In the earlier post Economy at risk as IT graduate numbers fall? I pointed out the weirdness of a story speculating about the shortage of computer science graduates triggering the collapse of New Zealand’s entire economic infrastructure at a time when US employers are sacking large numbers of IT workers.

It appears there could be a fresh supply of willing recruits closer to hand. In today’s Australia IT, Jennifer Foreshew writes:

The economic downturn has prompted jittery employers to force IT staff to take leave over the holiday season following a widespread slowdown in activity.

What’s more, she continues: “The moves come as the IT employment sector experiences a big slump, with job vacancies down as much as 30 percent compared with 12 months ago.”

Contrast that with this paragraph from the New Zealand Herald story which, presumably, is attributed to John Hosking who is a professor of computer science at the University of Auckland:

Parents often had a strong influence over their children’s career selection, and following the dot-com crash there was a perception that IT was not a solid career choice.

Which just goes to show. Mummy and daddy often do know best.

Consulting firm Mercer says the current global financial crisis is unlikely to solve New Zealand’s skills shortage. Like many other countries including nearby Australia, New Zealand has an aging workforce and a severe shortage of workers with key skills.

On top of these problems, there’s a significant brain drain as those workers with skills travel overseas to find better rates of pay, lower taxes and brighter opportunities.

The report goes onto say that New Zealand’s employers will need to focus more on older workers in order to maintain a viable workforce. Not only are there already more older workers than younger workers, but their numbers are growing faster. If anything, the problem is less pronounced in New Zealand than many other first world countries.

In my personal experience, New Zealand employers have been slower to recognise the shift towards an older workforce than their counterparts overseas. In particular, Australian employers seem keener than New Zealand employers to hire older workers.

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“The four most dangerous words in investing are: It’s different this time.”

Sir John Templeton, quoted in The Asian Age.

Not only are there no new economic paradigms, the moment anyone mentions the word paradigm in connection wth your money, I suggest you run for the door.

Bill Bennett, quoted on his Knowlege Workers web site, 2008.

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In his blog post The Stark Difference between Skills-based and Knowledge Workers Michael Hanley at the E-learning curve suggest this table from John Doerr at Kleiner Perkins, Caufield & Byers should be kept by every learning professional’s desk as a reminder of the value of their work.
It’s just as valuable for knowledge workers seeking to navigate the new economic landscape they inhabit, mind you, some of the elements in the table now look out of date (Hanley admits he dug this table out the attic so it wasn’t created yesterday.) For example, haven’t public/private partnerships fallen out of fashion?

Hasn’t the term Win-Win become yet another meaningless management cliche? You don’t hear too much talk of options these days. And, given the financial turmoil of recent weeks, I suspect right now many readers would choose security over risk-taking at the moment.

Nevertheless, this is worth book-marking or clipping for future reference.

Table 1. The Emergence of a New Economy

Source: John Doerr, Kleiner Perkins, Caufield & Byers

Knowledge workers are taking over the world. In America our counterparts already make up around a third of the workforce. Our numbers are fewer in Australia and New Zealand, but we’re catching up. Things are similar in other rich countries.

The massed ranks of knowledge workers are increasing rapidly. In just about every developed economy, most developing countries – and even in some undeveloped ones — knowledge workers now make up the fastest-growing employment group.

Throughout the developed world knowledge workers already outnumber industrial and agricultural workers. In more advanced countries they outnumber these two groups added together. America now has roughly as many knowledge workers as service industry workers. In most rich countries knowledge work is by far the most important economic sector both in terms of economic and political clout.

Knowledge worker is a new idea

Amazingly, the idea that people can earn a living by dealing purely with knowledge has only been around for 50 years. Writer and management expert Peter Drucker is often credited with inventing the term. He first used the term ‘Knowledge Worker’ in his 1959 book “Landmarks of Tomorrow”. But Drucker modestly claims to be only the second person to use the phrase saying the honour belongs to Fritz Machlup a Princeton economist.

Nevertheless, Drucker popularised the term and has spent many of the last 40 years expanding on the original idea and explaining its wider implications. His material is almost always worth reading.

Although the term ‘knowledge worker’ is widely used and people generally understand what the term implies, there is still much misunderstanding about its exact meaning — even among knowledge workers.

One common misconception is the term applies exclusively to people working in the information technology industry or are employed elsewhere in industry to use the products created by IT workers. While it’s true to say that almost all IT workers are knowledge workers, they are only a subset of that grouping.

Anyone who makes a living out of creating, manipulating or spreading knowledge is a knowledge worker.

This definition covers a wide range. Teachers, trainers, university professors and other academics are clearly included. Writers, journalists, authors, editors and public relations or communications people can all be categorised as knowledge workers – we’ll put aside for one moment any arguments about whether the knowledge created by these people is accurate. Lawyers, scientists and management consultants can all be described as knowledge workers.

One key difference between knowledge workers and other white-collar workers is the level of education and training. There may be some knowledge workers who don’t have a formal tertiary education or high-level training – but they are a minority.

As a rule, knowledge workers have a minimum of a university undergraduate degree, but that’s not always the case. Older knowledge workers tend to have less formal qualifications than younger knowledge workers. That’s partly because higher education wasn’t so ubiquitous when they started out — university isn’t the only path to knowledge.

Another reason is that practical experience counts for a lot. But the key here is knowledge workers each individually posses their own substantial personal reservoir of accumulated knowledge that they apply on a daily basis in their work.

Compared with other groups of workers knowledge workers tend to be well paid – some are extremely well paid. There are unionised knowledge workers, but on the whole they don’t tend to be organised in that sense. This can lead to forms of genteel exploitation: few knowledge workers get paid overtime yet most are expected to voluntarily work for considerably more than the basic 40 hours a week.

Knowledge workers are mobile

On the other hand, knowledge workers are more mobile than industrial workers and can often take their expertise elsewhere at the drop of a hat. They often do. Any employer who abuses knowledge workers’ professionalism is likely to see their most important assets walk out of the door one evening and never return. This applies as much today as it did when there were more jobs around.

Few governments have come to terms with the implications of having a highly mobile, highly educated, knowledge workforce. Just as knowledge workers can quickly find a new employer if necessary, most can move freely between countries. Any nation that doesn’t look after its knowledge workforce can expect – over the long term – to lose it.

This is particularly applicable in New Zealand, which operates a so-called progressive income tax system that, at times, appears to be deliberately designed to alienate knowledge workers. To understand this, compared the marginal and absolute rates of income tax paid by most New Zealand knowledge workers and you’ll notice they are substantially higher than in most competing nations.

When the first draft of this post was written (it first appeared in a different format in 2001, see this blog’s about page) the same could be said of Australia. Since then Australia has moved to correct it’s tax system and is currently attracting 40,000 New Zealanders each year, the majority of those emigrants could be classed as knowledge workers.

Back in the 1960s there was a lot of talk about a ‘brain drain’. If anything the flow of knowledge workers migrating to more benign economies is accelerating.

Drucker distinguishes between various classes of knowledge worker. High-knowledge workers include professional groups such as doctors and teachers deal mainly in the realm of the mind while the knowledge technologists work with their hands and brains in the IT industry, medicine and other areas. Although both categories of knowledge worker are growing, the bulk of growth comes from this second group.

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This post is a reworked version of an opinion piece that appeared in New Zealand Reseller News. The original story was written in response to suggestions that New Zealand’s technology market is economically indistinguishable from Australia’s.

It’s fair to say Australian companies account for a major slice of our market. There’s no questioning the importance of trans-Tasman trade. Wisely or not, many multinationals run their New Zealand operations from Sydney. And tech support hours are often geared to Eastern Australian Time.

Yet this isn’t the whole story.

For a start, despite what many people think, our neighbour is not the single, unified market it appears to be.

Mark Twain’s experience illustrates the point perfectly. When, more than a hundred years ago, the American author travelled between Melbourne and Sydney he had to change trains at the Victoria-New South Wales border because the two colonies ran different railway gauges.

He wrote, “one or two reasons are given for this curious state of things. One is, that it represents the jealousy existing between the colonies. What the other is, I have forgotten.”

This railway gauge mess isn’t ancient history. Until 1995, Australia was the only first world country whose main cities were not linked by standard gauge railway tracks. Even now trains in different states operate on different gauges.

Another example is the confusion in on the Gold Coast when New South Wales moves onto daylight saving, but Queensland does not. Next time you’re invited to a industry knees up on the Gold Coast, try catching a flight to Brisbane and returning from Coolangatta – at certain times of the year the experience is, well, interesting.

Train tracks and time zones are the thin end of the wedge. Australia has many different regional economies, inter-state rivalries and local tribalisms. They can’t even agree on a single football code. About the only thing uniting Australians is they support one national cricket team and even then supporters disparage out-of-state players.

So while you’d be right if you thought senior executives sitting in glass tower overlooking Sydney Harbour often fail to give much thought to the wants and needs of their partners, resellers and customers in New Zealand. Remind yourself the same people also disregard business partners, resellers and customers elsewhere in Australia.

What does this mean for us? Well, curiously enough, we sometimes get a better deal than our counterparts in rural and regional Australia. Being a distinctly separate market helps. Having a different currency and tax system means they have to sit up and take more notice than they would of, say, Tasmania.

Our four million population may be tiny compared to Australia’s 20 million, but for many major IT vendors the New Zealand market is somewhere between 25 percent and 30 percent of the Australian market. That’s not to be sneezed at.

So while a vendor might be persuaded to open support lines early to accommodate New Zealanders – Perth customers don’t have a hope.

Over the long-term, companies and brands investing and hiring in New Zealand tend to punch above their weight in this market. Companies and brands who fail to invest here can expect to under-perform.

This is a simple fact of life that eludes some bean counters clicking mice over Excel spreadsheets in distant offices. Their mistake is your opportunity.