Can It Really Be This Good?

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Unemployment falling to 13.7 percent.   Employment increasing by 20,000.  THe CSO’s new Quarterly National Houshould Survey should be good news.  So why isn’t it?  When we dig a little under the numbers, what do the numbers tell us about the kind of economy that is emerging?  Why should we be concerned?

First, let’s run the headline numbers.

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On the face of it, these are positive numbers:  employment up by 20,000 over last year – returning to the level of employment in 2011 while unemployment has fallen by well over 1 percent.  But now, let’s look at some numbers below this headline.

(a) The Rise of the Precarious Work

Probably the most disturbing aspect of the CSO release is the rise in precarious work.  This can be seen in the rise in under-employment.

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The economy is still shedding full-time jobs.  In the last year, the numbers working full-time fell by 6,000.  The difference was largely made up by an increase of 17,000 in precarious work (a 12 percent increase) – people working part-time but wanting more work.

Some might argue that when the economy is on the floor, the first work available will be part-time and that this will turn into full-time work once recovery sets in.  Let’s hope so but there are grounds for questioning whether this is part of a normal post-recession pattern or a more qualitative change in the nature of work.

Precarious work is part of an employer strategy to minimise costs.  Courtesy of the Government’s policy to cut employers’ PRSI on low-paid work, employers are offering part-time jobs to cut their PRSI bill.  They may have full-time work available but they are breaking them up.  This ultimately costs the State through part-time unemployment supplement, lost tax revenue, higher Family Income Supplement costs.  But it also costs employees:  over one million people suffer multiple deprivation experiences in the state.  Of this, approximately half live in households where there is at least one income from work.  No doubt, this is concentrated in the low-paid precarious sectors.

It is also a policy to discipline employees.  If you are depending on getting extra hours you don’t want to go around trying to organise your work-mates into a union, or complaining about working conditions, etc.  The employee must keep quiet, suffer anything the employer throws at them, all in the hope that they will more hours on the next roster assignment.  The Government could end this by implementing  the EU Directive on Part-time work – which would give part-time employees the right to any extra hours in a firm when it becomes available – but so far they haven’t indicated any willingness to do so.

So there is a very real possibility that we may be entering into a period where precarious work becomes the norm and not just a feature of a weak labour market.

(b) The Weakness of the Market Employment

Over the last year agricultural, fishing and forestry employment increased by 16,000.  This is a good performance for this sector.  But are we getting a true picture?  The CSO has recently starting re-adjusting their samples to align them with the 2011 census.  This will be phased in over the year.  In the meantime they provide a caution about interpreting trends in this sector.  In the survey for the last quarter they state:

‘In the case of the Agriculture, forestry and fishing sector it can be noted that estimates of employment in this sector have shown to be sensitive to sample changes over time. Given the introduction of the sample based on the 2011Census of Population . . . particular caution is warranted in the interpretation of the trend in this sector at this time.’

So we have to be careful about this 16,000 job improvement.  We may find that previous estimates of employment in this sector in the past were under-stated and, so, the total level of employment in the economy.

So how can we look at this.  The following breaks down employment in three sectors: agricultural/fishing/forestry, the market economy and the non-market economy.  The non-market economy includes public administration, education, health and other sectors (recreation leisure) – these are dominated by public sector employment.

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Nearly 2,000 jobs were lost in the market economy, an improvement on the 2011-2012 figure which showed a loss of 8,000.  We have, though, still to bottom out in this sector which employs 63 percent of the labour force and is the driver of value-added and exports.

Just to note, the increase in non-market employment is not related to the public sector which has been losing jobs.  There was, however, an increase of 8,000 in the health & social work sector – driven by the private sector.

(c) Increase Due to Rise in Self-Employed

The employment rise in the last year has been almost entirely due to an increase in self-employment.

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As seen, while employment rose by 20,000 in the last year, this was due to the rise in self-employment – which made up 16,000 (there was another small increase in assisting relatives of 2,700).

Of course, this increase in self-employment is to be welcomed (better than a decline).  But the question here is how long-term this work will be and to what extent the numbers have been impacted by the CSO’s sampling adjustments.  Many, believing they won’t find work, will try their hand at own-work.  This can be tenuous and low-income with an eventual high-failure rate.  One insight is that the number of self-employed who, in turn employ people, actually fell over the last year by over 3,000.  This was made up by a bigger increase in the numbers of self-employed without employees.

Meanwhile, PAYE employment has stagnated over last year – recording an increase of only 4,000; still, better than a decline.  However, when we strip out the numbers on Government schemes (Community Employment, Jobsbridge, etc.) the number of non-scheme employment rose by only increased by 1,700.

* * *

So what do we have?  We have some good headline news but much of this melts away when examining the details.

  • Full-time employment is still falling
  • Employment in the market economy is falling
  • Precarious work is on the increase – substantially so
  • The number of employees remains much the same as last year – especially when those on Government schemes are taken into account.
  • The main growth has been in the self-employed sector – but not in that part of the sector which employs people; that’s still falling
  • Some of the increase might be due to statistical factors unrelated to what is actually happening the economy.

Then there’s the question of emigration.  With the labour force actually falling by over 9,000 (despite new entrants from education), much of the decline in the unemployed numbers will no doubt be due to people searching for work elsewhere.

This is not a good news story.  At best, it’s mixed.  And to the extent that it presages permanent changes in the labour market – namely, the rise in precarious employment – it is depressing.

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