The great skills shortage conspiracy

IT professionals would hate to think they could be so easily manipulated. Have skill shortages been used as a ploy to depress wages? Surely not.

IT professionals would hate to think they could be so easily manipulated. Have skill shortages been used as a ploy to depress wages? Surely not.

The Australian Financial Review has suggested just that. While much of the Australian economy is prospering, its ICT sector is suffering mass layoffs, skilled jobless and stagnant or falling wages.

The federal government has now removed the priority processing of IT workers to reduce the number of new entrants and the Australian Computer Society, which manages the priority skills list for its government's immigration programme, is on the verge of halving the number of needed skills on the list from 26 to 14, the AFR reports. Consequently, claims that the country needed tens of thousands of IT workers to avoid Australia becoming an economic backwater have come under close scrutiny.

Here's how the argument goes: the perceived skills shortage pushed wages up. To counter this, big business talked up the shortages to force government to open the floodgates to immigration, which then pushed wages back down.

The Association of Professional Engineers, Scientists and Managers chief executive John Vines is quoted as saying that the shortages were always overstated and there is "probably some truth" in the "conspiracy theory". Australian Computer Society chief Richard Hogg also confirmed that immigration was used in Australia to drive salaries down.

Could or did the same thing happen here?

In the manner of "Big Tobacco" or "Big Oil" -- groups of shady corporates acting together in their own interest -- picture New Zealand's "Big IT". HP boss Russell Hewitt (a member of the Business Roundtable) meeting up with Microsoft's Ross Peat, IBM's Nick Lambert and others -- naturally in smoke-filled rooms regardless of nicotine habits -- to manipulate the economy.

Ingenious as it all sounds, perhaps I have seen too many episodes of The X-Files. New Zealand Computer Society president Mike Harte says his own employer, Dunedin City Council, has trouble filling some jobs, like systems analysts, but not others. There is no flood of immigrants pushing wages down, he says, as entry here is not easy. Some sectors, meanwhile, like consultancy, still have fast-growing wages, he says.

Harte does believe New Zealand needs to produce more IT graduates, particularly if claims are true that multinational IT firms have avoided investing in New Zealand for fear that they could not find sufficient numbers of graduates to work for them. "We produce lot of accountants and lawyers but not enough with ICT qualifications," Harte says.

The Employers & Manufacturers Association, however, thinks there has been "hype" over skills shortages. Advisory services manager Peter Tritt blames the media. Some IT workers, he says, did enjoy rapidly increasing wages, while many did not. But now after "hype around dot-com" there is definitely no shortage now, so the IT sector should no longer get priority in immigration. Instead, the country is short of tradespeople, Tritt says.

IT Association executive director Jim O'Neill says New Zealand has a very flexible, cyclical, market-driven economy. In the late 1990s, demand far exceeded supply for IT staff as firms prepared for Y2K (was that a conspiracy, I wonder?) so individuals could charge a premium for their services. But the past 18 months has seen a slump, with the help of the dot-com slump and September 11, says recruiters, and supply now exceeds demand.

O'Neill says the government has played a role in promoting the need for a knowledge economy through innovation summits and strategies, and the tertiary sector now churns out "six to eight times" the number of IT graduates than it used to. But he says immigration does not provide instant cheap labour. The New Zealand Immigration Service has told him that the High Commission in New Delhi last month received 1500 residency applications in one day, but unless they receive extra resources to cope with the backlog, applications will take two years or more to process.

Itanz, O'Neill says, is receiving more and more requests for "letters of support" from Kiwi firms wanting to employ overseas staff and gain them priority in the visa application process, but these are mostly for people from South Africa, Zimbabwe and Britain rather than India. The jobs are hardly cut-price ones either, he says, most paying between $45,000 and $70,000.

New Zealand, says O'Neill, still has some priority areas where skills are still in short supply, such as in e-commerce, the web and Java, particularly for high-flying systems developers, project directors, CIOs and systems architects. But people such as database and mainframe workers have been taken off ITANZ's own "priority list".

Looking back, yes, New Zealand employers and recruiters squealed big time about skills shortages. And yes, the government did belatedly ease immigration requirements for IT and other workers. But a corporate conspiracy? Perhaps not. O'Neill says it's difficult enough getting two of his members to agree on anything, never mind work in collusion with government.

Greenwood is Computerworld's human resources reporter. Send letters for publication to Computerworld Letters.