Thursday 19 September 2019

David Chance: 'Wage packets show it's been a long wait for very little extra'

 

Over the same period, consumer prices have risen 1.3pc, which means that the rise in real purchasing power is half the wages headline level. Photo: PA
Over the same period, consumer prices have risen 1.3pc, which means that the rise in real purchasing power is half the wages headline level. Photo: PA

David Chance

The most telling figure from the Central Statistical Office wages data was not the headline number that showed pay gains accelerating and spreading, but the comparison with pay today and those of the pre-crash peak.

Workers' average pay packets today of €740.32 a week are just 2.6pc more than the €721.89 in the fourth quarter of 2008.

Over the same period, consumer prices have risen 1.3pc, which means that the rise in real purchasing power is half the wages headline level.

"Nominal incomes are up, but the increase is quite modest," Tom Healy, director of the Nevin Economic Research Institute told the Irish Independent.

"The sensation that people don't feel better off is not indefensible."

Yesterday's data also showed the chasm between earnings at the top and the bottom end of the spectrum.

The information and communication sector, where US multinationals feature heavily, had the highest average weekly earnings of €1,139.26 in the third quarter of this year, more than three times the €363.83 a week that workers in the food and accommodation industry earned.

While the presence of large multinational companies has boosted growth and jobs here, that dynamism has not spread into other areas with the result there are now two vastly different economies - a well-paid, fast-growing international sector and a poorly paid domestic sector.

Another proxy for wage inequality can be seen in the differences between pay for managers and professionals, which came in at an average of €1,263.89 in the second quarter, the latest data available for this subset, and pay for clerical and sales staff of €507.90 and for manual workers at €534.84.

Changes to the way the CSO compiles data means it is hard to make direct comparisons, although a prior series on wages in the construction sector put the average weekly paypacket at €788.96 in 2008 and it is now at €777.60, according to the latest release.

Wages in the food and accommodation sector were among the first to start falling during the bust and hit a low of €292.89 by the first quarter of 2013. The current paypacket is less than 5pc more than in 2008 and average hourly earnings for the sector are just 3pc higher at €12.89 versus €12.51 five years ago.

Another uniquely Irish characteristic of the wages data is the continuation of the "public sector premium" and average weekly earnings increased by 1.9pc, bringing public sector pay to €958.98 versus €679.18 in the private sector.

However, this premium has declined in the past five years. In the most recent quarter private pay was 48.8pc of that earned by a State worker, a rise from 41.2pc five years ago. "If you look at this from the perspective of rising non-wage income from property and stock markets, you can see inequality is rising again," said Mr Healy, referring to the overall changes in pay.

Irish Independent

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