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Workforce composition

by Paul Callister and Robert Didham

Until the middle of the 20th century New Zealand’s workforce was mostly male, Pākehā, and working in industries such as farming or manufacturing. The rise of service industries, more immigration and increasing numbers of working women have all changed the nature of the country’s workforce.


Workforce by sector

The workforce includes everyone in paid work, plus people who are unemployed but actively seeking work.

The rest of the working-age population (defined as those aged 15 or older) are not included in the workforce, because they are not actively seeking employment. They include people who have a long-term illness that prevents them working, those studying full-time, parents looking after children full-time, and people in prison. Many people will have periods over their life in one or more of these categories.

The shape of New Zealand’s workforce has changed significantly from the days when a typical Kiwi worker was a bushman or miner: tough, uneducated, male and quite young.

Primary sector

In 1901 almost 40% of the New Zealand workforce was employed in primary industries, with mining, forestry and farming being key employers. These industries relied heavily on manual skills and most workers were male.

As farming and other primary industries became more mechanised, they employed far fewer people. In 2006 the primary sector employed just 7% of the New Zealand workforce.

Manufacturing sector

At the start of the 20th century manufacturing industries employed around a third of the workforce. Through the century the sector grew strongly, especially after 1950. By 1971 employment in this sector was much higher than in primary industries. Again, most manufacturing workers were men. The sector attracted many skilled males as migrants.

Much of the early growth in manufacturing industries such as clothing represented a shift from unpaid to paid work. For example when clothing was no longer made in the home, it was usually bought from a local manufacturer.

In the 2000s, most manufactured goods are imported. This has reduced employment in manufacturing in New Zealand, which by 2006 was just 12% of the workforce.

Service sector

Around 1901 service industries employed less than 30% of the workforce, but this sector has since seen the strongest growth. The service sector includes transport, communication, wholesale and retail trade, education and health services, and construction. These industries range from very highly skilled occupations such as doctors, through to relatively low-skilled jobs such as cleaners.

Some service industries have grown because previously unpaid work (such as caring for elderly relatives at home) has become paid work (such as nursing at a rest home). This has created new occupations in which there are many more women than men, such as childcare. By 1936 around half those employed worked in services. By 1986 this had grown to two-thirds, and by 2006 it was over 80%.


The size of the workforce

The relative proportions of the employed, the unemployed and those not in the labour force depends on many factors, particularly the strength of the economy. Government policies on issues such as the availability of affordable childcare, or the age of eligibility for superannuation, also have an influence on people’s employment choices.

The changing size of the workforce

Since the beginning of the 20th century, net migration to New Zealand has been a major factor in the growth of the working-age population. Both the First and Second World Wars (when many working-age men were overseas), and the depression of the 1930s (when huge numbers were unemployed and immigration dried up), have been the exceptions to the overall trend of an expanding workforce.

Since the Second World War the total labour force has grown not only from immigration but also because of:

  • the post-war ‘baby boom’
  • Māori moving from rural to urban areas, and taking up paid employment
  • a large increase in the numbers of older women entering the paid workforce.

As a result, from 1951 to 1986 the labour force more than doubled – from 740,000 to 1,600,000 – increasing at a faster rate than population growth. Then it shrank again due to the 1987 share market crash, the restructuring of New Zealand’s economy and the recession of 1989–92, when many workers did not seek re-employment after being made redundant.

From the late 1990s the workforce expanded again as economic conditions improved and immigration policies encouraged an inflow of skilled migrants. It is expected to continue growing until about 2020, then to drop once again as increasing numbers of ‘baby boomers’ retire.

Qualifications

Having a formal qualification, and the type of qualification, influences whether someone is part of the paid workforce. In 2006 only half of those with no formal educational qualification were in paid work. This rises to 68% for those with a New Zealand Qualifications Authority level 1 certificate, while 81% of those with a bachelor’s degree were employed in 2006.

Who’s not at work?

In 2006, about 3.5% of the adult population was officially unemployed, but another 28.5% were not employed for other reasons, such as carrying out domestic work at home.

Both younger and older people are most likely to be out of the workforce. In 2006, 34% of those aged 15–24 were not in the workforce – partly because they were increasingly likely to be studying or training. Also not in the workforce were 17% of those aged 25–44, 20% of 45–64-year-olds and 83% of those aged 65 or older.


Changing industries

Over the 20th century there was a decline in employment in New Zealand’s primary industries (such as forestry and farming); a growth, followed by a decline, in manufacturing; and very strong growth in services.

Since 1986 the changes within these areas of work have been quite dramatic. In that year the primary sector employed 11% of the workforce, manufacturing 21% and service industries 68%. By 2006 the primary sector employed 7% of the workforce, manufacturing 12% and services 81%.

Growing service sector

Economic restructuring and recession in the late 1980s and early 1990s had a major impact on New Zealand’s workforce. Between 1986 and 1991 the primary sector lost over 19,000 jobs, while over 84,000 were lost from manufacturing. Less dramatic job losses in manufacturing have continued.

A number of service industries, including education and health, have been growing strongly in recent years. The number employed in education has risen from 104,000 in 1996 to 142,000 in 2006, as the demand for education increased (particularly pre-school and tertiary).

The number employed in health services has grown from 108,000 to over 160,000. In New Zealand, as in all industrialised countries, demand for health services is predicted to continue to rise. This is partly because of an ageing population, but also because of advances in medicine, and an increase in incomes and health expectations.

Both the health and education sectors generally require a high level of education amongst their employees.

New skills for new jobs

As the major industries in New Zealand changed, the number of low-skilled manual jobs declined. There was a strong increase in highly skilled jobs across all industries, but there was also growth in non-manual lower-skilled jobs, primarily in the service sector.

Successive New Zealand governments have aimed to increase labour productivity by shifting from an economy that produced low-value commodities such as unprocessed farm produce, to one that produced high-value products such as international films or high-tech equipment. This required upskilling the population. In 1991 over a third of people over 20 had no qualifications, and just 10% of employed males and 8% of females had a university degree or higher qualification. By 2006 the proportions of those without any qualification had fallen to a quarter; and the figures for those with degrees had risen to 18% for employed men and 21% for women – one of the highest rates in the world. Increasing numbers of young New Zealanders were remaining in the education system after high school.

The rise in the number of well-qualified women in the workforce has been particularly noticeable. In 2006, 37% of employed women aged 25–29 held a degree or higher qualification, compared with 24% of men in that age group. There has also been a sharp increase in post-school qualifications among Māori. Between 2001 and 2006, the number of Māori with a bachelor’s or other degree increased by 73%.


Men’s work, women’s work

In the 19th century the women who migrated to New Zealand came as wives of migrants, potential wives, or domestic servants. From the time of European colonisation until 1968 – apart from brief periods during the First World War, the 1918 influenza pandemic and the Second World War – there were more men than women in the total New Zealand population.

Immediately after the Second World War most working-age men and women in New Zealand lived as married couples and raised children. Most men worked full-time, while women stayed at home to look after children.

By the early 2000s women were far more strongly represented in the workforce. In 1945 only about a quarter of the total workforce were women. By 1986 that had grown to 41%; by 2006 it was 47%.

Which women work?

The most important factors affecting New Zealand women’s participation in the workforce are:

  • their level of qualifications
  • whether they have children and, if so, the age of their children
  • whether or not they are single parents.

In the early 2000s women with young children had relatively low workforce participation rates, but many returned to the workforce as their children grew older. The percentage of solo mothers who work had increased significantly, but their employment rate remained low compared to women in many other countries. Women with husbands or partners were much more likely to be employed. As the number of couples who both work increased, balancing work with home life has become an issue for both women and men.

In the early 2000s government policy was to increase the number of women in paid work through the introduction of paid parental leave and expansion of early childhood and primary education. In turn, the growth of childcare brings more women into the workforce, since almost all childcare workers are female.

Gender in the workforce

As the proportion of working women increased, the proportion of men in paid work declined, from 90% of the total workforce in 1956 to 73% in early 2008. That downward trend was due to social changes such as a higher school-leaving age, more participation in full-time tertiary education and larger numbers of older men leaving the workforce.

The changes in the major industries also affected the overall gender balance of the workforce. The decline in employment in agriculture and manufacturing had a disproportionate impact on men, as these were male-dominated industries. In 2006 men still formed two-thirds of the agricultural workforce and 71% of manufacturing. In contrast, they were only 28% of the education workforce and just 17% of the health workforce. A particularly male-dominated industry is construction – 87% of this workforce was male in 2006.


Employers, employees and self-employed

As industries have changed, the proportion of employees to self-employed has shifted. In 1926 more than 20% of the workforce was either employers or self-employed. Since then, due to increases in agricultural productivity, fewer people have been employed in the farming sector, a key area for self-employment.

From the 1930s the state became a major employer. The growth of large-scale bureaucracies in both the government and private companies helped develop a relatively stable labour market for employees. The proportion of employers or self-employed in the workforce declined to a low of around 15% in the early 1970s.

From the late 20th century self-employment started to increase again. In 1986, 82% of the workforce were employees, but this fell to 78% by 2006. The percentage who were employers stayed stable at around 7%, but the self-employed rose from 10% in 1986 to 12% in 2006. In 1986, 1% of the workforce was classified as an ‘unpaid family worker’ – someone who works without pay for a family-owned business. This rose to 2% by 2006.

Self-employment and gender

Women are more likely than men to be employees or unpaid family workers. In 2006, 83% of women were employees compared with 74% of men; 5% of women were employers compared with 10% of men; and 9% were self-employed as against 15% for men. For unpaid family workers the figures were 3% for women and 2% for men.

Self-employment and age

Self-employment increases with age for both men and women. In 2006 only 6% of workers aged 25–29 were self-employed, and 15% of those aged 45–49. Although the overall number of people aged 70 and older in paid work was relatively small, almost one-third are self-employed.


Migration and work

People seeking employment are often motivated to migrate to another country, and changing sources of migration in turn affect the composition of the workforce.

New Zealand has a very mobile workforce. Many New Zealanders head overseas to work, and some never return. New Zealand also has strong inward migration and since the 1980s government policy has ensured that most new migrants are skilled workers.

In 1986, 17% of workers were born overseas, but by 2006 this had risen to 24%. In Auckland in 2006, 39% of the workforce was born overseas, one of the highest rates in the world.

In some areas of employment a very significant proportion of workers are foreign-born. For example the proportion of doctors born overseas was 52% in 2006, a rise from 36% in 1986.

Sources of migrants

After the Second World War migrants to New Zealand came from a much wider range of countries than before, when most came from the UK and Ireland.

A small but significant flow of people resettled from countries in continental Europe, such as Holland and Greece. Larger numbers migrated from the Pacific, and their numbers grew rapidly during the late 1960s and early 1970s. Many Pacific Island workers were employed in the manufacturing sector.

Asian people have lived in New Zealand from the early days of European settlement. Chinese in particular followed gold-mining strikes throughout the world and migrated to New Zealand to work in the goldfields. Although most Chinese gold miners were married men, their wives remained in China. There were only nine Chinese women to 4,995 men in 1881. From 1987 the number of people of Asian ethnicity entering New Zealand grew rapidly, most arriving as skilled migrants.

More recent migrants have included refugees and other settlers from countries in the Middle East and Africa, such as Somalia. Studies indicate that new migrants from non-traditional sources, especially those with poor English language skills, can face difficulties in New Zealand’s labour market.

Migration within New Zealand

The workforce is also affected by people who move from one part of New Zealand to another. Industries such as paper mills, mines and appliance factories develop over time and are frequently associated with particular localities. As these businesses grow, the workforce tends to move to within easy commuting distance. If the business closes, the local area may not have enough work opportunities to absorb surplus labour, so people move to areas with better prospects.

Seeking work opportunities was the major reason a very large proportion of Māori moved to cities from rural areas in the 1950s and 1960s. More recently, displaced workers have tended to move to Australia for similar work in industries for which they have skills and experience.


Ethnicity

As the New Zealand population becomes more ethnically diverse, that change is reflected in the workforce. In 1986, 88% of workers recorded a European ethnicity as one of their ethnic groups; by 2006, this had fallen to 69%. In 1986 Māori comprised 8% of the workforce but by 2006 this had increased to 11%. The strongest growth has been among Asians, from 3% in 1986 to 8% in 2006.

Multiple ethnicities

It has become increasingly common for people to identify with more than one ethnicity, and this is also reflected in the workforce. From the early years of colonial settlement there was intermarriage between European settlers and Māori. Sometimes inter-ethnic marriage was associated with specific occupations and industries, such as the Māori–Chinese community associated with market gardening in the early 20th century.

Ethnicity and age

In the early 2000s a much higher proportion of workers in younger age groups identify themselves as Māori, Pacific or Asian. For example in 2006, in the 20–24 age group, Māori made up 15% of the workforce, Pacific people 7% and Asians 13%. In contrast, in the 60–64 age group, Māori made up only 7% of workers, Pacific people 2% and Asian people 3%.

Multilingualism

In 2006 the Auckland region, which had the highest proportion of residents born overseas and the greatest diversity of ethnic groups, also reported the highest proportion of people able to speak two or more languages. In the working-age population, almost half of overseas-born people were multilingual, compared with 10% of New Zealand-born people. While some New Zealand businesses were using the non-English language skills of workers, this resource was not yet fully tapped.


Age

Age of workers

Over the 20th century the proportion of older people in the workforce declined, but by the early 2000s this was reversing. In 1986, 2% of workers were 65 years or older. By 2006 this had risen to 4%.

Due to the ageing of the general population, there were more potential workers in older age groups. Many older people were healthier than in the past and therefore able to remain in paid work. However, the main reason this age group remained in the workforce longer was because the age people qualified for national superannuation had been progressively raised from 60 to 65 between 1992 and 2002.

In 1986, 11% of men and just 3% of women aged 65 and older were in paid work. By 2006 this had risen to 24% for men and 11% for women. Among older workers the highest employment rates were in the 65–69 age group, with 41% of men and 24% of women employed in 2006. By 85 years and older this declined to 6% for men and 3% for women.

An ageing workforce

The larger proportion of older people in the paid workforce meant that 37% of workers were under 30 years of age in 1986, but only 25% by 2006. Also, in the early 2000s a smaller proportion of young people entered the workforce immediately after leaving school, as more carried on to tertiary education.

These trends had the effect of raising the overall age of the workforce. In 1996 half the workforce was older than 37. By 2051 half the workforce is expected to be older than 42.


Hours of work and productivity

Working long hours

From the early 20th century the long hours worked in New Zealand industry were a cause for concern. In 1936 the newly elected Labour government reduced ordinary working hours (before overtime was payable) from about 48 to 40 hours a week. During the Second World War there were further restrictions on the amount of overtime worked in various industries, particularly to protect the health of women and boy workers.

Who works the longest?

In the early 2000s New Zealand was one of a small number of industrialised countries, along with Greece, Japan and South Korea, where a significant proportion of the employed population worked long hours – defined as 50 hours or more per week.

Overall, in 2006, 23% of employed people worked 50 or more hours a week – 32% of men and 12% of women. Managers were most likely to work long hours.

Other occupations that often involve long hours of work include farmers, fishers and truck drivers. Younger people and those nearing retirement were less likely to work long hours. Clerical and administrative workers and sales workers were the occupational groups least likely to work such hours.

The trend for many New Zealanders to spend long hours at work was counterbalanced to some extent by a drop in the numbers who worked full-time. In 1986, 85% of workers were in full-time work, but by 2006 this had reduced to 77%. This reflected an increase in the number of young people who combined study with part-time work, and older people moving into retirement.

Labour productivity

Working long hours does not necessarily mean getting more work done. The two main forces for economic growth are labour utilisation (the total amount of paid work done in the economy) and labour productivity (the average amount produced by each worker).

In the early 2000s New Zealand had high employment rates and a large proportion of the workforce working long hours, so it had a high level of labour utilisation. However, the rate of labour productivity was much lower than many other OECD countries. From the 1990s New Zealand governments have explored ways to improve productivity by shifting to high-value, high-skill industries, where more is earned for fewer hours worked.


Hononga, rauemi nō waho

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How to cite this page: Paul Callister and Robert Didham, 'Workforce composition', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/mi/workforce-composition/print (accessed 23 October 2019)

Story by Paul Callister and Robert Didham, published 11 Mar 2010