Key Takeaways
- The New Zealand government plans to shift part of the funding from the “fees‑free” university scheme to trades training, calling the current university‑focused model a “quite a failure.”
- Early‑career earnings show that licensed tradespeople (electricians, plumbers) often match or exceed the median starting salary of university graduates, but degree holders pull ahead over time.
- Apprentices earn while they learn, face lower upfront costs, and enjoy comparable completion rates to degree programmes, yet many still pursue university for broader skill transferability and long‑term resilience.
- Variation within degrees is large: health, engineering and IT graduates earn significantly more than graduates in arts or commerce, while some Level 5 diplomas already surpass the income of those with no qualifications.
- Economists caution that education‑earnings correlations do not prove causation; ability, family background, networks and field of study all influence outcomes.
- Despite higher debt, university graduates tend to experience lower unemployment and greater ability to weather economic cycles thanks to transferable critical‑thinking and analytical skills.
- Employers increasingly value practical experience and “human skills” (relationship‑building, adaptability) as AI automates routine tasks, suggesting a blended approach—qualifications plus on‑the‑job learning—may be optimal.
Government Policy Shift
The coalition government, led by Prime Minister Christopher Luxon, announced it will redirect a portion of the funding that has supported the “fees‑free” university initiative toward expanding trades training. Luxon described the existing university‑centric model as “quite a failure” and argued that reallocating resources is necessary to stimulate economic growth. The move reflects a broader policy debate about where public investment yields the greatest return: in academic qualifications or in vocational pathways that address skill shortages in sectors such as construction, plumbing and electrical work.
Earnings Comparison Overview
Data from the Tertiary Education Commission (TEC) reveal a nuanced picture of early‑career income. For workers under 25 at the start of their working life, licensed tradespeople—particularly electricians and plumbers—earn a median salary that matches or exceeds that of the average university graduate. However, when looking at the longer term, degree holders tend to pull away. Nine years after graduation, the median income for degree holders rises to about $95,000, while electricians reach roughly $100,000 and plumbers plateau near $94,000. This crossover illustrates that trades can provide strong immediate returns, but degrees often confer greater earnings growth over a career span.
Licensed Trades vs. Degrees (Under 25)
Focusing specifically on the under‑25 cohort, the TEC analysis highlights that licensed trades benefit from regulatory barriers that limit supply, thereby sustaining higher wages. Electricians, for example, start at $84,000 annually and approach $100,000 after nine years; plumbers begin at $79,000 and rise to $94,000. In contrast, occupations such as carpentry and auto mechanics, which lack comparable licensing constraints, see earnings flatten after a few years—carpenters move from $73,000 to $80,000 and are overtaken by degree holders around year five. The scarcity created by licensing thus translates into more durable income for certain trades.
Hourly Wage Data and Self‑Employment Effects
Stats NZ reports that the average hourly wage for a technician or trade worker is $36.27 for men and $31.95 for women. Many tradespersons eventually establish their own businesses, which can complicate income tracking because self‑employment earnings are less consistently recorded in administrative data. Economist Shamubeel Eaqub notes that this variability may obscure the true earning potential of tradespeople, particularly after the five‑year mark when business profits can diverge significantly from wage‑only figures.
Variation Across Degrees and Tertiary Benefits
Not all university qualifications deliver the same financial return. Median incomes at graduation show health graduates leading at $116,000, followed by engineering and building‑related technologies, then management and commerce. After five years, health remains the top‑earning sector, but engineering and IT experience strong growth. University of Otago associate professor Lynnaire Sheridan cites OECD evidence that tertiary‑educated workers, on average, earn twice as much as those who only completed secondary school. This premium, however, masks substantial discipline‑specific differences and the influence of non‑educational factors such as innate ability and professional networks.
Cost of Study and Apprenticeship Earnings
A critical distinction between university and apprenticeship pathways lies in financing. Most university students fund their studies themselves, often accruing tens of thousands of dollars in debt; a decade‑old study found roughly half of medical students carried loans exceeding $90,000. Apprentices, by contrast, incur far lower fees and earn while they learn. Plumbing World estimates that apprentices earn between $24 per hour in their first year and $39 per hour by the fourth year. This “earn‑while‑you‑learn” model reduces immediate financial strain and provides early workplace exposure.
Completion Rates and Broader Economic Returns
The TEC reports that level 4‑7 qualifications (which include many apprenticeship programmes) have completion rates of 56‑57 % when work‑based, while degree‑level qualifications sit at about 60 %. Economist Murat Ungor from the University of Otago urges caution when interpreting the link between qualifications and earnings. He points out that correlation does not imply causation: degree holders may possess higher innate ability, stronger family support, better professional networks, or greater motivation—all of which can boost income independently of the credential itself. Furthermore, the field of study matters enormously; degrees in medicine, engineering, economics or finance typically yield far higher average earnings than degrees in the humanities or social sciences, even at the same qualification level.
Unemployment, Skill Transferability and Future‑Proofing
Ungor also highlights that university graduates enjoy lower unemployment rates—only 1 % of degree‑holders receive Jobseeker benefits compared with 9 % of those holding level 1‑3 qualifications. Sheridan argues that the long‑term resilience of a university education stems from the transferable skills it cultivates, such as critical thinking and analytical reasoning. These abilities enable graduates to adapt to shifting labour markets and to pivot into new roles when specific occupations decline. In contrast, tradespeople may face greater vulnerability during downturns that affect construction or manufacturing, although entrepreneurial tradespersons can sometimes generate work by diversifying services.
Employer Perspectives, AI and Human Skills
Recruitment leader Hayley Pickard of Fortitude Group stresses that qualifications are only one component of employability. Practical experience, industry knowledge, attitude and a willingness to keep learning often outweigh formal credentials in many sectors. Robert Walters chief executive Shay Peters adds that employers are likely to place decreasing emphasis on pure academic qualifications as artificial intelligence automates routine tasks. He observes that recent graduates sometimes struggle to secure roles because AI is taking over functions they were trained for, prompting a demand for workers who can combine technical know‑how with strong interpersonal skills—relationship‑building, adaptability and problem‑solving—to complement machine‑driven work.
Overall, the discussion suggests that neither a university degree nor a trade qualification alone guarantees success; the optimal path depends on individual preferences, financial considerations, sector‑specific demand and the ability to blend formal learning with hands‑on experience and continuous skill development. The government’s shift toward trades training aims to address immediate skill gaps, but maintaining support for tertiary education remains important for fostering the adaptable, high‑skill workforce needed for New Zealand’s evolving economy.