Griffin on Tech: Bright spots amidst the gloom of layoffs and budget cuts

The all-hands meetings are coming thick and fast around the country as the sluggish economy and mandates for budget cuts in the public sector start to bite.

I was commiserating with media friends in Auckland yersterday, some of whom had just left a TVNZ meeting where they heard of a play to cut 68 jobs, at least half of them in the news and current affairs division.

Callaghan Innovation staff will hear details of a restructuring plan at the Government’s innovation agency today. Here in Wellington, the BBQ chatter has been about the 7% cuts required and where the savings will be south. People are the most expensive line item for government agencies, and as Davbid Seymour said this week, job losses are “inevitable”.

We are not alone. A video blog from my the provocative American geopoliticial commentator, Peter Zeihan (who studied at the University of Otago and has a soft spot for New Zealand), put what’s going on in perspective earlier this week.

“Everybody is pretty much going slow, and even the economies that are still having growth in places like India are really slow. And then Australia and New Zealand are probably within spitting distance (of recession),” he said.

America is the only country doing reasonably well economically at the moment. There are two trends driving the global malaise, says Zeihan, and they are both related to China.

“The China post-Covid bump never happened, and as we get more and better data out of China on demographics, it looks like they had a population collapse that isn’t recent,” Zeihan explains.

Geopolitical analyst Peter Zeihan

Like most countries, we are reliant on growth in the Chinese economy to boost our exports. But China’s rapidly ageing population means consumption is slowing and China now has challenges finding enough working-age people to sustain its vast industries.

Zeihan has been criticised for being a population catastrophist, but the data largely backs up his claims - most advanced economies are experiencing rapidly slowing birth rates and an ageing population. That is slowing consumption because people spend less as they get older. The healthy economic growth the world has enjoyed for the last 30 years could be at an end. 

So we’ll need to think smarter about how the makeup of our economy, how we provide public services, develop and maintain infrastructure and train people for future careers. As the new coalition government has flagged, the transition is going to be painful.

Still, there’s plenty of good stuff happening, which points to the future potential. NIWA and University of Auckland scientists and Rocket Lab mission control staff played an important part in the launch of the MethaneSAT satellite earlier this week. The satellite was launched by SpaceX because it was too big for a Rocket Lab rocket, but has key New Zealand involvement as the satellite looks to get a better handle on methane emissions from oil and gas infrastructure and agricultural production. 

Embrace the digital workforce

Yesterday I attended the ribbon-cutting ceremony for Salesforce’s new office in Auckland’s CBD. The largest global creator of customer relationship management (CRM) has 16,000 people in New Zealand trained in use of the Salesforce platform and said yesterday it will require 10,000 more in the next few years. When CRM is in growth mode, it means businesses are getting serious about finding and retaining their customers - a smart move in tight fiscal times.

Tech-related roles are more important than ever.

As IT Professionals NZ chief executive Vic MacLennan pointed out earlier this week here on Tech Blog “the urgency for government agencies to embrace the digital workforce can't be overstated”. 

“We're operating in a hyper-competitive global landscape where skilled digital workers are in high demand. From cybersecurity experts to data analysts, these specialists are the backbone of modern economies. New Zealand, in particular, faces a double challenge,” she wrote.

We’ve got so much potential here, with smart Kiwis in the start-up sector, our research institutions and across business and the public sector doing incredible things.  But we’ll need a step change in how we teach, train and equip people for the future, one that will be less about shipping commodities and more about knowledge economy work, and coming up with solutions to an ageing population, climate change, and a geopolitically more complex world.