis tools.

An ERP system that incorporates Inventory management software helps businesses identify how much stock they need to order and when, and ensures that critical pricing changes are always up to date. The software identifies trends and patterns and seamlessly feeds this information into accounting software, so business and operations managers can get one source of truth on how the business is doing – in real-time.

The powerful thing about cloud-based technology like Qontro’s ERP system is that it’s scalable, enabling long-term efficiency and growth.

Just like the plough wasn’t new technology in 19th-Century France, cloud-based ERP systems aren’t new technology. This is tried and tested software that’s already having a powerful effect on the productivity of businesses around the world.

Rising inflation, the scarcity of talent, rising wage costs and global supply chain issues are presenting a bouquet of challenges for businesses today. But this presents an opportunity too, to invest in cloud-based technology and to truly innovate business processes to boost long-term productivity and resilience.

References
1. QSBO shows businesses are feeling less downbeat, New Zealand Institute of Economic Research (Inc) Media release, October 2022, (accessed November 2022): https://www.nzier.org.nz/news/qsbo-shows-businesses-are-feeling-less-downbeat
2. Labor Scarcity, Technology Adoption and Innovation: Evidence from the Cholera Pandemics in 19th Century France, Raphaël Franck, CESifo, Munich, 2022 (accessed November 2022): https://www.cesifo.org/en/publications/2022/working-paper/labor-scarcity-technology-adoption-and-innovation-evidence-cholera
3. It's no laughing matter; poor productivity affects all New Zealanders, Kevin Norquay, Stuff, August 2022 (accessed November 2022): https://www.stuff.co.nz/business/300665457/its-no-laughing-matter-poor-productivity-affects-all-new-zealanders