Category Archives: Blog

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.

 

Brexit Breakthrough- a glimpse at the future shape of EU UK relations ?

It almost feels too good to be true. A deal to conclude phase 1 of the Brexit negotiations fell apart at the start of the week because north/south assurances were not matched by clarity on the east/west relationship. At one stage during the week, it looked like no deal would be possible, such were the questions and concerns about the workings of “regulatory alignment” with the EU.

Four days later, a different approach to negotiations was taken. Instead of working out how to avoid the return to a hard border, the British government crucially focused on the what. In effect, they signed up to a guarantee that committed to no hard border between Northern Ireland and Republic of Ireland and no hard border between the island of Ireland and Great Britain. Critically, these guarantees apply whether there is a deal on Brexit or not.

The detail of how all this can be delivered remains to be worked out but this set of guarantees now binds Theresa May to a specific set of outcomes. In effect, she leaves herself with little wriggle room in phase 2 of the negotiations. In order to ensure no hard border north/south and east/west, it seems that the British government will have to sign up to a free trade agreement with no customs tariffs and a common set of regulatory standards with the European Union. Anything less will mean a return to a hard border.

The significance of this deal in the context of the Brexit negotiations is enormous. Over the past nine months, there has been a simple incompatibility in British and Unionist thinking about the implications of Brexit. It is not possible to “make our own rules”, “control migration and our borders” and exit the Single European Market and EU Customs Union while retaining a frictionless border. Shared membership of the European Union meant that the Republic of Ireland and the Great Britain and Northern Ireland had to enforce the same EU rules. The beauty of that joint membership was that it allowed the physical border to disappear through the dismantlement of tariffs and different product regulatory regimes, while at the same time giving political cover to Northern Unionists.

To a certain extent, the guarantees of December 8th deal resolves the incompatible issues despite British Government spin that they can still leave the customs union and the single market. The text of the agreement goes beyond a guarantee to uphold the Good Friday agreement and by extension the sectors singled out for north/south cooperation and expresses a commitment to the all-island economy. Honouring this commitment will depend on the free movement of labour and capital, not just goods and services. However, the caveat for this phase of the negotiations to exit the EU is that nothing is agreed until everything is agreed.

What now remains to be addressed is the how and there are plenty of questions. The opposite of a hard border is not necessarily a frictionless border. There is plenty of negotiating to be done yet.

 

Real concerns about future of post office services in Phibsborough

Statement by Marie Sherlock, Local Area Representative, Labour Party, Dublin Central

Last Wednesday, November 1st, staff at Phibsborough post office were notified that the post office would be closed down.

This is a really worrying development as the post office serves a large population and is a critical resource for pensioners, social welfare recipients, those who need to purchase bin tags and the many residents who depend on the services within the post office.

It is essential that the post office offering a comprehensive range of An Post services remains in the heart of Phibsborough.

I understand there is a commitment to contract out the post office service to a private provider but there is no guarantee as to the range of services that will be offered in future and no clarity as to where this will be located.

I have written to An Post and the Minister for Communications to relay my concerns and to object to any diminution of post office services for Phibsborough.

I have also sought clarification on a number of key issues; the timing of the closure, the intended use of the current post office building, the intended location of the new post office service, the volume of services to be provided in the new post office and how that will compare with existing services and the staffing of the new service.

No change must take place until we have guarantees that there will no diminution of existing services in the future.

Strong unions and gender neutral parental policies critical to closing the gender pay gap

November 3rd marked EU Equal Pay Day. Women in Ireland are, on average, paid 13.9% less per hour than men. The gap is even more stark when comparing annual average earnings- 36.8%.

Part time work and a high share of females in low paid occupations and sectors is part of the cause, but there are other factors at play. I wrote an article in the Irish Examiner today discussing these issues and setting out specific recommendations for closing the gap. Link here.