H.—35.

APPENDIX.

SURVEY OF FACTORS AFFECTING EMPLOYMENT IN NEW ZEALAND. Dual Aspect of the Present Situation. As a prelude to detailed consideration of the unemployment position in the Dominion, attention may be usefully directed to two broad divisions of the causes of unemployment in New Zealand at the present time :— (1) Maladjustment of the demand for, and supply of, labour due to causes inherent in the modern economic structure, and therefore of necessity a recurring and semi-permanent problem. (2) Unemployment due to a sudden slackening in the demand for labour consequent on the acute depression through which Sew Zealand, in common with other countries, is passing at the present time. Among the causes of unemployment falling under the first of these divisions, the seasonal ebb and flow of employment in the more important primary industries and in industries directly dependent thereon causes a recurrence of unemployment in the Dominion in the winter months. The rapid development in the technique of industry in recent years has been another factor of a recurrent nature contributing to the unemployment problem. Although the volume of production in both the primary and secondary industries has increased very considerably during the past few years, the growth of employment in these industries has not kept pace with the increased, production. A considerable expansion in industry would be normally concomitant with the resulting increase in the efficiency of labour, and this would absorb a large portion, at least, of the labour displaced by machinery and improved processes of manufacture. This has not, however, been the case —due, no doubt, partially to the depressing effect of a continued, though gradual, fall in wholesale prices. Again, the replacement of manual labour by machinery has been particularly marked in the building trade in recent years, which combined with a lessening in building activity, has resulted in a considerable increase in unemployment among unskilled labourers. These and other problems affecting employment, which have been characteristic of economic life in recent years, were considered in detail by the Unemployment Committee set up by the Government in 1928 and 1929 to report on the nature, extent of, and remedies for the unemployment situation in the Dominion, and suggestions for the alleviation of the position are contained in both sections of its report. The effects on the unemployment situation of the normal seasonal and other influences have been obscured by a sudden increase in unemployment consequent on the acute trade depression through which New Zealand is passing at the present time. In view of the serious effects of this depression on the local unemployment situation, it is advisable at this juncture to examine in some detail its characteristics, and the changes in industry and trade which have occurred as a result of the sudden collapse in overseas markets. Cyclical fluctuations in industry are a normal feature of modern economic life, and are not, in themselves, a cause for serious alarm. The depression consequent on the ebb of the trade cycle is essentially of a temporary nature ; and, while little can be done to hasten the economic forces towards recovery, the unemployment consequent on the cyclical trade depression can quite justifiably be met by the provision of schemes for temporary relief, such as the speeding-up of a public-works policy, as has been done in New Zealand in the past. The depression normally follows a period of business activity, high prices, and general prosperity, so that there arc normally sufficient resources available to tide over the temporary distress. The depression of 1921 is a case in point, although on that occasion the period of quiescence was accentuated by the abnormality of the immediate post-war economic conditions. The recovery was, however, rapid. t Fluctuations in the Visible Trade Balance. A disquieting feature of the present trade depression is that it follows a comparatively long period of decline in world prices. Although in New Zealand export prices recovered considerably in 1928, they fell away again in 1929 and collapsed in 1930, the general trend in export prices since 1925 (the peak year) being definitely downward. Wholesale prices in New Zealand have continuously (although slowly) receded since the year 1924. The decrease in prices has fortunately been offset to a large extent by increases in production, a favourable balance of visible export trade having been recorded each successive year since 1920, with the single exception of the year 1926. It is doubtful, however, whether, even with the increased production, this favourable trade balance has been more than sufficient

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