Tuesday 15 October 2019

Wages in Ireland rose faster than EU average last year

‘Tight labour market’: Gerard Brady, head of tax and fiscal policy at employers’ group Ibec
‘Tight labour market’: Gerard Brady, head of tax and fiscal policy at employers’ group Ibec

Anne-Marie Walsh

Irish wages rose faster than the EU average last year. But workers' pay growth of 3.6pc was middle of the road compared with some countries, where staff enjoyed hikes up to 11pc.

New figures from Eurostat show that hourly wages increased by 3.6pc last year compared with an average among the 28 EU states of 3pc.

However, in Portugal, Hungary and Latvia, wages rose by more than 10pc.

Average weekly earnings in Ireland stood at €761.65 at the end of 2018, which is more than €39,000 a year.

Gerard Brady, head of tax and fiscal policy at employers' group Ibec, said that when inflation is taken into account, Ireland's wages rose at the fastest rate of any EU15 country.

"This increase is indicative of the strong economy and tight labour market," he said.

"Whilst a number of Eastern European countries had faster nominal wage growth than Ireland, this is only to be expected given that they are at a different stage of economic development, and have higher rates of inflation."

Nominal wage growth refers to hikes in pay that do not take account of inflation.

He noted that Polish wages rose by over 6pc last year, according to the labour costs figures released yesterday.

However, he said this was from a base of less than €9 an hour in Poland, versus an average wage of over €23 an hour here.

Siptu economist Michael Taft said that there was no doubt that wages went up, but said they were still only a fraction of a percent above the EU average.

He said that pay in Ireland was only catching up now after a downward trend over the past five years.

Mr Taft claimed Ireland still had a relatively low-waged economy compared with its "peer group" of higher income countries in the EU15, including Germany, France or Finland.

"In the last year we have seen a marginal catching up on the EU average growth rate," he said.

"However, these increases were still mid-table in the EU."

He said that the wage figures on their own did not tell the whole story as they did not take into account total labour costs.

These include employers' social insurance contributions.

He said that workers in some countries had unemployment, maternity and state pension benefits based on their pay, as well as free health insurance.

"We have a long way to go to reach the average employee compensation in other high-income countries - in particular, our large domestic sectors," he said.

He said maternity benefit top-ups by employers, for instance, usually only happened in higher-paid sectors here. They were not generally given in lower-paid industries including hospitality, retail, or cleaning, he said.

"In the wholesale or retail sector, compensation would have to rise by 18pc to reach the average of other high-income EU countries, while in the hospitality sector they would have to increase by 28pc. Workers need a substantial wage increase to be treated like other comparable workers in the EU," Mr Taft said.

Irish Independent

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