The knowledge economy matters because it drives innovation and productivity growth and is the engine of sophisticated economies. Knowledge industries also help improve our wellbeing through better healthcare, and they nurture the next generation by providing them with new skills through education and training.
In this article I draw on data from the recently published 2023 Infometrics Regional Economic Profile and investigate the growth of knowledge intensive employment in New Zealand. The analysis details which parts of the economy have contributed most to knowledge intensive growth, and which regions lead the pack in knowledge intensity.
What are knowledge intensive industries?
Knowledge intensive employment measures employment in industries (measured at the ANZSIC Level 4 industry level) which are defined as knowledge intensive. Knowledge intensive industries are industries that satisfy two basic criteria:
- at least 25 per cent of the workforce must be qualified to degree level, and
- at least 30 per cent of the workforce must be employed in professional, managerial, scientific, and technical occupations.
The total New Zealand economy comprises approximately 500 industries and slightly more than 100 of them are defined as knowledge intensive. Collectively they account for almost a third (32.9%) of total employment in New Zealand.
The largest knowledge intensive industry is hospitals (excluding psychiatric hospitals) with 86,333 employees on average over the year to March 2023, followed by primary education (56,163), central government administration (52,853), and computer design and related services (51,714).
Knowledge intensive employment has grown faster than total employment
As our workforce becomes more skilled and our economy more complex and sophisticated, we would expect that knowledge intensive employment would grow faster than the rest of the economy. Indeed, knowledge intensive employment has grown on average 2.6%pa over the last ten years compared with 2.3%pa in the total economy.
Chart 1 shows that knowledge intensive employment grew faster than total employment in most years since 2000.
This stronger growth in knowledge intensive employment means the knowledge economy is becoming a larger share of total jobs. In 2023 knowledge intensive employment accounted for 32.9% of employment, up from 31.8% in 2013.
Central government administration is the largest contributor to growth in knowledge intensive employment
Although central government administration is only the third largest knowledge intensive industry, it is by far the largest contributor to growth in knowledge intensive employment over the last ten years. Employment in the industry has nearly doubled over the last ten years, adding more than 24,000 jobs to the 29,680 jobs in 2013.
Chart 2 shows that the next largest contributors to knowledge intensive employment growth were hospitals (except psychiatric hospitals) and computer system design and related services.
Local government administration also makes into the top 10, adding 6,740 jobs over the 10-year period.
Without central and local government, growth of knowledge intensive employment is less impressive
Collectively, central and local government administration accounted for 15% of all new knowledge intensive jobs created over the 10 years to 2023 despite only accounting for 8.8% of total knowledge intensive employment. On average, employment in these two industries combined have grown by 5%pa over the last decade.
Without the contribution of central and local government, knowledge intensive employment in New Zealand grew by 2.4%pa over the last 10 years, only marginally higher than growth in total employment of 2.3%pa over the same period.
Wellington City is our most knowledge intensive territorial authority
With nearly 6 out of 10 jobs in the capital being knowledge intensive, Wellington City is New Zealand’s most knowledge intensive territorial authority by a country mile. The concentration of the public sector in Wellington City contributes to its high proportion of knowledge intensive jobs. But even if we strip out central government administration, Wellington remains at the top of the list due to the high concentration of information technology, healthcare, and professional services jobs.
Chart 3 shows that cities dominate the top 10 territorial authorities mostly due to their concentration of hospitals, institutions of higher education, and professional services.
Hamilton City, with its large healthcare and education sector takes out the second spot. Dunedin’s university and hospital help it take the third ranking. Whangarei, with its large hospital and other health services which serve much of Northland, is the only non-city to make it into the top ten.
Understanding knowledge employment important for economic development
Knowing the broader and local trends influencing employment outcomes, including the growth of different industries and areas of knowledge intensive employment, is important for economic planning. Analysis like this can provide evidence of areas for further support and development or can allow for discussions to occur of how certain industries are performing and how those outcomes can inform growth in other areas.
The data used in this article are from the Knowledge Intensive Industry pages of the optional Skills Module of the Regional Economic Profile. If you would like more information about the Skills module for your area, please contact your Infometrics client manager or Andrew Whiteford (andrew.whiteford@infometrics.co.nz or 021 212 3864).
