Organisational Adjustment and the Labour Market in New Zealand

Abstract

Post-war New Zealand enjoyed exceptionally low unemployment rates as compared to other industrialised countries, especially after the boom years of the 1960s when unemployment rates rose in nearly all OECD countries. This can be explained by government policies regulating and protecting the economy from outside influences. Extensive use of high tariffs, import licensing and quotas meant that New Zealand had one of the highest levels of effective protection amongst OECD countries (OECD, 1990). The government also embarked on a "think big" campaign in addition to the active support given to a number of loss making government trading enterprises. The net result was that full employment was achieved through job creation and maintenance in those public and protected sectors shielded from foreign and domestic competition. The cost, however, was the reduced competitiveness of the export sector and "the creation of an insular, inefficient, increasingly rigid, inflation-prone economy-which proved ill adapted to external shocks and to the challenges and opportunities of a rapidly changing world economy" (OECD, 1990: 13). Since 1984, and the incoming Labour Government's radical change of strategy (i.e. commitment to free market policies), employment levels have fallen and consequently unemployment has risen.