Small companies could suffer under a Labour Party proposal to tax employers who are not providing training, Business New Zealand says.
The Labour Party has said the levy would be put back into workplace training and would encourage industries to provide training for the local workforce, rather than rely on workers from overseas.
It is one of 63 recommendations in the Future of Work document released at the party's annual conference in Auckland.
But Business New Zealand chief executive Kirk Hope said many employers couldn't get local staff in the first place, whether skilled or unskilled, and so couldn't train them.
"So the problem with the policy is that it's a fairly blunt instrument and it wouldn't go anywhere near addressing what is a fairly complex problem."
Mr Hope said small businesses also might not have the capacity to deliver training.
"If you think about a small- to medium-sized business that can't get the skills that it needs to grow it will then also be negatively affected by being taxed so that's not really a helpful solution to what is a growing problem.
"Given there are around 500,000 businesses in New Zealand, and only 2000 of them have 100 or more employees, it would be far better to provide some form training subsidy to the small to medium enterprises to help them access industry training and organisations to provide the training and capability building that we need."
Tourism Industry Aotearoa chief executive Chris Roberts agreed the proposal missed the mark.
He said most employers in his industry were already providing training.
"Any employer faced with this sort of levy would say 'We are training our staff, we are proving development opportunities for our staff, so don't tax us', and I think they would quickly find that there are very few employers in this category, so the whole thing would fall on its face pretty quickly."
He said the proposal wouldn't help fix the skill shortage problem, and more needed to be done to help train people before they get into the workforce.