Saturday 20 April 2019

If Central Banks think wages 
are too low something is up

Photo: PA
Photo: PA
Stephen Byrne's illustration
Brendan Keenan

Brendan Keenan

INVEST in breakfast rolls, was the witty advice of one analyst commenting on the growth in construction and dire warnings of a housing shortage.

These delicacies were the chosen dish of David McWilliams' archtypical building worker. It must be every journalist's wish to have his words become part of the language (he said, without a trace of envy).

An easier way is to invent new words, like the "nowcasting" I mentioned last week, although most of these end up writ on water rather than in the dictionary. A recent book by University of London professor Guy Standing comes up with "precariat" to describe the condition of many modern workers, who cannot really be called a proletariat but who endure a precarious financial existence.

I'm not sure about the word, but there is not much doubt about the condition. Perhaps the biggest change in my career has been in the nature of work. As with most white-collar workers, I started with a secure job and a pay-linked pension at the end of it.

Female journalists were confined to the women's pages, or at best features. Mortgages were approved only on the basis of a husband's salary and the Republic still had a ban on married women in the public service. There was also a "closed shop", which meant one could not work unless one joined the journalists' union, and the union set the rules for admission.

That's what I mean about the biggest change. There was already jet travel and a motorway to Dungannon. True, computers required a large air-conditioned room to house them (a large bomb-proof, air-conditioned room in the case of the Belfast Telegraph) but it is this world of work which seems like something from another age.

All this began to change from the 1980s onwards. One might lament the end of the closed shop - while disapproving of it in theory - but everything else seemed definite progress. One is not so sure about more recent developments.

Some of these are on view in an analysis of employment and unemployment figures contained in the Irish Congress of Trade Union's Labour Market Monitor. One of the most intriguing is the tendency of lower income groups to work fewer hours, while higher earners work more.

It used to be the other way round.

I still treasure the recollections of a woman in Brian MacAongusa's The Harcourt Street Line about accompanying her solicitor father on the train to his work and her school - and on the same train back! (He travelled first-class and bought his daughter a third-class ticket. Ah, God be with the days).

On the more mundane evidence of figures, the Monitor notes that in 1992, the average hotel and restaurant worker worked a 42.3 hour week; more than the then national average of 41.4 hours per week. By 2013 they worked 31.4 hours, below the average of 35.1 hours.

The question is to what extent this is because their work is not required, rather than they prefer to work less. According to Eurostat, almost 150,000 part-time workers described themselves as under-employed - they would like to do more.

Not all of this is to do with the crash. The trend has been in evidence for a couple of decades and some aspects appear hardly to have altered during all the financial upheaval. It helps to explain growing income inequality, with high-paid workers working longer hours, low-paid workers having fewer hours, and a smaller number in the average category.

The crash has had an impact, of course, especially in the indebted countries. Over 40pc of Irish part-time workers said they could not find a full-time job, compared with less than 11pc in 2007. Because the proportion of full-time workers has not changed very much in Ireland, the Monitor suggests that those who want to work full-time but cannot are displacing those who actually prefer to work part-time. Whether that is a good or a bad thing is a very nice question indeed.


The analysis mirrors the "precariat" thesis, suggesting that, rather than employ workers on a full-time basis, many employers prefer to have a pool of part-time workers on which to draw on at short notice. This is much less expensive than having enough full-time workers to deal with fluctuating demand.

But the patterns are anything but simple. According to the latest quarterly household survey, jobs were lost by sales and services workers, and process, plant and machine operatives. These tend to be lower-paid jobs. While there was an increase in the higher-paid jobs of managers and professional and technical occupations.

This suggests that the economy is moving towards better paid employment, which might seem a very good thing. But it may also be a sign of the growing division in the conditions of different groups of workers. One striking aspect of the recession is that working hours have remained stable when compared with the period 1992-2008. "This certainly runs counter to the expectations of many," the ICTU analysis says.

So do other things, including wages. There was palpable shock in Britain over data showing that average weekly earnings fell in the three months to June - the first such contraction since the depth of the crisis in 2009.

The Bank of England suggested that the fall may partly stem from reforms to retirement and benefit rules, as well as concerns among workers about the need to service debts and provide for pensions, which is making them reluctant to demand higher wages. Their condition, one might say, is precarious.

We now have the extraordinary sight of the German Bundesbank calling for higher wages to generate more inflation, and the Bank of England setting wage growth as a condition for raising interest rates.

All this should be music to the ears of the trade unions. The ICTU report makes similar points. But the unions can easily become part of the problem rather than the solution. In Ireland they mostly represent the least precarious workers - those employed by the government.

The rapid hostile reaction to Brendan Howlin's ill-advised comments about reversing public sector pay cuts might even be a sign of the first stirrings of the precariat, as advocated by Professor Standing.

Whether it is or not, some of the underlying forces, such as globalisation and technology, are largely outside the control of governments and will not be reversed.

It is too pessimistic to think that 
nothing can be done, but it is unlikely that the traditional methods of wage bargaining on behalf of particular groups, or government fondness for separating people into sheep and goats of work and welfare, have much to offer by way of solutions.

Indo Business

Today's news headlines, directly to your inbox every morning.

Don't Miss