Job security and perceived job insecurity

I don’t have time for a substantial post on this, but have just seen a 2005 report by Seek – it was no doubt in the news at the time – but I didn’t see it. Anyway this is one thing it says.

Despite an environment of high employment and a buoyant economic outlook, job insecurity has actually increased markedly over the last twelve months. 30% of employees now feel less secure, and only 18% feel more secure in their jobs.

A little reflection will tell you that there could be a large gap between actual job insecurity and perceived job insecurity.   As unemployment has continued to fall and businesses continue to scrounge for labour – workers have got to feel less, not more secure.

Andrew Norton often discusses this.   I guess the fact of job security – and the security you get from knowing that you’re labour is in demand rather than that you currently have a job (which you could lose) – is ultimately more important than perceived security.   But both things are important to wellbeing and to economic behaviour.
One economic consequence is that if you can keep workers misinformed about their security, you can keep a lid on wages that wouldn’t otherwise be there.   Workers might know that there are other more highly paid jobs around, and some might apply for them. But the risk averse might end up deciding that it’s better the devil you know than the devil you don’t. If you’ve been in your job for some years and there’s no sign you’ll get sacked, going to someone else who might subsequently sack you – or who’s workplace you might hate – is a fair risk.

Finally, here’s a table of how things have changed by region.   What’s the pattern.   I expect it’s statistical variation.   It’s certainly hard to figure out why those in WA would be getting to feel less secure.

Job security by region.gif

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derrida derider
derrida derider
15 years ago

Despite all the talk about casualisation, mean job duration is actually higher now than in the 1980s. Mark Wooden’s written the best stuff about this, though he’s cetrtainly not the only academic to look at it in recent years (sorry, I’m in a rush & don’t have time to dig it all out).

IME the stuff about this coming from private market research is usually not worth the paper it’s written on.

Chris Lloyd
Chris Lloyd
15 years ago

Nick:
If the surveys are from around 2000 people then statistical variation is about 1.5% either way. So it looks like some real difference are there. You also quote

Despite an environment of high employment and a buoyant economic outlook, job insecurity has actually increased markedly over the last twelve months. 30% of employees now feel less secure, and only 18% feel more secure in their jobs.

Imagine that all the levies in New Orleans had been removed in 2005. There were no big hurricanes that season. Do your reckon residents would have felt less secure or not? And they would be right to do so, even though they were not underwater yet. Exposure to risk is a direct contemporaneous cost regardless of when or if the catastrophe actually strikes.

Flexible working contracts shift risk from the employer to the employee. This should be compensated by a higher wage. But to choose a low risk contract is illegal. I recently negotiated a new contract with my boss. I was interested in accepting a lower wage in exchange for a list of reasons in the contract for which I could not be sacked. These would constitute unfair dismissal. We were both vulnerable to a k$20 fine for even contemplating the issue. So currently, I have 6 months tenure and no security apart from my faith in the people who run the joint.

MikeM
MikeM
15 years ago

For workers in their 20s, 30s, 40s and perhaps even 50s, their single biggest asset if they are in secure employment is the net present value of their future income stream. (And for people in their 40s, 50s and 60s who have superannuation, that’s when it’s really building up to a living retirement income.)

Future earnings are primarily what banks lend against when providing finance for a home, a car or other consumer goods. That’s what gives people confidence to enter a relationship, settle down and decide to have a family.

Whether job security has actually deteriorated or not doesn’t matter. What matters is perception. If you take away that perception, there’s a sum of maybe a million dollars plus that they might have thought they had, but just might not be there anymore.

Maybe people will adjust their expectations and eventually give greater weight to potential for re-employment and less to longevity of present job, and regain greater confidence in their future earnings stream in a world where it is normal to have half a dozen or a dozen jobs in a lifetime, rather than one or two or three. But adjustments like this take a generation or even a couple, and intermittent periods of high unemployment over the last 25 years haven’t helped the picture.

As it is, for a couple in their 30s with a few kids and a Sydney mortgage, even 3 months out of work while looking for another, similar job, things can get pretty desperate.

The averages in the Seek report that NG quotes may also be misleading, as averages often are. It would be interesting to know which occupational and demographic groups feel more secure (and indeed, how secure “more secure” actually is), and which feel less.

Is anyone doing similar research in Australia to Elizabeth Warren in the US?

“The American middle class is in real trouble,” she says [in 2003], her Southern-tinged sotto voce belying the power of her statement. “American families are smack up against the wall, financially speaking.” A middle-class lifestyle, she says, is increasingly out of reach for middle-class families, many of whom are going broke trying to attain it…

“We discovered that having a child is the single best predictor that a person will go bankrupt,” she says. By the end of this decade, one of every seven families with children will file for bankruptcy.

This is from the third wealthiest country in the world on PPP GDP per head basis (almost a third wealthier than Australia but behind Luxembourg and Ireland, according to 2005 World Bank figures).

Andrew Norton
15 years ago

DD is probably right. Morgan’s consistent series of questions had job security at high levels in early 2006. And while many more people worry about losing their jobs than actually lose their jobs in any one year, the historical pattern is that job insecurity broadly trends with the objective data.

Graham Bell
Graham Bell
15 years ago

I’ve seen acres of Communist propaganda over the years ….. and, apart from the superficial bits, I really can’t see much difference between that and all the glorious news we are now getting about our fantastic economy, our wonderful working conditions, our increasing prosperity, our incredibly low unemployment, our brilliant prospects and all that crap.

Kindly step outside and take a look at what is happening in the real world. It’s not just job insecurity you have to worry about, it’s something far worse.