Human capital: Our people and skills
Human capital is the skills and knowledge, physical and mental health that enable people to participate fully in work, study, recreation and society.5 It has a direct link to key elements of wellbeing, including employment, income, housing and social connections.
New Zealanders are generally healthy and well educated, but there are significant areas that need addressing
Overall, we are generally a healthy and well educated nation. The latest New Zealand Health Survey (2017/18) found that a high percentage of New Zealanders (88 per cent) report good, very good or excellent health. New Zealanders' life expectancy continues to gradually increase and is above the OECD median, while our smoking rates continue to decline. Additionally, health loss caused by non-communicable diseases is in the bottom half of OECD countries.
Mental health is a significant issue...
Mental health is a significant problem in New Zealand. Poor mental health is often a barrier to participating in community activities and connecting with others, which contributes to greater life satisfaction. It can also strongly affect other areas of wellbeing, including material standards of living and cultural wellbeing.
We know that in any year, one in five New Zealanders will have a diagnosable mental illness, with most lifelong cases beginning before the age of 25. He Ara Oranga – Report of the Government Inquiry into Mental Health and Addiction, found that New Zealand's suicide rate for young people is among the worst in the OECD. This is why the Wellbeing Budget priority, to support mental wellbeing for all New Zealanders, has a special focus on youth mental health outcomes.
There are also significant disparities in health outcomes between New Zealanders. Māori and Pacific people are less likely to report good, very good or excellent health compared to other New Zealanders. He Ara Oranga also found that mental health outcomes for Māori and Pacific people are worse than for the overall population. Suicide rates are higher for Māori than the total population, while a significantly higher percentage of Māori and Pacific people experience high levels of psychological stress relative to the rest of the population (Figure 8).
Figure 8 – Percentage of adults with high levels of psychological distress
Source: Ministry of Health
...and one in 10 young people are not in education, employment or training
Education can have a significant impact on occupation, income, housing and health. Nearly 80 per cent of our adult population have at least an upper secondary education (equivalent to National Certificate of Educational Achievement (NCEA) Level 2).6 Our young adult educational attainment is rising, our adult skill level is in the top performing OECD countries and our expected educational attainment is above the OECD median.
Yet, there are areas in need of improvement. For example, 12 per cent of young people aged 15-24 years are not in employment, education or training (Figure 9).
Figure 9 – Youth (15-24) not in employment, education or training (NEET)
Source: Stats NZ
We are preparing for a period of significant technological change that will have impacts on our economy. These changes include digitalisation, automation and the transition to a low-emissions economy. These future trends in the labour market will affect the way we work and the skills required, with evidence suggesting 21 per cent of current workforce tasks may be automated by 2030.7
This poses challenges for the resilience and adaptability of our workforce's skills and experiences. Evidence suggests people need to continuously refresh their skills to respond to the rapidly changing nature of work.
As with health outcomes, there are also significant differences in qualification and skills between New Zealanders, particularly Māori and Pacific people. For example, Māori and Pacific students are less likely to attain an upper secondary school education (equivalent to NCEA Level 2) or a tertiary qualification (Bachelor's degree or higher qualification) (Figure 10).
Figure 10 – Educational attainment, 2017
Source: Stats NZ
Disparities that emerge early in life, and differences in achievement and skills in early childhood, can persist, on average, throughout adulthood. This has impacts on occupation, income and overall material living standards. This is one of the reasons why lifting skills, opportunities and incomes for Māori and Pacific people is a Wellbeing Budget priority for this Government.
5. Additional sources used in this subsection: New Zealand Health Survey 2017/18 and He Ara Oranga – Report of the Government Inquiry into Mental Health and Addiction 2018.
6. Treasury analysis of the Household Labour Force Survey, Stats NZ.