Irish Economy
Declining regular work; Rising low-paid freelancing in Ireland & elsewhere - Part 1
By Michael Hennigan, Finfacts founder and editor
Jun 11, 2014 - 6:30 AM

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In the US 'Personal care aides' for the elderly is projected to be the fastest growing significant jobs category in the decade to 2022 and this irregular demanding work is also one of the worst paid. Meanwhile, data from the UK and Ireland also show a rising trend in low-paid freelancing work.

In April Finfacts reported that between Q1 2008 to Q4 2013, all the net additional employment in Britain of 613,000 was in self-employment and part-time roles.

David Smith, economics editor of The Sunday Times, summarised the UK data up to May: there has been 700,000 rise in self-employment since the eve of the crisis while the number of full-time employees, though rising strongly, is still some 200,000 below pre-crisis highs.

The 1.15m rise in employment in the period 2010-2014 divides into a 515,000 rise in the number of full-time employees, a 500,000 increase in self-employment and the rest - - between 130,000 and 140,000 -- in a rise in the number of part-time employees. Full-time employment during the recovery phase has kept ahead of self-employment, but only just.

Earnings of the UK self-employed fell 20% between 2007 and 2012 while those in salaried positions saw their weekly pay fall by 6% according to a May 2014 study [pdf] by the Resolution Foundation think-tank.

The foundation said that the typical self-employed worker earns 40% less than an employee.

An FT blog has several charts.

In Ireland, we reported last month that the number of employees in jobs that are not funded by public activation programmes in Q1 2014 was below the level in Q4 2010 when the international bailout was agreed.

Self employment (without employees) is back at boom time levels to 230,000 while self employment with employees is down from 125,000 in 2007 to 87,000 in early 2014.

The recovery in self employment (without employees) jobs does not reflect a spurt in entrepreneurship and the reality behind the data does not fit into a ministerial soundbite from the likes of Richard Bruton, jobs minister.

The CSO reported in 2011 [pdf] that pension coverage among self-employed workers fell considerably from 47% in Quarter 1 2008 to 36% in Quarter 4 2009. In comparison, coverage among employees fell only slightly from 55% to 54% over the same period.

The worst cases of irregular work are in Japan and South Korea -- both ageing societies.

About 38% of Japan's workforce are temporary with few rights and hourly pay is generally less than the Irish minimum wage of €8.65 ($12).

Permanent workers could only be made redundant on a voluntary basis and while some older workers survive in banishment rooms, many young workers have a precarious existence while the anti-immigrant country desperately needs to raise its birth rate.

Coincident with the rise in irregular work during the recession is the weeding out of middle skilled jobs such as clerical, administration and factory operatives.

This has been evident in both the US (see chart above) and the UK where jobs growth has been in both high skilled work and low paid positions such as food service and security.

The Wall Street Journal reported last Saturday that the number of jobs in manufacturing, construction and government - - typically well-paying fields - - has shrunk, while lower-wage work grew. The US has 1.6m fewer manufacturing jobs than when the recession began in December 2007, but 941,000 more jobs in the accommodation and food-service sector. More than 40% of the jobs added in just the past year have come in generally lower-paying fields such as food service, retail and temporary help.

Last year Prof Richard Florida wrote in The Atlantic that the total number of freelancers in the US could amount to 40m or about a third of the workforce.

There were 22.7m US businesses tracked by the Census Bureau that didn’t have any paid employees in 2012, 500,000 more than in the year before and accounting for 76% of total businesses. About 19m non-employer businesses, or about 84% of the total, reported receipts of less than $50,000.

According to Entrepreneur magazine, there are nearly 3m freelancers from several countries registered on Elance, the largest online platform for what Elance chief executive Fabio Rosati calls "fractional jobs," a term describing the result of full-time job functions being split into individual tasks performed by freelancers.

In Part 2 we will look at the impact of technology and the web -- just consider the Über Technologies smartphone app, where it has no car fleet but is threatening the taxi business in many countries --  where there will be a few big winners and likely many losers.

Sarah Kessler, a journalist, writes here on a month spent in the "Gig Economy":

For one month, I became the “micro-entrepreneur” touted by companies like TaskRabbit, Postmates, and Airbnb. Instead of the labor revolution I had been promised, all I found was hard work, low pay, and a system that puts workers at a disadvantage.]

Larry Summers, Harvard economist and former Treasury secretary, said in 2013: “Until a few years ago I didn’t think this was a very complicated subject; the Luddites were wrong, and the believers in technology and technological progress were right. I’m not so completely certain now.”

Knowledge workers in Ireland; Low-paid manufacturing grafters in China? - Part 2

The rich today work longer hours than the poor - Part 3

The Uber app economy and disruptive innovation - Part 4

Irish Jobs & Innovation: What should Ireland do? - Part 5


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