World of work in a spin

Dras­tic changes in em­ploy­ment il­lus­trate the chal­lenge ahead for the fair pay task­force, says Shamubeel Eaqub.

Sunday Star-Times - - FOCUS | OPINION - Shamubeel Eaqub is an in­de­pen­dent econ­o­mist and a di­rec­tor of Sim­plic­ity, a Ki­wiSaver scheme.

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.

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