Friday 23 February 2018

Revealed: How your pay has plummeted in past three years

Probe uncovers full extent of income hits

Anne-Marie Walsh Industry Correspondent

THE full extent of cuts in workers' incomes during the economic crisis is revealed today.

An Irish Independent investigation into pay in some of the country's main industries shows salaries have plunged by as much as 30pc. Many workers, such as sales reps, have been hit hard over the past three years with a drop of more than 20pc in their basic pay alone.

Office workers and those in the hard-pressed retail sector have lost more than 12pc of their income.

The situation is even worse when other factors, including reductions in overtime and hikes in pension contributions, are factored in.

This income squeeze comes as families struggle with higher prices and charges in the wake of five tough Budgets.

They have also had to cope with the introduction of the controversial universal social charge and other tax increases.

Different sectors have been hit in different ways -- ranging from reductions in hours and cuts in overtime, to pay freezes and higher pension contributions. But some jobs have bucked the trend, including IT specialists and hairdressers; while staff at financial institutions have also largely escaped cuts in basic pay.

Tradesmen have been hit hard by the burst property bubble. Their minimum pay rates have been slashed by 7.5pc -- but worse, they have lost nine hours per week in overtime since the boom.

In 2008, an unskilled tradesman was working 48 hours a week and earning a legal minimum of €37,851 a year while taking home another €11,550 in overtime.

But the loss of extra hours plus a pay cut have eroded the salaries of those who still have a job by 29pc -- including an agreed cut to the minimum salary of 7.5pc.

The situation is even more serious for those who work for themselves and aren't protected from any legal minimum.

And professionals have not been safe from the fallout from the property crash either. Solicitors whose main business was property-related have also taken pay cuts of up to 30pc.

In the private sector, pay freezes rather than pay cuts have been the norm, but cuts in basic pay have still hit one in four private sector workplaces.

However, many private sector employers have turned to the more drastic option of redundancies in order to make savings.

Meanwhile, the Government imposed a 6pc pay cut on all public servants last year.

But pay cuts alone do not give a full picture of their real loss in income.

Public servants including nurses, gardai, teachers and civil servants have been hit by higher pension contributions since 2009, knocking another 7pc off pay.

However, this may have been offset to some extent for those who have enjoyed incremental pay increases since then.

A primary teacher with 10 years service was earning €48,078 in 2008, as well as a €1,939 qualification allowance and €1,800 yard allowance.

Their take home pay is now down by more than €6,200 due to the pay cut, pension levy and universal social charge since 2008. Employer group IBEC said workers in a quarter of private sector firms had a pay cut, with an average reduction of 12pc, in the past three years.

IBEC chief economist Fergal O'Brien said: "At management level the cut was about 20pc, and 10pc at operative level, but people were getting increases as well, largely in the high tech sectors, while increments are being paid in the public sector.

"The vast majority of workers were on a pay freeze, but gross earnings are down about 5pc since 2008 overall."

Even in sectors where basic pay rates have stayed the same, such as the retail sector, other cuts have eaten into wages.

A sales assistant with 10 years service was earning €11.50 an hour in 2008.

They are paid the same rate now, but a drastic drop in hours has dragged their yearly earnings down by 13pc.

Many have been working shorter shifts and three-day weeks as their average hours fell from 39 to 34 a week.

This caused their annual wages to shrink from €23,402 to €20,402.

But hairdressers -- although on low pay to begin with -- bucked the trend and saw their pay rise. They were entitled to a 6pc wage increase under a legally-binding minimum wage agreement.

Highly-skilled IT workers also enjoyed a pay rise of more than 5pc. "Last year and this year have seen a significant increase in demand for programmers and salaries and other payments have seen steady increases," said Trevor Murphy of recruitment agency Morgan McKinley.


"Some organisations give healthcare cover and bonuses to keep this high demand staff happy and some have brought in work-life balance polices," he added.

Despite the banking crisis, staff in the financial institutions escaped cuts in basic pay.

They got delayed pay rises of around 3.5pc between November 2008 and July the following year.

But the Irish Bank Officials Association says this had been more than wiped out for some by an increased pension contribution equal to 5pc of their salaries, while bonuses have been halted.

On top of pay cuts and freezes, families are struggling with plummeting purchasing power.

Families on the average gross salary of €50,000 have suffered a loss of €4,000 from higher taxes and pay cuts.

This has resulted in monthly take-home pay dropping from €3,155 to €2,828.

In the past year alone households are shelling out €1,300 more to clear their bills.

Irish Independent

Promoted Links

Today's news headlines, directly to your inbox every morning.

Promoted Links

Editor's Choice

Also in Irish News