Author Archives: mariesherlock

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.

The pipe dream of owning a home

Housing

What do young workers want?

For a number of years now, we have been told that compared with previous generations, the so- called millennials are seeking out something different- whether it be “purpose” in their jobs, flexibility to maintain a healthy work life balance or co-living arrangements.

Yet, behind all this hype about the millennials, each worker, whatever their age, requires the basic dignity and decency of having a permanent roof over their heads. Nowhere are the problems associated with precarious and low paid work more evident than in the area of housing and the capacity to access affordable housing with certainty of tenure and price, particularly in the main urban areas in Ireland today.

Looking at historical earnings data and income per age data from the CSO along with national house prices from the Department of Housing, Planning and Local Government database, going back almost forty years, it is possible to establish housing affordability by average earnings according to age over time.

This shows that in 1986, a young worker aged between 25 and 29 earning average wages for his or her age cohort was facing house values of 4.7 times their annual income. Twenty years on, that ratio had jumped to 11.92. This ratio obviously fell during the crash but in 2017 it was back up to 11.1.

Income to price ratio

Source: CSO Census data, National employment survey,EHECS, Dept of Housing, Planning and Local Government and own calculations.

It is no surprise then that 45% of all 25 to 29 year olds owned their house back in 1991, fast forward to 2016 and that share had plummeted to 12%. The situation for those aged 30-35 is not much better, with half of them owning their house in 1991 and the share dropping to just under a third in 2016.

For today’s average young worker, the prospect of being able to buy a house with their own resources anytime soon is remote. For young workers in precarious or low paid work, that prospect is even more distant, the difficulties of affordability compounded by lending rules that require consistency of income. And those prospects become even more remote as with house prices increases five times the increase in real wages.

During the boom years, we know that cheap credit stepped in to meet home ownership demand.  But with tight macroprudential rules, what lower paid and middle income young workers do now? Depend on the private rental housing market for their long term housing needs? For a lucky 25% of first time buyers, the impossible becomes possible with the help of a gift from parents to help with their mortgage deposit.

We know from the TILDA project on ageing in Ireland that in their wave three survey over 4000 older (aged 54+) persons, that some 48% of older adults provided financial assistance to their children.

The intended purpose of that gift was not clear, however 2013 research by the Social Market Foundation in Britain on parental transfers to children, found that cash transfers are made in lower income families as well as higher income families. The main difference was that on average lower income families transfer cash across generations for everyday consumption as opposed to strategically planned life events such as the purchase of a house.

No official data on housing downpayments is available here in Ireland but we can rely on the 2017 work of Central Bank economists Jane Kelly and Reamon Lydon that looked at the 2013/2014 wave of the CSO’s household finance and consumption survey.  They identify that almost one quarter of first time homebuyers had an inheritance.

For those that can’t access a financial gift, their future is bleak in terms of accessing affordable housing is bleak. Currently, the average worker spends just over 50% of their disposable income on private rent for a one bed apartment in Dublin, leaving them with little or no scope for being able to save for a deposit.

The economics of the housing market and the market control exerted by developers means there will no major glut of housing supply in Ireland any time soon. It is also a misplaced expectation that a simple increase in housing supply will dramatically reduce house purchase prices.

In that context, we need to get away from the mindset of thinking about delivering social, affordable and private housing separately. Any basic understanding of the housing market, and how past crises within it have been resolved, points to the need for the State to become involved in providing market rate and affordable rate rent housing to cross subsidise the social.

The State can and should get involved in building housing. It has the land; the Government itself admits it has 1,700 hectares alone in State agency and local authority control, it has the access to the cheap credit and it has the space within the fiscal rules.

An edited version of this appeared in the Irish Times on 10th, August, 2018.

 

 

 

Project Ireland 2040- can it be delivered and is it enough?

Cranes

On Wednesday, May 16th I spoke at the Infrastructure Ireland 2018 conference organised by Eolas. Presentation is here

Two questions hang over the new national development plan Project Ireland 2040; (i) can it be delivered and (ii) is it sufficient? While there is a lot of heat and light about the total spend, in reality the cumulative additional spend is modest and well within the fiscal rules. Of concern are the cyclical, political and operational risks-  almost 60% of the spend is backloaded 2023-2027- that is at least two governments away.

More importantly, is there is sufficient construction capacity to deliver? I talk about some of the structural issues within the industry that will significantly inhibit labour supply into the sector. All too often the focus is on State supports to apprenticeships and training. The industry also needs to reflect on the impact of sub contracting processes and the offer of little or no direct employment on the future supply of construction workers.

Lastly, we believe Project 2040 underestimates future housing demand. We explore the concept of of unmet housing demand- i.e. that household formation rates have remained stable between census 2011 and census 2016 not because people want to live in big households but because they can’t afford to live on their own.

Housing economics suggest that there will be no dramatic reduction in house prices anytime soon.  The concept of thousands of houses flooding onto the market to depress house prices is highly unlikely to happen because of who controls land supply. There is a significant generational issue here- younger workers on average wages face a major affordability issue. The most cost effective option is that the State develops the land it owns rather than parcels it off for sale. The State’s new Regeneration agency offers some ground for hope; coordination of zoned residential land for development and a focus on the necessary infrastructure to service it. The agency should adopt the lessons from our neighbours, the Dutch and the Scottish and take on a third function; development of the land itself.

Living income must also be a part of North East Inner City revival

Five lampsIn late February, the North East Inner City (NEIC) task force issued their first progress report. This excellent initiative was set up in 2017 with the ambition of supporting long term economic and social regeneration of Dublin’s north east inner city. At its heart are Sean McDermott street, Sheriff street, Portland Row, Summerhill, Ballybough and all their surrounding areas. To those of us who live or work there, it is very obvious that the scale of the challenge is huge. Resilient and proud, yes but with some of the rates of joblessness across the city.

The list of initiatives is long, the range is broad-encompassing security, the physical landscape, sport, community organisation, training and career guidance.  On top of existing state agency and Dublin City Council funding, extra has been provided to fund specific projects. So far so good, but I couldn’t help wondering about the immediate and longer-term impact of these initiatives on the area. Together, these actions are very important in striving to make the north east inner city, in the words of chair Michael Stone, a “safe attractive, vibrant, living and working environment for all.”  But will that impact persist when the extra funding is exhausted and the task force has to be stood down in a few years time?

Over the past decade, a lot of research has been undertaken about the impact of policies designed to boost areas of high disadvantage in the world’s major cities.  Most agree that a high level of employment is vital to regenerating an area. But its not just a job, it must be a good job with a fair income that can afford a worker and his/her family a decent standard of living. To be fair to the Chair of the NEIC task force, he recognises this, he talks about ensuring there are real job offers by local employers to local people.

How this is delivered is another matter. Measures to boost employment such as training, education and transport, business and telecommunications infrastructure have been shown to be necessary but not sufficient to deliver a persistent employment boost to the area. Issues such as skills mismatches, access to workplace experience, the quality of education and training and job quality have given rise to more disappointing outcomes than were expected.  The NEIC task force recognises some of these issues- they want to improve access to apprenticeships in 2018 and local businesses are encouraged to take on students for work experience.

However, the missing element in all these deliberations is income. The task force progress report rightly highlights the very high levels of unemployment in the area; 19% for women and almost a quarter of all working age men (24%) do not have a job. This is based on data from Census 2016 across 74 small areas in the north east inner city. However, the majority of the working age population in the north east inner city do have a job. And the issue then becomes about income and the adequacy of that income to provide for the worker themselves and their dependents.

The CSO’s census data from 2016 provides us with an insight into the types of jobs people in the north east inner city have. The rates of non reporting on certain census questions is above the national average, so we exclude them from our analysis, which may have the effect of creating a rosier picture than is actually the case.

Of the 5,148 households in our analysis located across the district electoral divisions (DED) of Mountjoy A and B, Rotunda A and B and North Dock C that encompass most of the areas names above, 21% of are headed by a person who is semi skilled or unskilled, compared with 14% for the whole of Dublin city.

In terms of occupations, there are fewer persons in managerial and professional roles living in the north east inner city which we might expect. The numbers in skilled trades is slightly above average for Dublin city, and again the numbers in what are termed “elementary occupations” is almost double (21%) the average for Dublin city (11%).

In their 2017 paper, “Job creation for inclusive growth for cities”, veteran researchers on the livable, inclusive cities question, Andy Pike, Danny McKinnion and their co-authors look at the probabilities of being low paid, underemployed or insecure amongst different occupations. When controlling for individual characteristics they find that there is over a 40% chance of being in a low paid, insecure or underemployed job if in an “elementary” occupation. These elementary occupations are found in the retail, hospitality, caring and leisure sectors.

These sectors were never highly paid, but many hotels and retail outlets would have traditionally afforded a decent income to their workers living in the north east inner city many year ago. Now most of this employment is on the national minimum wage or just above it and has very low levels of trade union membership.

So the answers to reviving the north east inner city are not solely about getting people into work, nor improving the area’s security and making available more amenities. Nor are the answers solely to be found in an area based strategy such as the North East Inner City task force- albeit this is very important. The answers also lie in national policy and in particular, we need to think about how to improve low wage workers’ income. A large share of the population of the north east inner city are in “elementary”, semi skilled or low formal skilled occupations with a high probability of being low paid, insecure and/or underemployed.

A living income isn’t strictly about a worker’s wage but about their hours of work and their terms and conditions in terms of sick pay and other benefits. Government can offer better support for a living income in low paid sectors through a number of mechanisms; encouragement for negotiated wage agreements in low paid sectors. To date, some sectors are refusing to engage in the Government established Joint Labour Committees designed to negotiate terms and conditions and secondly, Government can support workers’ right to be recognised by employers for collective bargaining purposes.

Getting this right along with the area based initiatives will be crucial to overcoming inter-generational disadvantage in the north east inner city.