Two-tier workforce emerging as new employees taken on at lower pay rates


THE WAY WE WORK NOW:College-educated people open gap in increasingly unequal labour market

Today’s graduates may never have tasted yellow pack cornflakes but they know all about yellow pack jobs. Starting salaries for teachers are 25-30 per cent lower than they were three-four years ago, and trainee nurses are being offered just €85 a day under proposed new two-year contracts.

In the private sector, there’s a proliferation of unpaid internships and the scope for exploitation is great against a backdrop of few job opportunities.

“When things get bad, insiders get protected,” says Donal de Buitléir, who chairs the economic thinktank “You get situations like ‘last in first out’, or people doing the same job but getting paid less.”

Some economists talk of a generational wages gap emerging. Others cite a growing polarisation between a highly educated upper class and an unskilled, and less well-connected, lower class.

“This is the first generation since the second World War that will not earn more than their parents,” says Ictu economist Paul Sweeney.

“What we are seeing in Ireland is a considerable row-back on earnings and the key driver is the share of national income going to labour.”

Provisional figures, which he is collating for a forthcoming paper on the issue, show 65 per cent of national income went to employees in 1990 and “this is now down to 50 per cent” – a much lower figure than the global average of 62 per cent.

“The owners of capital – people who own shares – are getting more and more of the national income.” Within the labour market, “professional employees are doing quite well but the middle is being hollowed out and the lowest paid are being screwed.” This is mirroring trends in the US, he adds, where “college-educated people” in sectors like technology, medicine and law are pulling ahead in a two-tier workforce.


This analysis, however, is contested by statisticians drawing on CSO and Revenue data. A new study by UCC researchers suggests that earnings inequality fell between 2006 and 2010, with the lowest-paid fifth of the workforce gaining 22 per cent and the highest-paid fifth gaining just 4 per cent.

The first study of its type, it tracked the earnings of 1.4 million people who were employed in 2006 over a five-year period, and showed earnings inequality fell in the period 2006-2008 but then rose in the period 2008 to 2010 – however without fully cancelling out the gains of the boom.

“What really struck me from this was, during the Celtic Tiger years, we had this collective guilt about being rich,” says Cormac O’Sullivan, senior research officer with, which commissioned the report with funding from Atlantic Philanthropies. “We were being told society was crumbling all around us. Despite this perception, we were becoming less unequal. So recessions are not good for equality.”


Prof Philip O’Connell of the ESRI and UCD has also challenged perceptions that Ireland became more unequal in the boom. A study he co-authored in 2009 found no evidence of the labour market becoming biased in favour of skilled workers and at the expense of unskilled workers.

He says he finds the notion of a “two-tier” workforce unhelpful, noting there are several identifiable factors that influence labour market outcomes, including gender, age, ethnicity, education, experience and whether you are public or private sector.

“The new thing in the crisis is the absence for young people of the opportunity to get work experience,” he says.

More young people are staying on in education and this has led to “an over-education problem. We have more education than the job market requires. Young people are studying too long, or are unable to get jobs.”

This is compounded by undereducation in sectors like IT as part of a “skills mismatch”.

While there’s a dearth of hard data, an EU study estimates about 30 per cent of the workforce is overeducated – defined as having more education than the job requires.

The number of people in third-level education in Ireland has risen by more than 20 per cent over the past decade, with 170,000 full-time students now enrolled. The Department of Education predicts this will rise to 197,000 by 2023.

Prof O’Connell notes it is “very rational” for people to stay on in education “because even if you are overeducating yourself you are improving your prospects of finding work”. But from an economic perspective “there is a waste of human capital”.

As for broader inequalities, he says “Ireland is a class-dominated society” and this has been demonstrated by sociological research.

“There has been a gradual opening up of better jobs but there has been very little in the way of social mobility.”

Asked about nepotism within the professional classes, he said there hadn’t been serious work done on the issue but “you would expect people with good contacts will do better in a situation of a shortage of jobs”.

The one thing economists tend to agree on is certain professions in Ireland are extraordinarily well paid by international standards.

Cormac O’Sullivan says possible reasons for this include the influence of multinationals and lack of competition in certain sectors. The net effect is “underlying [labour] market conditions in Ireland seem to be incredibly unequal”.

‘Highly skewed’

This is borne out by research published last month by the Nevin Institute. Using CSO data, the Ictu-backed think-tank said income distribution in Ireland was “highly skewed”, with 62 per cent of households having a gross income below the average.

Adjusted for tax, it reported 31 per cent of households had a disposable income of less than €500 per week, or €26,000 a year, while the top 10 per cent had a disposable income of more than €88,000 a year.

While economists continue to debate the trends, young people are drawing their own conclusions about the fairness of the Irish labour market.

Unions are getting particular flak over the pay reductions for new entrants in the public sector. But Paul Sweeney says “the two-tier workplace started in the private sector in the 1980s with the Bank of Ireland” – the originators of “yellow pack” grade – “and over time we rectified that”.

What’s clear, says Donal de Buitléir, is “younger people will be working much later than 60-65 but they will be living much longer on average. So they will start work much later and they will finish later”.

Cormac O’Sullivan, who is an example of that trend (he had to return to college some years ago after initially failing to find a job), says the key to combating inequality is job creation. A big issue, he says, “is what is going to replace construction as an employer of young men, young low-skilled men in particular. They can’t all become IT professionals overnight”. He said the lack of focus on this problem “is kind of shocking”.

The jobs we do now: 10 roles that barely existed 20 years ago

* Commercial DNA analyst

Map the human genome! Recreate the dinosaurs! Do paternity tests for the Jeremy Kyle Show!

* Content creator

Western culture once had poets, writers, artists, film makers and musicians. Now we have “content creators” with blogs and YouTube channels and Twitter one-liners.

* Life coach

Deals with the restless ennui of aimless professionals who feel ennui because they can afford a life coach.

* Web strategist

Once this might have referred to Marvel Comics’ Peter Parker. Nowadays it refers to people who know slightly more about the internet than you do.

* Social media expert

Someone who tells you to start a Twitter account and charges you for it.

* Reality television star

A blandly attractive circus clown who often works for free.

* Quantitative analyst

Designs complex financial instruments to facilitate easy trading, hedge risk and accidentally destroy western civilisation.

* Reputation manager

You know that picture of you on your Facebook page with your trousers around your ankles at the office party? A reputation manager would tell you to take that down.

* Angel therapist

Practitioner of a relatively new form of counselling that integrates conventional psychotherapy with being batsh*t crazy.

* Corporate social responsibility manager

Professional hired by big companies to offset corporate evil with some big altruistic gestures/tax write-offs.

Different class: A tale of two teachers

Experienced: Ann Bray Teaching 31 years

“I’ve been teaching here for 31 years, since 1981,” says Ann Bray, a teacher at Deansrath Community College in Clondalkin, Dublin. “When I came out of UCD in 1980, you could easily get into the HDip because they were a lot of places. If you wanted a place, you automatically got in. I didn’t even think of doing a master’s degree.”

She says now competition for HDip places is tighter and classrooms have changed.

“When I started teaching, it was chalk and talk, your resource was your blackboard and chalk and whatever posters you put up around the place. Now teachers can bring up videos and other resources that students can watch on the spot, so in that respect, I think teaching has improved an awful lot.”

She says increased pressure on students has also changed the role of the teacher. “It’s not just about teaching, it’s about caring for your students too . . . I think teachers were always caring but students now have so many other issues to deal with like all the recent things in the press about cyberbullying. Teachers have be aware of all that.”

And, of course, teachers’ pay has changed.

“If you look at the calibre of people coming into teaching and you look at the money they are on . . . teaching was never a highly paid job, you were never going to be wealthy, but you knew over the years you’d have enough money for a car and a house and you’d be okay.

“The teachers starting off now, I don’t know how they do it. I don’t know how they can survive. They could be five years out of college and they are still just looking for the odd substitute job here and there. How can they have a standard of living?”

Now completing a part-time master’s in education, she has her sights set on the next rung in the ladder. “When I finish, I’d possibly like to go for principal or deputy principal. If I can, I’d just like to go that step higher.”

New: Sinead O'Flaherty Teaching 1 year

“I only started teaching last year and I’m loving every minute of it,” says Sinead O’Flaherty, a teacher at Adamstown Community College, Dublin. Training at St Angela’s College in Sligo, she did a concurrent degree in education and home economics and Irish.

“So after the four years in college I didn’t have to do the HDip, I was ready to go out into the workforce. I was lucky that I walked straight into a job; some of my friends have had to go to Australia or England searching for jobs. I know a lot of my friends who are primary teachers, it’s fierce hard. A lot of them have to emigrate.”

O’Flaherty says the way she teaches is different from how she herself was taught.

“Years ago there was more emphasis on talk and chalk, whereas now it’s more based on experiential or active learning. There is more emphasis on group work and social interaction. When I was in school we used the book a lot, now everything is on the computer.”

Ireland’s changing demographics have also increased the challenges for new teachers.

“In Adamstown there are students from all cultures and backgrounds, and you have to cater for each of them. You have Polish and Lithuanian students, from the Middle East and Africa – when we are doing practical cooking in home economics you have to do your research. You have to advise them on substitutions for spaghetti bolognese or burgers because meat might not be part of their culture.”

She values the support of her more established colleagues. “The great thing about having older teachers on staff is that you learn from them.”

A bone of contention, however, is pay.

“For me as a newly-qualified teacher we would be on a much lower wage than those out even four years before us. There should be equal work for equal pay.”

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