Three major universities in New Zealand, namely The University of Auckland, Victoria University of Wellington, and the University of Otago, have plummeted in the Times Higher Education (THE) World University Rankings 2025. The University of Auckland, which has been the country’s top-ranked institution, fell from 139th to 162nd place.
The University of Otago has indicated that it contributes nearly $2 billion to the New Zealand economy, accounting for approximately 16% of Dunedin’s Gross Regional Product (GDP).
Furthermore, a report from Universities New Zealand reveals that universities produce around 43,100 graduates each year, many of whom are skilled professionals vital for various sectors. However, a decline in university rankings could deter international students and researchers, thereby limiting the talent pool available to local businesses.
This dramatic decline raises important questions about the future of New Zealand’s economy, workforce development, and education. As these universities navigate their lower rankings. The potential impact on the nation’s competitiveness in the global market is becoming a pressing concern. It is essential for local employers to understand how this drop in global rankings may affect their ability to hire and retain talent.
Decline in University Rankings: What Went Wrong?
One reason affecting the universities’ academic performance and research outputs is linked to several factors, including decreased government funding, reduced investment in research infrastructure, and challenges in attracting top international talent.
These issues can also impact New Zealand’s economy, particularly in the technology, biotech, and green energy sectors, which rely on cutting-edge research and innovation to remain competitive globally.
The fall in rankings also impacts New Zealand’s global reputation as a destination for education and research. The decline could hamper the country’s ability to attract international talent, businesses, and partnerships.
The Business Implications
For Kiwi business leaders, the drop in university rankings is not just a concern for the education sector. It directly impacts talent pipelines, innovation capacity, and global competitiveness.
1. Talent Supply Issues
Lower-ranked universities might struggle to attract top international students and academics, leading to a potential decline in the quality of the domestic workforce. Businesses in high-skill industries like technology, science, and engineering may find it harder to recruit the expertise they need locally, driving up costs if they are forced to look overseas for talent.
According to research published in the International Journal of Scientific & Technology Research, graduates from lower-ranked universities tend to receive fewer job offers and lower starting salaries. Additionally, a report by Rothwell and Arnold emphasises that a university’s reputation is crucial for graduate employability, especially in competitive job markets such as the UK and the USA.
2. Weakened Research and Development (R&D)
Top-ranking universities often collaborate with industry to drive R&D. As rankings fall, this could lead to less funding for innovation projects and fewer opportunities for businesses to partner with universities on new technologies, particularly in crucial sectors such as biotech and renewable energy.
3. Risk to International Partnerships and Investment
New Zealand’s global reputation is closely linked to the strength of its academic institutions. A lower standing in world rankings could reduce its appeal as a hub for global business partnerships, foreign direct investment (FDI), and international research collaborations. Therefore, it could stifle growth in industries reliant on cross-border collaboration, reducing access to cutting-edge technologies and knowledge transfers.
The 2021 Economic Impact Report from the University of Otago estimates that the university contributes around 17% to Dunedin’s gross regional product (GDP) and makes up about 9% of the city’s workforce. A drop in university rankings could threaten this economic contribution and international partnerships.
What Kiwi Businesses Can Do
Despite the concerning news, there are several steps New Zealand businesses can take to mitigate the risks and ensure continued growth.
1. Increase Collaboration with Universities
Now is the time for businesses to strengthen partnerships with universities. By funding research projects, offering internships, and collaborating on innovation initiatives, companies can uplift the academic sector and ensure a steady supply of qualified graduates.
A great example of this approach is the recent collaboration between 2degrees and Spark to enhance digital education in New Zealand schools. This partnership highlights the importance of businesses engaging with educational institutions to tackle skills gaps.
2degrees and Spark are preparing students for future careers and helping universities align their curricula with industry needs by investing in digital literacy and technology training, Such collaborations can create a skilled workforce ready to meet the demands of the digital economy.
2. Focus on In-House Talent Development
Kiwi companies should consider investing in internal upskilling programmes to bridge the growing skills gap. Organisations can offer training in advanced digital skills, data science, and other critical areas that will ensure that businesses remain competitive, even if the talent from universities becomes less predictable.
The 2023-2024 SHRM State of the Workplace Report reveals that 53% of organisations view upskilling and reskilling as a vital strategy for bridging skills gaps within their workforce.
3. Look to International Collaborations
Businesses should seek partnerships with universities and research institutions abroad to remain at the forefront of innovation. This initiative could involve joint ventures, knowledge-sharing initiatives, or tapping into global research networks, ensuring that New Zealand firms remain competitive in critical fields like AI, biotech, and green energy.
New Zealand’s education system can draw inspiration from successful practices in European countries, particularly in enhancing digital literacy and vocational training. A Reuters report highlights that many EU nations have placed a strong emphasis on integrating digital skills into their educational curriculum.
For instance, countries like Germany and the Netherlands have developed robust vocational training systems that align closely with industry needs, ensuring that students are equipped with relevant skills upon graduation.
Conclusion
While the recent drop in rankings for three of Aotearoa’s premier universities presents a challenge, it also serves as a wake-up call for New Zealand’s education ministry and the business community.
Kiwi business leaders have the opportunity to take proactive steps to strengthen educational partnerships, develop internal talent, and advocate for strategic investments in the education sector.
By doing so, they can help ensure that the country’s global competitiveness and innovation ecosystem remain robust. The synergy between education and business is crucial for our future, and addressing these challenges now could yield significant long-term benefits for both sectors. Local businesses and Universities can turn this situation into an opportunity for growth and resilience.