From Tech Sector to Digital Nation

The New Zealand Technology Industry Association (NZTech) recently released its report on the impact of technology on the country’s economy. Titled ‘From Tech Sector to Digital Nation’, NZTech touched on how the 300 tech organisations they represent are shaping and enriching New Zealand’s economy. Here are our highlights.

Key Details

New Zealand’s technology industry comprises nearly 29,000 firms, collectively employing almost 100,000 people – or 5% of the workforce - with a further 20,000 tech jobs in other sectors. It’s now the economy’s third largest export sector, contributing $6.3 billion of goods and services, equating to 9% of all exports. In total, it makes up 8% of New Zealand’s gross domestic product (GDP), contributing just over $16 billion.

"We are a highly skilled nation, we have an international reputation as innovators, and our small but rapidly growing digital technologies sector shows that we can disrupt and compete in the global digital market."

- David Smol, Chief Executive, Ministry of Business, Innovation and Employment

Jobs

The New Zealand Institute of Economic Research is predicting that a staggering 46% of kiwi jobs will be automated within the next 20 years. However, the report warns against assuming half of all workers will be unemployed. A number of auxiliary jobs will be created to support the new, automated roles. The report states that each new tech job creates 5 new service jobs around it.

NZTech gives the example of ATMs, which threatened the jobs of bank tellers when they were rolled out in the 90s. Rather than reducing the number of bank teller jobs, they allowed branches to be operated at a lower cost and prompted banks to open more branches. Consequently, the number of bank teller jobs rose faster than the entire labour force in the period from 2000.

"There is no doubt that we are all seeing and feeling the ever growing importance and impact of digital technologies in the lives of New Zealanders."

- Barrie Sheers, Chief Executive, Microsoft New Zealand.

NZTech’s report also delved into the topic of salaries. In New Zealand, 2015’s median annual income before taxes was $45,864. A report released in January this year states that the tech sector’s median annual income before taxes was nearly $40,000 higher at $82,000 last year. The employees in the tech sector tended to be more highly qualified than average, and even less educated tech workers were paid well above national average.

Exports

Since 1990, New Zealand exports from the high tech manufacturing sector have grown from $100 million to $4.4 billion, and exports from the ICT sector have grown to $1.9 billion.

"Our stable political and regulatory environments, along with our extensive investment in digital infrastructure, make us one of the best places in the world to do business and develop new technologies."

- David Smol, Chief Executive, Ministry of Business, Innovation and Employment

The trouble with measuring exports is that a significant amount of tech activity is being routed through offshore subsidiaries of kiwi tech companies. It’s nothing to do with shady tax havens; companies establish offshore entities to be closer to their markets and customers, and for regulatory reasons.

Tech export figures are understated because the sales of these goods and services are not captured in exports, and the money is often not repatriated.

All in all, NZTech’s report paints a positive story about the NZ tech industry. The sector is experiencing solid growth, contributing a considerable chunk of exports and providing a healthy stream of well-payer jobs. That’s it from us, stay tuned for more updates on this exciting sector.

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