June 3, 2013
Freelancing. Being your own boss, having a portfolio career, living on your wits, independence, having no one to answer to – this all sounds good, doesn’t it? And it can be. The other side of this world is insecurity, worry, constant fretting about the next gig, undercutting everyone – starting with yourself – to get gigs, spoofing, hustling, not being able to plan and recurring financial anxiety, not to mention fear of tomorrow.
But this freelance world is a world that we are going to have to get used to and it is a world that your children are likely to inhabit. The latest figures from the national household survey, released last week, reveal a rapid change in the Irish labour market.
There has been a massive switch to part-time work. Looking at the figures, the most conspicuous development is that since 2008, full-time employment positions continue to fall quite relentlessly. The jobs that are being created are part-time and as these jobs are on temporary contracts, with them comes a huge element of job insecurity.
You can see in the chart from the newly-released CSO data what is reality in Ireland: more and more people are working at jobs with less and less security. In the main, these are young people.
The precarious nature of being a young worker is central to the change in economic life, which is going on every day in Ireland.
Contrast this with ten years ago when young workers were getting well-paid permanent jobs in a variety of local sectors.
In addition, these young workers were buying houses which were rising in value, giving them the feeling of wealth. Some 50 per cent of Ireland’s total mortgage book was lent out in the Noughties. These two factors drove spending, tax revenue and fed the demand for labour.
Now we have precisely the opposite situation. These same young workers, carrying negative equity, are now faced with the prospect that any new job they pick up is most likely to be temporary or part-time.
This profoundly undermines any foundation for a solid recovery.
Now just imagine that the trends of the past five years are extrapolated out for the next five years. What is the Irish labour market likely to look like then?
Check out the table and graph below:
Here I have just extrapolated the trends and we see that by 2020, the number of part-time workers will have almost doubled from the 2008 figure. In contrast, there will be 10 per cent fewer total full-time positions in 2020 than there were in 2008.
This will have profound implications for everyone.
It means that the recovery will be almost non-existent because insecure workers don’t spend. Why might this be? It is because spending comes out of income and part-time incomes are usually much more volatile that full-time incomes. If your income is dodgy, you don’t spend and equally you are not a good bet for loans.
The implication of the older population having secure employment and the young having insecure employment is that the money saved by the older secure folk does not get circulated in the economy because the banks are terrified about lending it out locally. This will lead the banks to recycle savings into investments that are seen as more secure, even if they provide lower yield.
Now what may such investment look like? Why, government bonds of course. But what will a proportion of the money raised by government bonds finance? Why the salaries of permanent, middle-aged civil servants and the pensions of the already retired! This will exacerbate the security imbalances within the working population – the very imbalances that were forcing the banks to invest deposits in government bonds in the first place. Can you see where all this is going?
It is likely to make the economy more sclerotic, not more dynamic.
The purpose of these statistical updates is to give us a snapshot of the society that we live in. This sort of data should prod the government to act and to base policy on evidence.
Now think of what is happening in Ireland. The labour market is split between insiders and outsiders. The insiders have secure jobs, protected by legislation and legacy.
These people have a stake in society. The outsiders are those who are exiled to the twilight world of part-time work, temporary contracts and the quality of the last job.
These guys can’t come in hungover on a Monday and hide for the day, safe in the knowledge that someone else will foot the bill. They don’t clock in and clock out based on a rigid time clock, calculating exactly how much extra they may have worked over and above some arbitrary minimum and charging the employer accordingly.
They don’t do this because they are their own employer.
The insider/outsider dilemma is very complex in a small country like Ireland. Within families, there will be insiders and outsiders living in the same house.
Parents may be in insider employment and the children may be outsiders. Brothers and sisters may be similarly divided.
Pointing out the insider/outsider dilemma is quite different from pointing the finger.
These outcomes might be nobody’s fault. That said, it is clear that this situation can’t go on. It is obvious that if young workers are being employed casually, they will hardly reach their full potential and will flirt around in the twilight world of quasi-employment.
This may make them keener and better at their chosen pursuit, but it’s not going to be a pretty picture if they, the worker bees, feel that they are working their butts off in a competitive world, while a drone class is sitting around getting well paid, extracting concessions and complaining at the same time.