Unemployment falling to 13.7 percent. Employment increasing by 20,000. THe CSO’s new Quarterly National Houshould Survey should be good news. So why isn’t it? When we dig a little under the numbers, what do the numbers tell us about the kind of economy that is emerging? Why should we be concerned?
First, let’s run the headline numbers.
On the face of it, these are positive numbers: employment up by 20,000 over last year – returning to the level of employment in 2011 while unemployment has fallen by well over 1 percent. But now, let’s look at some numbers below this headline.
(a) The Rise of the Precarious Work
Probably the most disturbing aspect of the CSO release is the rise in precarious work. This can be seen in the rise in under-employment.
The economy is still shedding full-time jobs. In the last year, the numbers working full-time fell by 6,000. The difference was largely made up by an increase of 17,000 in precarious work (a 12 percent increase) – people working part-time but wanting more work.
Some might argue that when the economy is on the floor, the first work available will be part-time and that this will turn into full-time work once recovery sets in. Let’s hope so but there are grounds for questioning whether this is part of a normal post-recession pattern or a more qualitative change in the nature of work.
Precarious work is part of an employer strategy to minimise costs. Courtesy of the Government’s policy to cut employers’ PRSI on low-paid work, employers are offering part-time jobs to cut their PRSI bill. They may have full-time work available but they are breaking them up. This ultimately costs the State through part-time unemployment supplement, lost tax revenue, higher Family Income Supplement costs. But it also costs employees: over one million people suffer multiple deprivation experiences in the state. Of this, approximately half live in households where there is at least one income from work. No doubt, this is concentrated in the low-paid precarious sectors.
It is also a policy to discipline employees. If you are depending on getting extra hours you don’t want to go around trying to organise your work-mates into a union, or complaining about working conditions, etc. The employee must keep quiet, suffer anything the employer throws at them, all in the hope that they will more hours on the next roster assignment. The Government could end this by implementing the EU Directive on Part-time work – which would give part-time employees the right to any extra hours in a firm when it becomes available – but so far they haven’t indicated any willingness to do so.
So there is a very real possibility that we may be entering into a period where precarious work becomes the norm and not just a feature of a weak labour market.
(b) The Weakness of the Market Employment
Over the last year agricultural, fishing and forestry employment increased by 16,000. This is a good performance for this sector. But are we getting a true picture? The CSO has recently starting re-adjusting their samples to align them with the 2011 census. This will be phased in over the year. In the meantime they provide a caution about interpreting trends in this sector. In the survey for the last quarter they state:
‘In the case of the Agriculture, forestry and fishing sector it can be noted that estimates of employment in this sector have shown to be sensitive to sample changes over time. Given the introduction of the sample based on the 2011Census of Population . . . particular caution is warranted in the interpretation of the trend in this sector at this time.’
So we have to be careful about this 16,000 job improvement. We may find that previous estimates of employment in this sector in the past were under-stated and, so, the total level of employment in the economy.
So how can we look at this. The following breaks down employment in three sectors: agricultural/fishing/forestry, the market economy and the non-market economy. The non-market economy includes public administration, education, health and other sectors (recreation leisure) – these are dominated by public sector employment.
Nearly 2,000 jobs were lost in the market economy, an improvement on the 2011-2012 figure which showed a loss of 8,000. We have, though, still to bottom out in this sector which employs 63 percent of the labour force and is the driver of value-added and exports.
Just to note, the increase in non-market employment is not related to the public sector which has been losing jobs. There was, however, an increase of 8,000 in the health & social work sector – driven by the private sector.
(c) Increase Due to Rise in Self-Employed
The employment rise in the last year has been almost entirely due to an increase in self-employment.
As seen, while employment rose by 20,000 in the last year, this was due to the rise in self-employment – which made up 16,000 (there was another small increase in assisting relatives of 2,700).
Of course, this increase in self-employment is to be welcomed (better than a decline). But the question here is how long-term this work will be and to what extent the numbers have been impacted by the CSO’s sampling adjustments. Many, believing they won’t find work, will try their hand at own-work. This can be tenuous and low-income with an eventual high-failure rate. One insight is that the number of self-employed who, in turn employ people, actually fell over the last year by over 3,000. This was made up by a bigger increase in the numbers of self-employed without employees.
Meanwhile, PAYE employment has stagnated over last year – recording an increase of only 4,000; still, better than a decline. However, when we strip out the numbers on Government schemes (Community Employment, Jobsbridge, etc.) the number of non-scheme employment rose by only increased by 1,700.
* * *
So what do we have? We have some good headline news but much of this melts away when examining the details.
Full-time employment is still falling
Employment in the market economy is falling
Precarious work is on the increase – substantially so
The number of employees remains much the same as last year – especially when those on Government schemes are taken into account.
The main growth has been in the self-employed sector – but not in that part of the sector which employs people; that’s still falling
Some of the increase might be due to statistical factors unrelated to what is actually happening the economy.
Then there’s the question of emigration. With the labour force actually falling by over 9,000 (despite new entrants from education), much of the decline in the unemployed numbers will no doubt be due to people searching for work elsewhere.
This is not a good news story. At best, it’s mixed. And to the extent that it presages permanent changes in the labour market – namely, the rise in precarious employment – it is depressing.
FAMILIES are facing a €10 cut in child benefit and medical card holders will see a doubling of the charges they pay for prescription drugs in next week’s Budget.
Pensioners are also still in the firing line, with changes to the over-70s medical card and the home package of free TV licence, electricity and telephone allowances still on the table.
Although the pension is safe, the rest of the benefits for the elderly have yet to be decided upon by ministers.
The Cabinet met twice yesterday to work through the health and social-welfare aspects of the budget, with another special meeting tomorrow evening.
Among the swingeing measures to emerge from the discussions are:
* A €10-a-month cut in child benefit, which will drop from €140 to €130.
* A cut to the time for which non-means-tested dole is paid from 12 months to nine months.
* A doubling of the 50 cent charge that medical card holders pay for medicines and other items that they get on prescription from pharmacies, up to a maximum of 10 items per month.
And further details have emerged about the property tax, which will come into effect next year, following yesterday’s revelations of the plan in the Irish Independent.
* Elderly people will be given the chance to pay the property tax on their home from beyond the grave
* People living in council houses are expected to be hit with higher rents – with rises of €1 or €2 a week to bring in €50-€100 a year per house.
The Government has devised a way of protecting old people who live in large houses where they raised their children and who now can’t afford to pay the property tax from their meagre pensions.
Rather than forcing them to borrow or sell their home, elderly people will be able to apply via a means test for a deferral of the property-tax payment. However, there will be a cap on the number of years that can be deferred.
Similar to the Fair Deal nursing-home scheme, the accumulated bill would then be paid when the person sells their house or if they pass away, when their estate would pay it off.
Although local-authority housing will be exempt from the property tax, the occupants will have to make a larger contribution to take account of the charge going to local services.
Those in council estates who bought out their houses will have to pay the full property tax anyway, so the Government wants to see every home make a contribution.
The property-tax rate will be at 0.2pc in a self-assessment system, with bands starting at €50,000 and going up by €50,000 each time.
There is no cap on the market value of the home, so millionaires living in mansions will pay the same percentage on the total value of their house.
Someone living in a house worth €100,000 will pay up to €200, while someone living in a house worth €1m will pay up to €2,000.
The amount of tax to be paid is set at the mid-point of the bands. For instance, where the value of the house falls anywhere within the band of €100,000 to €150,000, the homeowner will pay on 0.2pc of €125,000 i.e. €250.
A special meeting of the Cabinet yesterday saw the detail of the health and social-welfare budgets thrashed out.
Any changes to the medical-card system are not yet signed off. But the over-70s are being closely examined, especially the means-testing threshold of €72,000 for a married couple and €36,000 for a single person.
A move towards a GP-only card is being examined for those on healthy pensions. The pension will not be cut and the free travel scheme is not expected to be touched. But a cut to the package of free TV licence, electricity and phone is still alive.
There will be a change to the entitlement to the dole. When someone becomes unemployed, they go onto the non-means tested dole, unemployment benefit, of €188 a week.
After 12 months, they move to the means-tested payment of the same amount. However, if another member of their family is working, this can put them over the means-test limit.
This period will be cut back to nine months to encourage people to get back to work.
But Labour Party sources believe this will not have a major effect on its policy not to cut welfare benefits. Party figures claim it is not a direct cut to a core social welfare payment.
– Fionnan Sheahan and Fiach Kelly
AN ACTOR who pleaded guilty in court to stealing groceries said he did it because telling his three children that there was no bread and milk “was a step too far”.
“That’s why we were left with no money and nothing in the fridge,” Purcell told The Irish Times yesterday.
“For myself I can deal with it, but for the three kids it was different. I couldn’t let them ask for a glass of milk in the morning and not get any,” he said.
The actor, his wife and three children, aged nine, 12 and 16, is living on social welfare payments and the small earnings from on and off acting work .
Last Thursday he pleaded guilty at Tallaght District Court to stealing €58 worth of groceries from two shops in Firhouse last August 6th. Judge Anthony Halpin ordered him to complete 100 hours of community service.
Judge Halpin told the court that middle-class people unable to buy food for their children was a new type of poor that had emerged from the recession.
However the judge said there were “green shoots”.” He described the recent appearance of Taoiseach Enda Kenny on the front page of Time magazine as a “great launch for this country to show that we are pulling ourselves up by our boot straps”.
Yesterday Purcell said he had originally decided to ask for some credit in local shops on August 6th but was refused. “I had no money. I had to get bread and milk, simple things,” he said. Purcell said the manager caught him getting into his car outside the second shop.
“I said I don’t do this all the time, I’m not a thief, but the manager said, ‘You are a thief,’” Purcell explained. He felt there was “a difference between stealing a million dollars or mugging an old lady and stealing a loaf of bread”.
He was ashamed at first but is no longer ashamed. “What man wouldn’t, if your children are hungry? It’s basic instinct,” he said. His family manages to live on the social welfare payments but was always to the pin of its collar, he said. He and his wife have given up smoking and no longer have a drink once a week.
He hopes he can get more acting work to help.
“This Monday morning we had €10 left until Thursday and we will stretch that, no matter what happens,” he sai
The Coalition was forced into a U-turn after last December’s budget when its plan to stop the practice of paying disability allowance directly to 16- and 17-year-olds met strong opposition from the parents of severely disabled children and Opposition parties.
The contentious proposal to increase the minimum qualifying age for the allowance from 16 to 18, while providing a compensatory payment for the teenager’s parent or guardian, is back on the agenda as Budget 2013 approaches.
Minister for Social Protection Joan Burton has said the EU–European Central Bank–International Monetary Fund troika has raised concerns about social welfare payments going straight to under-18s and said she was worried about young people losing the incentive to stay in education.
Ms Burton charged the expert advisory group on tax and social welfare with resolving such anomalies in the social welfare code. The group submitted its report on family income supports, including child benefit, to Ms Burton earlier this year. The Minister will receive the group’s work on State payments to the disabled shortly. The group will propose withholding disability allowance from 16 year olds who are new claimants while extending the domiciliary care allowance to the children’s carers. Currently, a domiciliary care allowance is paid to the parents of a child with a disability until the child is 16, after which the teenager goes on disability allowance in his or her own right.
The weekly maximum rate of disability allowance is €188. The domiciliary care allowance rate is €309.50 per month, although those in receipt of the payment may also qualify for carer’s benefit or carer’s allowance. A respite care grant of €1,700 a year can also be claimed and child benefit is not affected.
The country’s biggest local authority, Dublin City Council, is owed a massive €380m by various debtors — and a new report urges that rents be deducted directly from social welfare payments paid to 70 per cent of its tenants.
Projecting an income of over €72m from 24,000 tenants this year, which is described as the single most important source of council revenue after rates, the report said direct deduction at source from social welfare payments will “result in substantial savings and efficiencies”.
The report from the City Council Finance Department says that despite the current economic circumstances of tenants “rent arrears have stabilised for 2010-12”.
Children’s Minister Frances Fitzgerald has confirmed that various allowances for pensioners will be looked at and confirmed that free travel for pensioners is under review. However, she insisted that as of now the Government has made no decision yet on next year’s Budget.
the IMF is due to publish a report tomorrow which is expected to push for universal social welfare reform as well as the speedy introduction of the property tax.
If you are a pensioner now is the time to start making your voice heard. Let the ripple of your actions be an inspiration to the nation