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War Economy

Civilian Labour Reserves Melt Away

Civilian Labour Reserves Melt Away

The National Service Department estimated that numbers unemployed or on subsidised employment schemes fell from 19,000 at the outbreak of war to 13,000 by the end of 1940 and 6000 by the end of 1941. By December 1942 this figure had fallen to the then unbelievably low level of 2000. It was to be reduced still further before the end of the war and, more astonishingly still, to continue to fall in the post-war decade. Chart 17 shows wartime changes in unemployment or subsidised employment.

chart of employment statistics

Chart 17

Thus, from the outbreak of war until peak mobilisation in September 1942, some sixteen thousand men, previously unemployed or in subsidised employment, were absorbed into the armed page 87 forces or into industry. To this extent the impact on industry of the armed forces build-up from 3000 to 157,000 men and women was reduced.

It will be noticed that, in this volume, most of those in subsidised employment, as well as the unemployed, have been treated as a labour pool. Such a treatment for the former group may be questioned, but is considered to be reasonable. Most of those in subsidised employment were in jobs which would not have been done without the subsidy from the Employment Promotion Fund.

Of Scheme 13, one of the more important forms of subsidised employment, the Employment Division of the Labour Department had written in 1939:1

‘In order to give effect to the policy of placing all fit unemployed men in full-time work, subsidies are made available to local authorities—City and Borough Councils, County Councils, River and Drainage Boards, School Committees, sports bodies, and other social institutions not established for profit—for the full-time employment of registered and eligible labour at award rates of pay on developmental works which would not be put in hand without State assistance. The works undertaken include the formation, widening, metalling, etc., of streets and roads; footpath construction, kerbing, and channelling; local-body water-supply and sewerage schemes; land-drainage, river-clearing, river-protection, etc., afforestation; formation, levelling, improvements, etc., to parks, reserves, domains, school-grounds, hospital-grounds, etc.; flood-damage restoration.

‘Subsidies approved under the scheme range from £1 10s. and £2 5s. per man-week for single and married men respectively to, in some cases, the full wages cost. The men are employed under ordinary industrial conditions, and are paid in terms of the award to which the employing authority is a party. In cases where an employer is not cited as a party to an award the work is carried out under the conditions and at the rates of pay prescribed by the Public Works Workers’ agreement, 1936.

‘It has always been an essential condition of employment on full-time subsidised work under Scheme 13 that the applicant must be registered and eligible to receive unemployment relief.’

The most important words in this quotation seem to be, ‘which would not be put in hand without State assistance’, although it must be conceded that this test would be difficult to apply to existing subsidised work.

1 Parliamentary Paper H-11a, 1939, p. 4.

page 88

Work done under subsidised schemes may have been worthwhile1 but, under pressure of war, much of it had ceased by 1942. To what extent it ceased because there was more urgent work to be done, and to what extent because there was no longer an unemployment problem to justify payment of subsidies, is difficult to decide. Some of the subsidised work, particularly that concerned with roads, would not again employ men on the pre-war scale, but the issue still remains confused, because changes in methods and increased mechanisation played a part in reducing labour requirements.

It is surprising that, even after recruitment had substantially exceeded the pre-war unemployment pool, the Government was still paying out substantial amounts for employment promotion schemes. This apparent anomaly did not escape attention at the time. The Dominion in a leader on 24 August 1942 headed ‘Employment in Wartime’ said:

‘It will seem anomalous to very many people that, at a time when the country is faced with a serious shortage of manpower—a position that can be said to have been developing rapidly from the day war was declared—the Government should, in the past year, have expended no less than £1,288,000 on the promotion of employment. That the total showed a decline of £1,124,000 when compared with the expenditure of the previous year is something, but the fact remains that in the last two years New Zealand has expended £3,700,000 on the various employment promotion plans.

‘The scheme that has absorbed over £3,100,000 of that amount is known officially as Number 13 and it provides for full time employment at award rates with local bodies and other employing authorities of registered and eligible men. During 1940 there were, on occasions, over ten thousand men employed under Number 13 scheme, but the total fell steadily last year and in December touched 4,258, when the seasonal demand was probably at its heaviest. At March 31 last the total was 2,092 and the large majority of the men are said to be fit only for the lightest type of work. But it seems evident that some of them could be usefully employed in production—though not economically at full rates—for they were reported to be engaged on drainage, river protection, sewerage schemes, public works and land development. Probably they were the younger men, but any

1 Though the need to pay subsidies seems to indicate that it was uneconomic. In referring to subsidised public works employment, the Employment Division had written: ‘…subsidies are granted out of the Employment Promotion Fund to meet the cost in excess of the economic value of the work.’—Parliamentary Paper H-11a, 1938, p. 9.

page 89 man capable of doing that class of work could be useful in a milking shed.

‘The men working under Scheme Number 4B, which provides for employment under contract for the improvement and development of farms, are considered by the authorities to be reasonably fit because of the nature of the work they do. This scheme was not suspended until November last, and in 1941–42 there was a monthly average of 990 men employed. At that time it was left open for all work which had been started to be completed, but in February instructions were given that no more men were to be employed and commitments were to be cancelled although current contracts could be finished. Last year over 2,000 were allocated to this class of work, which included top dressing, road and track formation, repairing of flood damage and the ploughing of virgin land. Men who could undertake that should be able to find immediate employment in the vital work of maintaining production—the routine work of the average farm.

‘This year the estimated expenditure on the promotion of employment, including administration expenses, is only £263,000, and while the marked decline will be satisfactory it will create serious doubt as to whether an expenditure of £1,288,000 last year was at all justified at a time when there was an increasing demand for labour. It seems hardly credible that in two complete years of war, with manpower at a premium, this country should have spent over £3,700,000 on employment promotion schemes.’

Be that as it may, some 17,000 men who were unemployed or in these types of subsidised work at the outbreak of war had been absorbed into industry or the armed forces by the end of 1942.1

Under stress of war, labour for industry was also augmented from groups of people not normally in the labour force, particularly married women and retired men. In a rather speculative labour force analysis, the National Service Department estimated2 that the number of women in civilian employment increased by nearly a quarter in just over two years, from 180,000 at the outbreak of war to 224,000 by the end of 1942.

1 The problem raised by the Dominion leader can be studied in better perspective when post-war experience is also taken into consideration. See also Chapter 20.

2 Parliamentary Paper H-11a, Report of the National Service Department, 1946, p. 134.