Saturday 16 December 2017

Little evidence to support claims that jobs are more precarious for everyone

Since job tenure was first measured in 1995, the largest share of the employed workforce at any given time has been those in their current job for 10 years or more.
Since job tenure was first measured in 1995, the largest share of the employed workforce at any given time has been those in their current job for 10 years or more.
Dan O'Brien

Dan O'Brien

Life is becoming more precarious for most of us. The job-for-life is increasingly a thing of the past. More people are on short-term contracts. Fewer people have steady jobs in manufacturing and more people are flipping burgers. The least fortunate have been "left behind" entirely.

This narrative of how the rich world have evolved since the end of the golden age of capitalism in the 1970s is now the received wisdom. It is used as an explanation for almost every political development these days. But how much evidence is there to support it?

Given how commonplace this view of our world is, one might expect there to be mountains of reports and studies setting out the hard evidence behind it. Amazingly, numbers to back up the thesis are much more scarce than one might expect.

One reason for this is a lack of long-term and comparable data. Since the 1990s there have been Europe-wide surveys on the labour force and working conditions, which will provide valuable time-series in the future. However, these cover only a shortish period which includes the so-called "great moderation", a period of reasonable and stable economic growth accompanied by low inflation (that period ran from around 1993 to 2008).

That said, we are not flying blind - some good data exists.

Despite much talk about fragmentation, the bulk of jobs in the OECD remain full-time. In 2015 they accounted for 83pc of total employment, down from around 87pc of those employed in the 1980s. Given the extent of change to work life over this time, a shift of a few percentage points is small and does not suggest any significant increase in precariousness on average across the OECD. Indeed, with aging populations and more people deciding to see out their working lives on a part-time basis, this factor alone could explain the small overall change.

What about the share of the workforce who are involuntarily in part-time employment - defined as people working less than 30 hours a week because they cannot find permanent job. At 3.7pc of the labour force in the OECD, the rate remains low, even if it has risen from a stable 2pc in the period from the 1980s up to the turn of the century, as the accompanying chart shows.

The chart also shows that involuntary part-time work did increase markedly in Ireland during the recession. Although it has fallen in the past two years, it remains well above the rich world average, at 7.1pc. That reflects the depth of the labour market crisis in Ireland compared to most other countries. But the bigger OECD picture from this perspective certainly does not support the thesis that there has been a sea change in precariousness of work affecting swathes of the population.

Another measure of precariousness is how long people spend in a given job. With the aforementioned decline of the job-for-life, one would expect to see more job churn. But the OECD-wide data does not show that.

Since job tenure was first measured in 1995, the largest share of the employed workforce at any given time has been those in their current job for 10 years or more. They accounted for one third of all workers in 1995, exactly the same as 2015. The same is largely true of the other tenure durations over the past two decades and there has been no increase in those in jobs for very short periods

The incidence of low pay (the percentage of workers earnings less than two-thirds median earnings) is often raised in Irish political debate. English-speaking countries tend to have a higher rate, and two countries that do have longer-term data are the UK and US. As it happens, the incidence of low-pay has hardly changed in either country over a quarter of century - a steady one fifth of Britons and one quarter of Americans have been classified as being in low-paying jobs since the early 1990s.

That, however, has masked changes in terms of gender. In both the UK and US, the percentage of low-paid female workers has fallen markedly since the 1970s, while the percentage of males has increased, especially in the US (despite these improvements, however, women are still more likely to be in low-pay in most countries).

For good reason, inequality and precarious work are often linked. And there is no doubt that increases in income and wealth inequality have taken place in many rich countries.

But it is far from universal and the perception that the whole of the developed world is becoming more unequal may be partly due to trends in the United States. That country has always been the least equal when it comes to income distribution in the developed world over many decades, and the increase in inequality over those decades has been much bigger than the rich world average.

So from this perspective there is a lot more to the "left behind" argument in the US than in any other country. That is also the case in terms of the share of the population that is employed, as this column has discussed in detail before.

Related to the idea of a precariat - a social class formed by people suffering from a condition of existence without predictability or security - is the rise of joblessness, as a result of globalization and/or technology. Yet in every single rich economy bar none the number of jobs has risen since the 1990s, when globalisation really took off.

That is almost as true for the share of the adult population at work. It has increased in 20 of the 23 richest countries in the 20 years to last year. The exceptions are the US and Greece, where significant falls of around five percentage points have been recorded over two decades (perhaps surprisingly, the employment rate has also fallen in Denmark since the mid-1990s, but only marginally).

When put together these indicators suggest that the US is the only rich country for which there is a decent amount of evidence to point to a significantly larger share of the population being left behind. The evidence for the rest of the OECD, at least from the mid-1990s when more data series are available, provide little to back up the thesis that ever larger shares of rich country populations are living more precarious and poorer lives.

Sunday Indo Business

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Search 1,000’s of jobs on IrishJobs.ie

IJ

Promoted Links

Also in Business