Earnings Data for Ireland

The CSO has released a new and comprehensive survey on earnings patterns in the economy: you can find the release here.  The new Earnings, Hours and Employment Costs Survey (EHECS) results are comparable across sectors and include more detail on components of earnings and labour costs than is currently available. The data show interesting sectoral variation in earnings patterns and the relative roles of adjustment in hourly earnings and total hours worked in determining aggregate earnings dynamics in each sector.  Still, the survey still only relies on aggregated data for each participant in the survey, such that it does not reveal the precise earnings dynamics for specific worker types or occupations.

8 replies on “Earnings Data for Ireland”

It is interesting that smaller organisations (<50ppl) seem to hold on to more employees.

It is a pity that this data is collected by survey rather than through the Revenue Commissioners. Perhaps somebody would indicate what degree of accuracy we can safely assume for such a survey?

These figures would appear to confirm that, relative to the Eurozone, there has been a very significant improvement in wage competitiveness in Ireland in 2009.

At the most basic level, hourly earings in Ireland were up by just 1.8% between 2008 Q2 and 2009 Q2. Eurostat figures released a few weeks ago showed that, in the Eurozone, hourly earnings were up by 4.2% between 2008 Q2 and 2009 Q2. That is a modest gain of 2.4% for Ireland.

However, that is not the end of it.

The CSO release, that Philip Lane has linked to, specifically states that the Ireland figures are BEFORE deducting the pension levy on public sector employees. The figures for Ireland show an increase in hourly earnings of just 0.2% for private sector employees and 2.6% for public sector employees, both for the year between 2008 Q2 and 2009 Q2. But, if we deduct the pension levy, then on my rough calculations, that would result in the hourly earnings of public sector employees having fallen by about 5% between 2008 Q2 and 2009 Q2 and, combined with the 0.2% increase for private sector employees, would result in the hourly earnings of all employees in Ireland having fallen by about 1.5%. That brings the gain in
wage competitiveness in Ireland to about 5.7% against the Eurozone average in 2009.

However, that is still not the end of it.

As Ireland has a far more flexible labour market than most Eurozone countries, job shedding, even per unit of output, has been much greater in Ireland. Despite the fall in GDP, it looks as though productivity in Ireland(GDP per person employed) will increase by about 2% in 2009. In most Eurozone countries, the opposite is the case. In most of them, productivity will fall by about 2% to 3% in 2009, as the number employed has fallen by less than the fall in output.

When all the figures for wages, output and productivity for 2009 are in, which probably won’t be until late 2010, I’ll be surprised if the gain in unit wage competitiveness in Ireland, relative to the Eurozone average, is less than 10%.

“It is interesting that smaller organisations (<50ppl) seem to hold on to more employees.”

Presumably easier for them to negotiate a pay cut than for larger organisations. On average paycuts of 4.9% for these firms versus a pay rise in the larger organisations. Somewhere in the back of my mind is some stat that a large percentage of the work force are in these smaller firms.

Watch for Q4 figures. This is where bonuses mainly come into play and could have an even bigger impact. I don’t know if our culture is more bonus oriented than Europe.

These data are designed to give us good information on the wage bill. They are not well designed to give us information on pay rates.

The data on average hourly earnings and average weekly earnings are generated by aggregating the wage bill for a sector and dividing through by the total employment or total hours worked. With most of the loss of employment being among the lower paid “production, transport, craft and other manual” category this shows up as an increase in average earnings, even if there is no change in pay rates. This biases upwards the figures significantly.

This problem could be ameliorated by creating an index where the changes in each individual category were weighted by the wage bill for that category. (See the methodlogy underlying the index for public sector earnings published by the CSO last week.) Unfortunately, due to sample size, there are limitations on the extent to which this can be done. However, even with the data available it would be useful. It would ceratinly show up as a significantly smaller increase in the index of average earnings than is the case for the current raw data. This would give a better idea to what is happening to pay rates for indivdiuals.

If what John Fitzgerald says about weighting as between sectors is correct, and I have no reason to doubt that it is, then it is clear that the gain in wage competitiveness in Ireland in 2009 is considerably greater than what I suggested in my first post. Taking into consideration Stuart Blythman’s point about bonuses, and bearing in mind that the CSO figures are for 2009 Q2 and that the fall in wages in Ireland is likely to have been gathering momentum as 2009 progressed, it seems to me quite likely that by 2009 Q4 there was a 10% gain in wage competitiveness in Ireland against the Eurozone average and an approximately 15% gain in unit wage competitiveness against the Eurozone average (taking into account the point I made about productivity in my first post), as compared with 2008 Q2.

@John Fitz Gerald
Why has it not be possible to get better and more timely statistics on wages and earnings in Ireland.

Would Revenue not collect this exact data on a very regular basis?

Comments are closed.