Tuesday 12 November 2019

Richard Curran: 'There's lots of work but where have all the good jobs gone?'

Closure: Helen Downes, Shannon Chamber of Commerce speaking to the media after the job losses at Molex, Shannon. Photo: Eamon Ward
Closure: Helen Downes, Shannon Chamber of Commerce speaking to the media after the job losses at Molex, Shannon. Photo: Eamon Ward
Richard Curran

Richard Curran

Your heart would go out to Molex staff who were told last week they would lose their jobs with the closure of the Shannon operation. It is always difficult to see workers get the bad news that a place is going to close down and jobs will be lost.

In this case, it was 500 jobs and it came in the same week Novartis, the Swiss pharmaceutical giant, announced 320 jobs would go from its Cork operation.

It automatically prompted the regular kind of script about multinationals, the fragility of foreign direct investment (FDI) and whether we are now at some kind of turning point in the economic cycle. Even the Bishop of Cork weighed in, urging policymakers to focus more on developing indigenous employment and businesses.

Amid all the publicity and soundbites, one comment stuck out for me.

A man at the Molex plant said he had worked there for 46 years.

If you have a multinational presence in a factory in Ireland which employs people for close to 50 years, these really are good jobs. And it goes against the perception that FDI jobs are somehow fly by night, or easy come, easy go.

The reality is that FDI jobs are among the best in the country and a great many of these employers remain here for the long haul.

The challenge is whether the current crop of major multinational employers will still be around in 40 years' time.

Will somebody joining a Google, a Facebook or an Amazon as an employee in Ireland today still have a job there, if they want it, 40 years from now? Government policy and IDA practice have tried to make these jobs as sticky as possible. By and large, we have done incredibly well from FDI and, relatively speaking, we do not have a massive churn of jobs.

At the peak of the Celtic Tiger boom in 2006, we were already employing fewer people in FDI jobs in Ireland than we had been in 2000. During the crash years, all the stops were pulled out to attract more investment and more jobs.

It has worked spectacularly. So much of the publicity around FDI in recent years has covered the surge in corporation tax receipts and whether they are sustainable in the long term.

Yet the underlying and very real economic contribution from FDI can sometimes be undervalued.

David Blanchflower has written a fascinating book about the end of so-called 'real' jobs. Called 'Not Working: Where Have All the Good Jobs Gone?', the book examines what is really happening behind very low unemployment figures in countries like the United States and Britain.

Blanchflower points to a very real conundrum. Since the financial crisis of 2008, employment in the US and UK has reached record highs. Yet, British workers haven't had a pay rise in 10 years.

American employees have the same purchasing power as they did in 1988. He says that labour markets are not functioning properly because many people categorised as employees are not working as much as they would like to. He concludes that under-employment, which remains above pre-crisis levels in both the US and the UK, is the missing link between the employment rate and average wages.

Job stability is also a factor here. Since 2006, across the OECD, average job stability (as measured by job tenure, the length of time spent in the current job) has increased in a number of countries. To some extent, this is due to the increase in the share of older workers, who are likely to stay in the same job for longer.

Strip that out and interesting patterns emerge. The largest declines in tenure have occurred for low-educated workers. Under-employment has increased in many countries over the past 10 years, according to the OECD.

Some of this, especially in Ireland, Spain and Greece, is explained by the fallout from the crash. But the OECD also points to structural changes like growth in the service sector, where casual, part-time work is more prevalent.

There has also been growth in the employment share of low-skilled occupations and the spread of non-standard forms of employment with no guaranteed hours. According to OECD studies, there have been small increases in the probability of low-paid employment for the young and for workers with medium education.

But there has been a pronounced deterioration in the labour market position of the young with less than tertiary education in many countries. We are told that in the future, lifetime employment will disappear. Job mobility will increase and people will move from one position to another.

Sometimes this is even portrayed as a wonderful opportunity.

It may be good for a time, but it carries with it prolonged uncertainty, risks, the need for constant retraining, and potential for a cliff-edge drop in earnings, not only at retirement but as you get closer to retirement.

So what does all this mean for Ireland and the mix in our economy of foreign multinationals and indigenous companies?

Firstly, we cannot undervalue the contribution FDI has made to the economic recovery.

According to the annual employment survey, back in 2008 there were 158,000 full-time employees of foreign-owned state agency-assisted companies in Ireland. The figure for indigenous agency-assisted jobs was also 158,000. By 2011, the bottom of the cycle, foreign-owned firms employed 10,000 fewer people, but indigenous firms employed 22,000 fewer. By 2017, foreign-owned employee numbers had gone up to 202,000 and are now at their highest level ever. Indigenous-owned firms had clawed back to a record 177,000.

But given they had both started at the same figure in 2008, there were an extra 25,000 foreign-owned company jobs. If one of the signs of under-employment is a greater dependence on part-time work, the indigenous sector tells an interesting story. Indigenous agency-assisted firms employed 16,800 part-time staff in 2008.

By 2017, it had risen to 27,700, whereas foreign-owned firms went from 15,000 to just 20,000.

All research points to greater vulnerability for younger people who do not have third-level education. Therefore, in Ireland we should be investing heavily in third-level to fully equip our future workforce with the skills it needs.

But universities are increasingly vociferous about the lack of a sustainable funding model into the future. Equally, some businesses will argue it isn't about the skills the workforce needs, but the skills employers need.

One in four graduates in England and Northern Ireland are working in jobs for which they are overqualified and do not require a degree, according to an OECD study. It found that while graduate unemployment rates in the UK are among the lowest in the world, students are more likely to end up in non-graduate jobs associated with lower incomes.

Ireland may not be quite there yet, but there is evidence to suggest that for all our massive job announcements and growth in very successful indigenous companies, we have not produced the number of truly highly skilled roles our GDP numbers would suggest. We have moved up the value chain, but not enough. As for job losses at multinationals, they will come and they will go, but change is constant.

Change caught up with Molex in the end. Ireland is nimble enough to keep attracting and retaining high-tech firms to our shores, but whether they or anybody else will end up employing people here for 46 years is another matter.

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