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How precarious is new work?

Posted on August 24, 2015 by Tom Healy

Tom Healy, Director NERI
Tom Healy, Director NERI

Suppose you plan to take out a bank loan or mortgage … the first question you will be asked relates to your salary slip or income statement. But, what if you don’t know for sure what your income is next week let alone next year? Many self-employed workers find themselves in this situation. And, a growing number of employees are also living in situations of uncertainty and precariousness not knowing from week to week or month to month how many hours of work they will have. A new term has been invented – the ‘precariat’. It was always case that new workers such as young entrants to the labour force as well as migrant workers or long-term part-time workers (most of whom are female workers) faced less certainty about their work or conditions than other workers.  However, data provided by the OECD suggests that (a) there has been a long-term trend towards what they term ‘non-standard work’ and (b) the recent economic recession has accelerated this trend in many countries of which Ireland is an example.

Should we be concerned? Is this just an aspect of globalisation, flexibility and change and aren’t workers happy to have flexibility when it comes to choosing their place and hours of work especially in this new digital era of online commerce and information? These matters were discussed on a recent radio programme here in which an employers’ representative was interviewed along with a researcher from NERI. There is growing evidence that precarious work is impacting not only on young people, women and migrants but on older workers too and not always in the more traditional areas of construction, retail, hotels and restaurants. Even higher education and others areas of services have witnessed the rise of short-term contracts with limited employee rights. Ominously, there is some evidence of ‘bogus self-employment’. Although difficult to quantify it appears that anything between 10 and 20% of self-employed workers could be in this situation. OECD estimates show that 2% of the whole workforce (of roughly 15% of the self-employed) can be classified as ‘dependent self-employed’ working for, and reliant on, one employer. While ‘dependent’ self-employment is not necessarily illicit or exploitative it could be especially where:

  • Employers use such contracts to reduce costs and avoid responsibility for the cost of holiday, sick and parental cover;
  • Where such contracts have built-in conditions in relation to working for other competitors and are used on a repeated basis to carry out work for one employer.

 However, it is among young people or new hires that the reality of precarious work has been greatest especially during the years of recession. In the Republic of Ireland the rate of ‘fixed-term contracts’ (FTC is a proxy for the extent of potentially precarious jobs) has surged from 27% of new hires in 2006 to 48% in 2011-12.. I am grateful to my colleague, Daragh McCarthy, who has summarised some key indicators from recent OECD publications in a recent presentation he made here .

Were data for 2014-15 available this would probably indicate higher rates of FTC hires. How many of these new hires are content with their current job situation?. Chart 1 indicates that the overwhelming majority of FTC workers seek full-time work. This is true of almost all OECD countries considered (the Netherlands are an exception).

The positive news is that the rate of precarious work (as approximated by the proportion of FTC workers) did not appear to be above the OECD average in 2011-12. At 10% in the Republic of Ireland the rate compares favourably to that of many major EU economies including France, Germany and Italy (Chart 2). However, it should be noted that the FTC rate was 34% for workers below the age of 25 – still considerably lower than in many other EU countries but way higher than for older workers. 

Vigilance and active policy interventions are needed to ensure that the use of exploitative or questionable employment practices is curbed and controlled. Some practical measures could include:

  • Enforcement of a revised statutory minimum wage for all workers in keeping with business conditions and an evidence-based living wage;
  • Zero tolerance in law and in practice for zero-hour contracts as well as measures to ensure that workers have a right to full-time hours where business conditions permit;
  • Measures to ensure that workers have a right to some measure of certainty with regards to earnings and hours of work through a full implementation of the EU directive on part-time hours; and
  • Bogus self-employment should be identified and weeded out through replacement by proper employee contracts.

The above issues are considered in the ICTU Charter for Fair Conditions at Work .

Later this week, the Central Statistics Office will be issuing detailed data on employment for the 2 nd quarter of 2015.  Hopefully, the very positive upward trends in levels of employment and rates of employment will be confirmed by the new data. However, researchers will be exploring the underlying data to examine how much of the new jobs created, especially since 2012, do not fall into the category of temporary and low-paid. A social recovery in relation to working conditions and earnings from employment needs to be more visible.

 Chart 1

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