Monthly Archives: November 2018

Part 4 The paradox of plenty- why we all need to worry about precarious work

Precarious workLooking from the outside in, the Irish economy is performing really well at the moment- on course to have the highest GDP growth across the EU for the fifth consecutive year.  Yet ask any young worker on average earnings about their prospect of ever purchasing a home, particularly in Dublin or a hard-pressed young couple trying to pay childcare and a mortgage or rent out of their combined average earnings and they will probably tell you they don’t feel they are doing particularly well at the moment.

This issue goes to the heart of how income is distributed in Ireland. It is measured in two ways; the first relates to how much workers can claim from the proceeds of output in terms of wages and taxes paid, relative to the owners of capital who elicit a return in the form of rents, dividends and interest paid on loans owing. This is the labour-capital share of output. The second relates to how evenly that labour and capital income is dispersed between various households.

Over the past thirty years, there has been a fivefold increase in GDP here in Ireland. Based on adjusted labour share data in the EU commission’s ameco database, we know that back in 1987 some 65.9% of national income was distributed to households, thirty years on in 2017 that wage share has dropped to 37.1%; the lowest across the EU28.

So the overall pie has got bigger but the slice for households from employee’s income has got proportionately smaller. Importantly, within that slice, we know from ESRI work on long run income growth and income distribution that all households are better off now compared to households across the income distribution three decades ago. What stands out is that with the exception of the lowest 10% of earners, all households saw their income more than double between 1987 and 2014.  Trying to understand exactly how much higher income households are better off becomes complicated when we factor in non-earned income. This is generated from rents, dividends and share options. For the top 10% of earners, self employment earnings and income from other sources account for some 15% of overall income.

What has all of this got to do with precarious work?

In the first and third article in our series, we highlighted the transformative impact that automation, digitalisation of production and the rise of digital platforms are having on how firms are organized and good and services are produced. Each of the three innovations have implications for how we think about the role and power of workers, employers and the owners of capital in today’s world of work.

In their 2017 discussion paper on managing automation in a digital age, the Institute of Public Policy Reform (IPPR) in the UK note that the changes brought about by technology challenge some of our fundamental assumptions about how the world of work operates. In particular, they highlight concerns about how technology may alter “the role of employment as a primary means of distributing reward, labour’s position as a central factor of production, notions of scarcity and returns to scale and how we organise working time.” Many of these factors point to an increasing precariousness and insecurity of work.

Taking these concerns to their logical conclusion, the IPPR note that automation and the control of many by a small number of robots may give rise to the “paradox of plenty.” In short, technological innovation  may give rise to higher output but lower gain for workers and a widening inequality in the distribution of income between the owners of capital and workers. Not only would this have very serious implications for workers and their household income, their reduced purchasing power would also have a serious longer term impact on the wider macroeconomy.

Technology is not the only future driver of a global and national trend towards declining labour income. The rise of so called “super star” firms also plays a part in concentrating greater amounts of resources in fewer hands.

In their latest Economic Outlook, the OECD highlights that on average companies across advanced countries are effectively spurning the opportunity to adequately reinvest in their business in favour of the accumulation of cash piles. At a time when returns from bank deposits are at historic lows and the returns on investment are very high, we would expect firm investment to be booming. Instead companies have opted to sit on large profit piles and not distribute the gains between the owners and workers. Why do this? In the Irish case, it would seem that the existence of super profits and a desire to maintain lower tax liabilities are reasons.

When we look at the Irish situation, the experience of US multinationals stands out. The presence of US superstar firms has long been a feature in Ireland with global leaders in pharmaceuticals and technology located here. In his comparison of multinationals located here, John Fitzgerald highlights the extent to which US MNC’s do not repatriate their cash. US tax rules has meant for many years that US companies located abroad could “defer” repatriation of their profits and thereby put off paying US corporation tax. Ireland’s low corporate tax regime meant it was more attractive to “park” profits in Ireland. While changes were introduced to the US corporate tax code in 2017 to limit the amount of tax deferred, the new rate is hardly penal. The result for Ireland is that approximately 40% of corporate tax revenues in this country comes from just 10 companies, the bulk of whom are US multinationals.

So where does that leave us? While Ireland’s public finances may enjoy the benefit of US multinationals paying significant corporate tax bills here, there is a wider and longer-term issue as to how profits are distributed via wages and taxes and reinvestment back into companies.  The macroeconomic impact of concentrating greater market power and greater resources in fewer hands means there is less to be redistributed to incomes, taxes and by extension, social spending.

How do we respond? No one measure will ensure greater distribution of income to workers. But a series of actions can.  There is a growing volume of research that has found that increased financialisation of companies is a strong predictor for the decline in wage share within countries.  So a strong case must be made for enhanced financial and prudential regulation of companies. As a start there needs to be greater transparency in the reporting obligations of unlimited companies.

In order to protect workers from precarious working conditions, we need to see stronger enforcement of existing labour rules so that they are worth the paper they are written on. And we need to have stronger welfare systems to mitigate the uncertain effect of flexible working conditions. We know from looking at the experience within the Nordic countries, that there is a high correlation between well designed, flexible welfare systems, lower than average wage dispersion and a higher than average wage share.

And finally, we need a strong legislative framework to support collective bargaining in this country. That involves the right to bargain and to be recognised for trade union negotiations. In Ireland at the moment, there is the right to benchmark wages against other workers doing similar work, provided certain criteria is met. That is not the same as the direct right to be recognised for trade union negotiations.

Again there is a growing volume of research that shows that higher union density and greater union coverage are associated with a higher wage share and lower income inequality respectively.  In their review of studies on the income share, Guschanski and Onaran (2017) highlight that union density is the most robust or consistent variable exerting a positive impact on the labour share within a sector when compared with all other variables. Union density is the proportion of workers in union membership within a workplace. And in terms of the distribution of income within that wage share, 2015 research by OECD economist Oliver Denk finds that top earners obtain a smaller share of the total wage income of an economy when a majority of all workers are covered by collective wage bargaining. He used data from Eurostat and the international trade union database ICTWSS to compare wages shares with collective bargaining coverage.

Technological advances and the increasing concentration of market power by companies in certain sectors means that the power balance between workers and employers remains greatly skewed. In that context, precarious and insecure work will remain part of the workplace landscape. Overcoming it requires stronger unions and more collective bargaining- something SIPTU is striving towards every day.

Is precariousness the future of work?- part 3

Precarious work the future

Precarious work in Ireland is not new. Since the foundation of the ITGWU and SIPTU, it has been an almost constant feature of the Irish labour market over the past 100 years. Casual labour on the docks in Dublin since the turn of the 20th century, agricultural labourers working across thousands of Irish farms, the emergence of fixed term workers in the 1990s and workplace innovations that saw the development of the temporary agency worker in the early 2000s and more recently, “if and when” contracts.

Each time, the union movement has responded by organising workers in those sectors and in latter years ensuring that legislative protections are put in place to create a level playing field between permanent and insecure workers.

We now have a new set of challenges.  Already, we have highlighted that increasing automation and the digitalization of production are transforming how firms produce. The emergence of digital platform companies is transforming how companies are organised.

With regard to the impact on job quality from all of these innovations, the most obvious concerns lie with the emergence of digital platforms and so called “crowd sourcing”. In short, digital platform companies depend on highly automated digital processes to connect their services (remotely provided by workers whose only tool is typically their computer/digital device) with their customer. The pool of workers typically compete for work and in their review of new forms of work in 2015, Eurofound highlight that this work can encompass anything from food delivery, cleaning, graphic design, marketing and website management.  In how they are organised, digital platform companies are radically altering how firms recruit, manage and retain staff.  The (almost) zero marginal cost of taking on workers means that firms can scale up or scale down in way previously unrecognisable. In short, the role of the worker in these firms is dramatically different.

How big it is in Ireland right now? We don’t really know- some like Uber are precluded from operating here due to tight regulations surrounding those who provide taxi services. But walk around Dublin and you’ll see a new breed of couriers on bikes- this time delivering meals. The less obvious but just as significant group of platform workers operate out of their homes or from the growing stock of short term rental offices.

One potential indicator is the emergence of serviced office companies here in Ireland. Although not exclusively aimed at gig workers, serviced office companies play a key role in the gig economy by renting out “hot desks” and temporary office space to workers on an hourly, daily or weekly basis. In Dublin alone, the largest real estate brokers are reporting huge growth in this area in a very short period- by the end of 2018, it is expected that serviced office space will have mushroomed to over 20,000 square meters in the Dublin area- that’s enough space for between 4,000 and 7,000 gig workers.

Some present platform work as a great innovation for micro entrepreneurs”.  However, a 2015 ILO survey of crowdworkers on Amazon’s Mechanical Turk platform and the Crowdflower platform presents a very different picture. They found that for 40% of respondents in a survey based in the US, crowdworking was the main source of income with an average of 30 hours work per week. These respondents reported that they earned 80% or less of the federal wage and that they spent 18 hours seeking out work for every hour worked. Most respondents reported being under employed.

The extent to which digital platform work becomes a major driver of precariousness depends on whether it assumes the position of primary or supplementary income source for a worker. Eurofound (2017) research suggests the scale of this work remains very small for the time being. Estimates suggest that 0.5% of all workers are employed in digital crowdworking at any one time. This figure was derived from CIPD (2016) research showing that in the UK, only 4% of workers were working for digital platforms at one time, with just 1% dependent on it as a source of income.

Arguably, the second key challenge to decent work may well come from the increased demand for care sector workers over future decades. In their 2017 report on future health demand in Ireland, Wren et al  estimate, based on certain assumptions relating to population growth, unmet demand and healthy life expectancy, that demand for home help hours will increase by over 48% in the fifteen years to 2030. This will necessitate significant recruitment and from SIPTU’s detailed knowledge of the sector, a lot of private sector care work is precarious with part time or variable hours and low pay.  The OECD highlight that non- standard work creates job opportunities for those that may not otherwise be able to take up so-called “standard work” and this is particularly relevant to the high numbers of females over the age of 45 who are currently outside the labour force.

So what to do? As the international organization tasked with setting labour standards and the promotion of decent work, the ILO, put it, the goal must not be to make all work standard, but rather to make all work decent.

That is why SIPTU and ICTU are pushing politicians to ensure we get the Employment Miscellaneous Provisions Bill passed through the Oireachtas. It sets a threshold of decency for new workers in being able to access a contract of employment within the first five days of work and negates the effect of an “If and when” contract by ensuring a minimum weekly payment according to the lessor of the two; 25% of contracted hours or 15 hours at a rate that is three times the national minimum wage or minimum wage set down for the sector by an employment regulation order.

But it is not enough. Collective bargaining is the only real tool to improve worker’s living standards. While the challenges are enormous, the German union IG Metall has agreed a crowdsourcing code of conduct with eight German based digital platform companies, while Delivery Hero, a food delivery service has signed an agreement with EFFAT- the European confederation of unions covering food , agriculture and tourism. Likewise in Austria, a works council has been established in the Foodora food delivery company. In Denmark, the 3F union entered into a collective agreement with digital platform company; Hilfr.dk which provides private cleaning services. The agreement, claimed to be the world’s first, covers minimum wages, sick pay, holiday pay and pensions.

Here in Ireland, we have had groundbreaking legislation enacted both in 2015 and in 2017. Last year, collective bargaining legislation covering freelance workers was signed into law. This marked a big step forward in ensuring that those who are classified as “dependent” self employed can collectively bargain for their terms and conditions.

In 2015, legislation was introduced to allows groups of workers to benchmark their terms and conditions with similar workers in other firms. To date, SIPTU has used this legislation to improve the terms and conditions of hundreds of its members and within a short time, it will be used to improve the conditions of many thousands more.

For trade unions, our challenge is to overcome worker fear and employer hostility and increase membership where precariousness is greatest. We know that for workers the best protection against precariousness is through collective bargaining and the security of having their terms and conditions negotiated and enforced through membership of a trade union.

Precarious work in Ireland Part 2

SIPTU health

 

Just days before Christmas 2017, the European Commission issued a proposal to member states to make working conditions across the EU more predictable and transparent. In it, they highlighted that across Europe, there are between 4 and 6 million workers working “on-demand” or on intermittent contracts. Another 1 million are subject to exclusivity clauses where they cannot work for anyone else; even if their current employer is not offering them sufficient work! And of those in temporary work, only a quarter transition to a permanent role.

But these figures do not present a full picture of precarious working conditions across the EU and in Ireland, we do not have a good grasp of the scale of that type of work in this country.

By its very nature, the concept of precariousness is hard to define.

Those tasked with looking at these labour market issues; the International Labour Organisation (ILO), Eurostat, Eurofound and the European Commission employ a range of definitions for insecure and precarious work, but we can combine them to characterise precarious workers as those that find themselves uncertain with regard to working hours required and their tenure or security of employment, vulnerable with regards to the amount and frequency of pay and unsupported with little or no access to state supports in terms of jobseekers benefit because of the hours and days they work.

However, the numbers only tell part of the story.  This is where some commentators fall into the trap that if it isn’t measured, they don’t believe it. The reality is that there is no full comprehensive measurement for what we believe to be precarious work. And the reason for that relates to the issue of risk.

Risk is the defining characteristic of insecure work and the greater the risk or responsibility borne by the worker as opposed to the employer for a worker’s security of income, stability of employment and access to social security, the greater the precariousness of that job.

Not all insecure work such as self employment is necessarily precarious. Although we know that in 2016, some 41% of Class S PRSI contributors (self employed not including proprietary directors) had a gross income of €20,000 or less. Similarly we know from the dependence on the family working payment (formerly FIS) that not all full time permanent work guarantees adequacy of income.  Looking from the outside in, a worker with a permanent contract may appear secure but their variable hours and inconsistent income tell a very different story.

In that context, no single type of work or occupation can be classified as precarious.

However, we understand that those in full time temporary employment and those reporting as being in part time under-employment are at most risk.  CSO labour force survey data suggests that in 2017 just over 175,000 workers found themselves in this situation.  Alongside this, the Department of Social Protection has produced a very conservative estimate of 7,500 workers in disguised self employment, a figure many at the coalface of recruiting union members in the construction sector would contest as too low.

The focus on precarious work to date has been on worker’s lives and rightly so. The recent report by Tasc “Living with Uncertainty” excellently details the day to day lived experience of those working in precarious jobs and the adverse implications arising from this work life for housing security, self care in terms of health and family formation decisions.

Similarly, there has been a lot of research undertaken internationally on the lifetime impact of initial world conditions when young workers enter the labour market. Well known work by Autor and Houseman (2010) in the US looked at the so-called stepping stone effect from temporary agency work and fixed term contract work into permanent work and the initial work experience on employment prospects and lifetime earnings. Compared with fixed term contracts, those in temporary agency work had a lower probability of getting permanent employment and endured a larger earnings penalty over a longer period.

CSO’s labour force survey data tells us that the share of young workers aged 25-34 in temporary work has been edging upwards over the past two decades. In 1998, some 6% of all 25-34 year olds were in temporary work.  At the height of the economic crisis here, this share rose to 10% in 2012 and it was 8% in 2017.

With regard to part time, almost one quarter of all those in employment in 2017 under the age of 35 were in part time work, up from less than a fifth (18%) back in 2008. If we consider that a share of younger workers are combining work and study, this figure alone need not give cause for alarm, provided young workers have access to consistent hours and decent pay, irrespective of the contract type.

However, 10% of those aged 24 and under who are working part-time reported being under-employed. It is these workers that we regard as being in a particularly precarious work situation. While we don’t know the precise reasons for that underemployment, there are strong grounds to believe that this is part of the exploitative culture in certain sectors where “if and when” contracts and variable hours exist.

Precarious work is not new. What is new is that precarious work is now emerging in sectors previously thought unimaginable such as third level education and that for some sectors, particularly those that rely on digital platforms, their business model or the very basis of their business depends on precarious work practices to operate and survive. We know from the CSO’s labour force survey data that in the education sector, just one in eight workers were on temporary contracts in 1998. It was one in seven in 2017.

How workers respond to this challenge will be crucial. Many SIPTU members have found themselves on permanent contracts but working variable hours in sectors such as logistics, distribution and aviation. It was only when workers came together as SIPTU members and made their case collectively that they were able to achieve higher levels of guaranteed paid hours.

In the health sector, thousands of home helps achieved a major breakthrough earlier this year when together as SIPTU members they fought and won the right to increased hours and better conditions. And in the third level education sector, SIPTU’s work has ensured full time lecturer status for many who were previously in ill-defined lecturing roles with uncertain hours. Our goal is to ensure that university lecturers can access secure, decently paid employment contracts and we are now at the stage where Government now accepts this principal via the recommendations of their commissioned report produced by  senior counsel Michael Cush.  Our next step is to ensure it is implemented.

For SIPTU, the motto is simple; united we bargain, divided we beg.

Series on Precarious work in Ireland – Part 1 Behind the shine of Ireland’s employment growth rate

With the exception of the stratospheric growth between 1991 and 2006, the pace of employment growth over the past six years in Ireland has been the fastest over the past 90 years.  At a glance, this is great news.

However the world of work, as we know it, is changing and of course, not all of it is bad. Looking at the CSO’s Labour Force survey, we see that there have been significant structural changes to the nature and composition of employment here in Ireland over the past two decades.

The average age of entry into the labour market has increased because of a welcome increase in educational attainment. In 2007, close to 20% of all those aged 15-24 were in employment. Ten years on, that share fell to 11%.

The increase in female labour market participation has been the single greatest change to the Irish labour market. Between 1998 and 2017, the number of women in employment grew by 59%.  Almost three quarters of all workers working 30 or less hours per week are women and so it is no surprise that there has been a significant slide in average hours worked per week over the past two decades. In 2017, one fifth of all workers were in so-called “part time” work- working less hours compared with full time work in a particular workplace.

There has also been a major shift in the type of jobs that workers now undertake. In 1998, just over one third of all jobs were in industry and agriculture. Nineteen years on that share has fallen to less than a quarter of all jobs with the lion’s share now accounted for by services.

If we scratch further below the surface, we find concerns about the quality of some of these jobs. A major debate has taken off in recent years within Europe and in the US about the quality of work and there is little evidence to suggest that Ireland should be immune to these concerns.

In the early years of the employment recovery in Ireland, a key feature of that recovery was an increase in the availability of temporary and part time work. Now in 2018, almost all new jobs are in full time employment, giving rise to a debate in some quarters as to whether insecure employment is merely a temporary feature of the recovery.

It is not. In Ireland in 2017, almost one in five workers woke up each day to some type of insecurity surrounding their livelihoods, be it the length of their contract (full time temporary workers), insufficiency of their income (involuntary part-time worker), those in self employment with no paid employees or those working for a family member (“assisting relatives”) with no individual access to social supports in the event of a change in circumstances.

When we look at 20 years of data contained in the CSO’s Labour Force survey we see that the overall share of those in some form of insecure work has remained remarkably persistent and stable over the past two decades. So it’s not that this is a new phenomena. Insecure work in some shape or form has always existed. It has just evolved into new work practices in some well established sectors; 9% of all plant and processing jobs were in temporary contracts in 2017, up from 5% in 2007 while those working in education have seen a rise in the numbers on fixed term contracts such that one in seven in that sector are now not on permanent, secure contracts.

On the ground, SIPTU members report that in hospitality and manufacturing, temporary work is on the increase while in construction, there is has been a dramatic reduction in direct employment. Instead, the bulk of general operative work in construction is now available via temporary work agencies.

What are behind these trends? Multiple factors are a play here. Greed remains an age old feature of some employers’ motivations whereas for others, a big increase in how companies debt finance their activities, so called finanacialisation shapes how they recruit and retain. For these employers, their profit maximisation strategy depends on minimising their cost base to the greatest extent possible.

The design of our social welfare system also plays a part in that it is cheaper to take on “self employed” persons than directly employ workers because of the differential between Class A (most employees) and Class S (self employed) PRSI contributions.

And technology is transforming how almost all of us work. Eurofound identify three separate “vectors” of transformative change in the workplace due to advanced technology; automation, the digitalisation of production and digital platforms.

While so called “gig work” has always existed in sectors such as the arts and media, the growth of digital platforms has meant that this work, also known as “crowd employment”, is now becoming a more common feature in conventional sectors such as food delivery, transport, personal services and desk based work.

The extent to which automation and the digitalisation of production will make employment less secure and more precarious is not yet clear. The digitalisation of work refers to the increasing use of data to understand, control and alter production processes. With this there are concerns about worker input, worker autonomy and management control.

A lot of fear been expressed about the impact of automation on employment and whether there will be less jobs, worse jobs or better jobs in the future. To date, little research has been conducted on the impact of these changes on the Irish workforce. While the past is not a good predictor of the future, the legacy of each phase of technological revolution going back to the 1700’s and through the early 1800’s (steam and railways), late 1800’s (steel electricity and heavy engineering) and early 1900’s (oil, automobile and mass production) was that there was continuous change, the “creative destruction” of old jobs, reform of existing ones and the creation of new ones.

Right now, we are trying to better understand how these new work practices are impacting on workers’ quest for a decent income and fair working conditions. But we do know this much; successive studies demonstrate that when workers are members of a trade union, there is a lower probability of being in precarious or insecure work.