Precarious jobs holding back young workers, OECD finds

New studies from the OECD and the United Way of Toronto are exposing how precarious work is hurting economies and blocking opportunity for an entire generation of young people.

Income inequality retards economic growth and robbing a generation of opportunity

Income inequality holds back economies

8 years ago
Duration 7:17
The OECD’s Stefano Scarpetta examines the economic damage caused by income inequality

New studies from the OECD and the United Way of Toronto are exposing how precarious work is hurting economies and blocking opportunity for an entire generation of young people.

Much of the burden of insecure jobs is falling on youth and they are at greater risk of spending their lives in poverty than the elderly across most developed economies, according to the Organization for Economic Co-operation and Development.

Among temporary workers, close to half are under age 30 and almost 40 per cent of young workers in the OECD are in non-standard work, such as contract or temporary work, or involuntary part-time employment.

Opportunity to move out of low-wage, insecure employment as workers get older is becoming increasingly limited, the OECD found.  Fewer than half of people on temporary contracts were able to transition to full-time work within a three-year period, it found.

For those in low-wage, part-time positions, precarious work can be a trap. Their earnings remain low and their poverty limits their housing options, ability to form relationships and ability to start a family, according to the The Precarity Penalty, a report from the Poverty and Employment Precarity in Southern Ontario research group.

That report, done for the United Way, found 44 per cent of workers in the Hamilton to the Oshawa, Ont., region are in insecure employment. Younger workers, women and racialized workers are most affected, the report found.

Inequality increased in Canada

The OECD found Canada's inequality has increased in the period between the mid-1980s and 2013, though the gap between rich and poor isn't as wide here as in the U.S. or Mexico, or in developing countries such as Brazil or Russia.

OECD director of labour and social issues Stefano Scarpetta said in most developed countries inequality is rising.

"Canada to some extent is an exception because you're one of the few countries in which inequality has stabilized even during the world recession and the recovery period, but overall in most OECD countries overall inequality is on the rise again," he said in an interview on CBC News Network's The Exchange with Amanda Lang.

Canada's inequality measure is close to the OECD average, with the richest 10 per cent of the population earning 9.6 times the income of the poorest 10 per cent.

The widening gap between haves and have-nots in much of the developed world not only raises concerns about the fraying social fabric — it's also dramatically holding back economic growth, the OECD concludes.

In part, this is because low-income people have less to spend, but there is also a longer-term impact the study found.

Low-income families are unable to take advantage of educational opportunities for their children, nor can they better their situation by investing in new skills for a breadwinner, the OECD found.

Scarpetta argues that inequality ends up being bad for everyone.

"In this report, we find evidence that a high degree of inequality is actually very bad for social cohesion," he said.

"You need effective taxation and benefits to redistribute part of the income inequality, but you also have to work more to help people improve on their opportunities." 

Personal toll of insecure jobs

The Precarity Report, which studied insecure employment in the Greater Toronto Area, goes further, arguing that insecure work leads to poorer physical and mental health and high levels of stress for low-income families.

Uncertainty over their work schedules can affect family life and low incomes can limit opportunities for their children to take part in sports, arts activities or school trips, said the report. That affects the quality of life not just for individual families, but also for their communities. 

"Precarious employment can be a trap — many people have a hard time moving into better opportunities," the report concluded.

People with insecure jobs don't get benefits, rarely are allowed training and don't have pensions. About 60 per cent of them said their income varied from week to week and almost one third had been up to four weeks without income in the past year.

Both the OECD and United Way recommend policymakers find ways to address the rise of insecure work and income inequality, suggesting both social supports and income redistribution to address a global trend. 


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