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War Economy

Depletion of the Labour Force

Depletion of the Labour Force

Another effect on the employment situation was the loss, as war casualties, of 11,625 men who would almost all have been in the labour force for a considerable period after the war. A larger number of men who survived the war were fully or partially page 541 disabled for further work.1 Then again, the rate of flow of migration into New Zealand fell right away during the war years so that this inflow of people, most of whom would have been members of the labour force, was lost.

These effects of war were reinforced by the effect of a pre-war influence on the size of the labour force. The birth rate had fallen in each year from 1928 to 1935.2 The result was a comparatively small contingent of young people entering the labour force after the war.3

After 1939 the percentage of people in the age group from 15 to 64, from whom most of the labour force is drawn, decreased progressively in every year until 1960. The percentage was 68.5 in 1939 and 65.2 in 1946. It had fallen to 59.0 by 1960.4

Chart 81 shows changes in the percentages in three major age groups in the population.

chart of demographic statistics

Chart 81

1 17,000 were wounded, but more than this had their ability to work fully or partially impaired. In 1955, for example, 21,600 ex-servicemen from World War II were receiving disability pensions, the percentage of disablement being classed as 100 per cent in 1600 cases, 40 to 99 per cent in 4100 cases and under 40 per cent in 15,900 cases.

2 A falling tendency was evident before 1928 too.

3 Moreover, the school leaving age was raised from 14 to 15 in 1944, tending to raise the average age at which young people joined the labour force.

4 It then started to increase slowly and had reached 59.4 per cent by 1962. Persons serving in the armed services are included throughout in calculating the percentages on which this statement is based.

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The effect of this changing age structure on the size of the labour force has been offset to some extent since the war by an increased proportion of married women taking jobs. This has been in part influenced by changed attitudes as a result of war experiences, when married women worked as a war effort, and in part by the wider range of job opportunities now offering.

On the other hand the higher school leaving age and the postwar tendency for an increased proportion of young people to seek higher education, aided usually by Government bursaries, has delayed entry to the labour force.

Some people have suggested also that increased Social Security benefits for the aged may have reduced proportions working, but the effect of this, when most of the new benefits have not been subject to means tests, is much more doubtful.1

Under these influences the proportion of the population actually working, already reduced by direct war effects, has tended to fall since the war, but not by as much as the changing age structure of the population might lead one to expect.

Depletion of the size of the labour force relative to the rest of the population may have been a contributing influence helping full employment to continue in New Zealand after direct war effects had been expended. However, this alone could not have accounted for the persistently high level of demand relative to the output of New Zealand's industries. Here two Government policies, though they often had quite unrelated objectives, interacted most effectively. The social security scheme was in no small measure responsible for the high overall level of demand, and import licensing restricted the proportion of this high demand which could be diverted to imports. Thus New Zealand production was nearly always less than the demand for it, and New Zealand's labour remained in short supply.2

1 This question is discussed in the author's paper ‘Social Services and Economic Development’, published in Welfare in New Zealand, edited by K. J. Scott.

2 This summary is necessarily over-simplified, but contains what are, in the author's view, the most important reasons for New Zealand's continued full employment.