Recent labour market changes consistent with polarisation

Posted on March 11, 2014 by Rory O'Farrell


Data from the recent Earnings Hours and Employment Costs Survey show that recent trends in employee numbers (employee numbers exclude the self-employed) are consistent with a pattern of polarisation.

The patterns are consistent with the effects of austerity combined with an underlying process of labour market polarisationstates are excluded). Unfortunately data for all sectors is not available for the last quarter of 2013, but comparing Q3 of 2013 with the same period of 2012, employee numbers are up 21,800. While there are some doubts and anomalies with regard to the overall employment figures (which are estimated as part of the Quarterly National Household Survey) these figures come from a different source. (The QHNS reports an increase in employees of 27,200. The difference can be explained by the QNHS including those on various schemes, inclusion of the agriculture sector, and sampling error).  Consistent with a government policy of export led growth the number of manufacturing employees increased by 8,700. Employees in the Professional, scientific and technical activities (which includes Legal and accounting activities, Activities of head offices; management consultancy activities and Scientific research and development; amongst others) sector increased by 8,400. This is consistent with an ongoing pattern of labour market polarisation (which shows increases in employment for relatively high paid jobs, and low paid jobs, with a hollowing out of middle paying jobs). Interestingly employee numbers in the Information and communication sector only increased by 900. This sector includes Computer programming, consultancy and related activities, but also other areas such aspublishing activities. It would appear that some of the employment created by firms such as Google and Facebook are not classified as the Information and communication, but as Professional, scientific and technical activities.

Consistent with a pattern of hollowing out middle paying jobs Administrative and support service activities employee numbers are down 2,600, and weak domestic economy is reflected by stagnant Wholesale and retail trade employee numbers (down 300). That employee numbers in the Accommodation and food service activities sector is externally driven can be seen by the fact that Arts, entertainment, recreation and other service activities employee numbers are down 3,800. Despite the pick-up in tourism numbers (in part due to The Gathering) the domestic economy remains very weak leading to employee numbers falling in this related sector.  Employee numbers in the Financial, insurance and real estate activities sector is down (in line with continuing readjustment in those sectors), while construction employee numbers are up 1,300, reflecting that construction activity had swung from being unsustainably high to unsustainably low, and now is beginning to rebalance. Overall the patterns in employee numbers are consistent with changes in working hours, though with changes in working hours being less volatile than changes in employee numbers. This is consistent with standard economic theory.

Data from the Live Register show that any recovery is heavily in favour of men, with the slight fall in the number of women on the Live Register likely to be due to changes in eligibility. Though according to the Quarterly National Household Survey the number of women under 35 in employment has fallen by over 17,000; about 4,000 is likely to be due to employment falls, and the remainder simply due to the aging of the population (as employed women aged 34 move into the 35 plus age group). In 2013 there were 40,431 women aged 34, but only 24,935 aged 21. Though men show similar demographic patterns, the stable numbers of under 35 men in employment is reflective of an increase in the employment rate for that age group.

A seminar on labour market polarisation will be held at 16.00 on Wednesday 12th March at the INTO Learning Centre 38 Parnell Square. Details are available here.


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