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War Economy

Employment in Manufacturing

page 147

Employment in Manufacturing

IN WAR, New Zealand's still immature manufacturing industries were called on as never before to provide increased output and new products to fill supply gaps. Not only was an extensive range of war equipment produced for the first time in New Zealand, but also many essential consumer goods, no longer available in sufficient quantities from traditional overseas suppliers, had to be made locally.

To give a general impression of the stage of industrial development in New Zealand in 1939, there were then six persons employed in manufacturing for each 100 of the population, compared with eight in Australia and fourteen in the United Kingdom.

Before the war New Zealand manufacturing had a somewhat chequered career, though showing an underlying tendency to increase in relative importance. Most industries had been hit hard by the economic depression of the early 1930s, and it was not until 1935–36 that the labour force in manufacturing was built up again to what it had been in the pre-depression year, 1929–30. Nearly 83,000 people had then been employed in manufacturing, but by 1931–32 this number had fallen to 69,000.1 This was the worst year of the depression. There followed a slow recovery, which gathered strength. The labour force reached 79,000 in 1934–35, and 87,000 in 1935–36. The 1934–35 figure was still below 1929–30 and 1935–36 was only 4000 above it. Two years of rapid growth followed. In 1936–37 there was an increase of 10,000, and in 1937–38 a further increase of 6000, bringing the numbers employed in manufacturing up to 102,000. This was 23 per cent above the highest pre-depression level.

1 Figures used here are taken from the 1947–49 Official Yearbook. They have since been revised as a result of a change in coverage of industrial production statistics, but these are the figures which were available and which provided the basis for wartime thinking. They include generation and supply of gas and electricity, and the logging operations of sawmillers, all of which were transferred to other sectors after 1951–52.

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Manufacturing was then affected by the depressive influence of the 1938 reduction in overseas earnings. Between 1937–38 and 1938–39 its labour force increased by only 200. But, for manufacturing, the 1938 recession was to be a blessing in disguise. It provided the Labour Government with a new and more effective means of nurturing secondary industries.1 The rapid fall in overseas assets forced the Government to take drastic action to correct the trade unbalance. It decided on exchange controls and quantitative controls over imports, accompanied by an import selection policy which gave a high priority to materials and equipment for New Zealand producers and a low priority for many manufactured imports. As a result, manufacturing entered the war with a very high degree of protection against outside competition.

In some industries, particularly those concerned with metals, the diversification resulting from the high level of protection against imports considerably increased the need for skilled labour, and there were some staffing difficulties before the war, in spite of the quite large pool of unemployed labour still available. Special training schemes were started to provide suitable labour, and some skilled labour was recruited overseas, but not all the gaps could be filled.

The metalworking industries, with the clothing industries, were to bear a particularly heavy load in providing war stores, but most other industries were also affected. The war made ever-increasing demands on many branches of manufacturing.

Of one important group, engineering, shipbuilding and repair, the National Service Department wrote:2

‘During the war years the industry was called upon for a tremendous war effort, which included the manufacture of wireless sets, Sten guns, Bren-gun carriers, bombs, grenades, fuses, aeroplane-fuel tanks, water-bottles, steel helmets, wire nails, barbed wire, ammunition, batteries, agricultural machinery and implements, the manufacture and maintenance of machinery used in essential production and services, the repair of vehicles and equipment from the Pacific War Zone, the building and repair of aircraft, repair of ships, the fitting of defensive armament and protective equipment to ships, and the building of minesweepers, Fairmile patrol boats, tow-boats, steel tugs, powered lighters, and barges of various types. In addition, it continued to meet civilian requirements of high priority.’

The first three war years were years of quite rapid expansion in manufacturing employment. The labour force increased by 6000 in the first year, 5000 in the second year, and 3000 in the third year,

1 The Labour Party manifesto for the 1935 General Election included ‘the fostering of secondary industries’. Quoted by J. T. Paul in Humanism in Politics, p. 174.

2 H-11a, Parliamentary Report of National Service Department, 1946, p. 54.

page 149 to reach 117,000 in 1941–42. This was an average growth of 5 per cent a year. But manufacturing was now being affected by the faster rate of mobilisation which followed the entry of Japan into the war in December 1941. Losses to the armed forces were, for a time, more than made good by recruiting extra women and older persons, but, in 1942–43, there was an overall decrease of 3000 persons. This, however, was the only war year in which the numbers engaged in manufacturing declined.

When the lessening of the threat of invasion made it possible to reduce the size of the home army, numbers employed in manufacturing increased again. By 1944–45 there were 122,000 and, in the last war year, 1945–46, over 128,000, which was some 26,000 above the immediate pre-war level.

Over the seven years between 1938–39 and 1945–46, the manufacturing labour force increased by a quarter, an average growth of 3¼ per cent a year, which compares with a population increase of a little over 1 per cent a year and would have been considered fast under much less difficult conditions.

Chart 33 shows changes in numbers employed in manufacturing over the depression, the pre-war, and the war years. It is apparent that recruitment for the armed forces caused only a temporary setback in the upward trend of manufacturing employment. In this, manufacturing is unusual; most groups were much more severely affected. So great was the pressure of extra wartime demand that manufacturing remained seriously short of labour, in spite of the fact that its work-force grew faster than in most other groups.