The Labour Market and Rising Living Standards in 1950S Western Europe: the Case of the Netherlands
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The Labour Market and Rising Living Standards in 1950s Western Europe: The Case of the Netherlands. John Geoffrey Walker London School of Economics Dissertation submitted to the University of London for the degree of Doctor of Philosophy, September 1999. This thesis was funded by ESRC studentship R00429534344. UMI Number: U148242 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U148242 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 I (+£S£S F T l t l k o Abstract This thesis looks at the rapid rise in living standards in western Europe during the 1950s. It argues that this rise occurred as a result of structural changes in the labour force, changes that were associated with the high growth rates and industrial expansion o f the period. The thesis looks specifically at the Netherlands, where rising living standards went side by side with wage control. The purpose of wage control was to enable funds to be made available for industrial expansion. The wage control system and industrialisation polices are described, along with critiques that have argued that wage control failed to hold down wage levels. This alleged failure is rejected as the explanation of the rapid rise in living standards. A test of the effect of full employment on wage levels shows that wage rates in a number of industries where demand for labour was extremely high rose measurably by more than they otherwise would have done, but nowhere near enough to explain the rise in incomes during the period. The effects of sectoral change on male incomes are also calculated. Manufacturing increased its workforce during the period by recruiting young workers, new entrants into the workforce, who received higher pay than they would have received working in other sectors. Earnings have a tendency to rise with age, and the combination of these factors resulted in a median rise in male real incomes of over a hundred percent across the 1950s. A contribution to this rise was also made by the movement of older male industrial workers into office work, and by the movement of self-employed craftsmen into industrial employment. The rise in participation of unmarried women, particularly after 1952, increased the amount of earnings brought into households, with the result that household incomes rose even faster than male earnings. Table o f Contents. Abstract 2 Table of Contents. 3 lis t of Figures. 6 List of Tables. 7 Chapter 1. Introduction 10 1.1 Wages growth. 13 1.2 The case o f the Netherlands. 15 1.3 The structure of the thesis. 18 Chapter 2. Wage Control and the Industrialisation of the Netherlands. 20 2.1 The Netherlands after the Second World War. 20 2.2 The operation of the wage control system 30 2.3 The trade unions and wage control 38 2.4 The industrialisation of the Netherlands. 43 2.5 Conclusion. 46 Chapter 3. Wage Control and Incomes Growth. 48 3.1 Critics o f wage controlf: Roberts. 48 3.2 Critics of wage control: van Hulst 51 3.3 Critics of wage control: Brander, van Hulst and Mieras 61 3.4 Wage rates and income growth. 64 3.5 Conclusion. 67 Chapter 4. The Changing Structure of the Workforce. 69 4.1 How the structure o f the workforce changed, 1947-60. 69 - 3- 4.2 The Supply and Demand of Labour. 80 4.3 The growth of manufacturing employment. 86 4.4 Women’sparticipation in the workforce. 92 4.5 Conclusion. 97 Chapter 5. Full Employment and Wages Growth. 99 5.1 Measuring the effects of full employment 99 5.2 The distribution of income and how it changed 108 5.3 Wage drift. 114 5.4 Wage growth and the growth of national income. 118 5.5 Wages growth by industry. 122 5.6 Conclusion. 134 Chapter 6. Structural Change and Income Growth. 136 6.1 The net movement of labour. 137 6.2 Age and earnings growth. 149 6.3 The changing age structure of the workforce. 153 6.4 Employment growth of younger workers in manufacturing. 160 6 .5 Occupational change in the older workforce. 163 6.6 The growth of individual incomes over time. 171 6.7 Conclusion. 174 Chapter 7. The Growth of Household Income. 176 7.1 Households and household income. 178 7.2 Measuring Dutch household income. 184 7.3 Changes in incomes from pensions. 194 7.4 The income growth of working sons. 199 7.5 Increased women’s participation and household income. 202 7.6 Conclusion. 210 - 4- Chapter 8. Conclusion. 213 8.1 Rising incomes in the Netherlands. 213 8.2 International comparisons. 217 8.3 Some implications. 220 Bibliography. 224 - 5- List o f Figures. Figure 1. The Netherlands at the beginning of the 1950s. 23 Figure 2. Unemployment, investment and industrial production, 1950-62. 43 Figure 3. Employer's demand for labour, 1947-60, as a proportion of the number seeking work. 82 Figure 4. Quarterly changes in employment in mining and manufacturing, 1948-60. 89 Figure 5. Quartedy changes in male employment in mining and manufacturing (excluding food processing), 1948-60. 90 Figure 6. The growth o f employment in mining and manufacturing (excluding food processing), 1948-60. 91 Figure 7: Income distribution of the assessable population. Ill Figure 8. Annual rates of houdy earnings of male industrial workers aged 25 and over, compared with per capita national income at market pdces. 120 Figure 9. Cumulative growth of houdy earnings of male industrial workers aged 25 and over, compared with per capita income at market prices. 121 Figure 10: Age-eamings profiles of French employees, 1966. 150 Figure 11: Age-eamings profiles of British employees, April 1974. 151 Figure 12: Earnings growth of birth cohorts in Britain, 1963-73. 152 Figure 13: The relationship between age and income, 1959. 157 Figure 14: Age-incomes curves for selected occupational categories in the male workforce, 1959. 158 Figure 15: Employment in mining and manufacturing, and the mean income of 21-29 year- olds, 1950-59. 162 Figure 16: The relationship between age and income in the male workforce in 1950 and 1959. 172 - 6- List o f Tables. Table 1. Membership of the main trade union confederations, 1946-1962 ........................... 40 Table 2. The numbers of industrial disputes in the Netherlands, 1946-63 ............................ 42 Table 3. Indices of industrial production, 1949-60 .................................................................. 44 Table 4. The percentage of the male workforce in each age group, by sector, on 31st May 1947 ..................................................................................................................................... 45 Table 5. The Dutch workforce in 1947 and 1960 .................................................................... 71 Table 6. Structure of the Dutch workforce, 1947 and 1960 ....................................................72 Table 7. The paid workforce in 1947 and 1960 ........................................................................72 Table 8. Employees by branch of economic activity, 1947 and 1960, as a proportion of the total number of employees ................................................................................................ 73 Table 9. Net increase in employment in each branch of economic activity, 1947-60, as a proportion of the total net increase in employment ...................................................... 74 Table 10. Net increases in manufacturing employment, 1947-60, as a proportion of the total increase in manual and white-collar jobs ................................................................. 74 Table 11. The proportion of the employed workforce in each industry, 1947 and 1960 ..... 75 Table 12. Changes in the structure of the agricultural population, 1947-60 .......................... 76 Table 13. Employment in manufacturing, by age, 1960 .......................................................... 77 Table 14. The female workforce by sector, 1947 and 1960 .....................................................79 Table 15. Men registered as seeking work and registered demand for male labour from employers, 1948-60 .............................................................................................................83 Table 16. Women registered as seeking work and employers' demand for female labour, 1948-60 ................................................................................................................................ 85 Table 17. The proportion of wives in the paid workforce, by husband’s occupation, 1960. ..............................................................................................................................................94 Table 18. Percentage of married women in the paid workforce, by wife's age, 1947 and 1960 ......................................................................................................................................95 Table 19. Atkinson index values for 1946,1950,1955,1958 and 1960 ................................112 Table 20. Proportion of the industrial workforce (men and women) paid by time and tariff wages, 1951-59 .................................................................................................................