World of work in a spin
Drastic changes in employment illustrate the challenge ahead for the fair pay taskforce, says Shamubeel Eaqub.
The idea of a career is changing rapidly. Not only are we likely to change jobs more frequently, they are likely to be in entirely new sectors.
How we re-imagine education, welfare and industrial relations will be critical.
I think of a career in many parts, including getting a job and keeping a job. It should provide a decent income, be safe, and offer enough free time to look after yourself and whanau, as well as scope to save for a dignified retirement, and progression and growth during one’s career.
Not long ago, in our parents’ generation, there were easy shortcuts such as university. If someone wanted a ‘‘good’’ career, a tertiary education was the ticket.
It would be easier to get a job, they were likely to stay in those jobs for a long time and those jobs would pay well.
Those with tertiary qualifications do earn more, but the premium is shrinking. In the mid-1990s, tertiary qualified workers earned about 50 per cent more than the average wage. Today the premium is closer to 15 per cent.
The discount for someone with less than a high school education was around 25 per cent in the mid-1990s and is about half that now.
There is a wider issue of how the value of economic activity is being shared across workers and owners, but it is clear that the value of qualifications is diminishing.
Security in work is diminishing around the world. In the US, for example, which has much better data than New Zealand, a good metric is the average time a middle-aged man spends in a job.
Post-war, the time in a job rose from around eight years to a peak of 12 years in the mid 1980s and has since fallen back to post-war levels. Back to the future.
As jobs become more fractured and less enduring, workers have less power to demand decent pay and conditions.
Unions and collective agreements had done that for previous generations. But that was dismantled long ago, in the face of militant unionism and a lurch to extreme, free-market economics.
Union membership has fallen from a peak of nearly 50 per cent of workers in 1986 to just 18 per cent now. There is little scope for collective arrangements for worker rights, conditions and pay.
The proposed Fair Pay Agreements working group will be interesting to watch. It must strike a balance between whipping up business hysteria of a return to the 1970s, and actually improving the rules for a very different labour market.
Jobs are also worth less. The lifetime income from work is diminishing. By my estimates, expected income from a working career rose in each successive cohort to peak with those born in the decade to 1985. Since then, lifetime incomes have been falling.
With lower security of work, there will be more time spent on changing jobs and associated disruption, and less take-home pay, which means younger generations are less likely to own their own homes. Incomes have also not kept pace with property prices.
In many regions, the cost of housing is so high that reported incomes have little meaning when doing the weekly budget. It is cold comfort to have a high income on paper, but little left over after paying for the basics such as food, housing and utilities.
It is particularly hard for professions like teaching, which have a national pay scale. This means disposable income is much lower in high-cost cities. If salaries don’t change, high-cost cities will find it increasingly difficult to recruit staff in many essential services.
In many jobs, the income is not enough to live on with dignity; instead, it is a life with high stress.
There is good emerging evidence that a job is no longer enough. In fact, many jobs provide such low income and create so much insecurity, that they are worse than being unemployed.
For welfare, which is hardly generous and hardly kindly given, to be better than some jobs speaks volumes about the precariousness of some types of work. Constant stress is a key marker of poverty, which makes it difficult to make the best of limited options for those living in poverty.
Future generations of workers will have to deal with more volatile careers, and a need to upskill or re-skill regularly.
We should be preparing them to deal with this, including reassessing our current rules and regulations, firmly fit only for the past.
Former Prime Minister Jim Bolger and Workplace Relations Minister Iain Lees-Galloway announce the working group on Fair Pay Agreements.