ONE OF IRELAND’S largest trade unions claims the country’s low wages are driving a ‘race to the bottom’ after an analysis showed poorly paid jobs were still rife.
A report from Unite the Union called ‘the truth about Irish wages’ said the Republic had the fifth-lowest average pay in the ‘market economy’ – essentially the private sector – among the original 15 EU member states.
That was despite Ireland having the third-highest economic output per person in the group, even after stripping out the effects of multinationals’ accounting deals on GDP.
However when compared to other ‘small open economies’ – countries like Austria, Belgium and Finland – Ireland’s wages fell further behind at 24% below the average.
The report draws on figures from a range of sources, including Eurostat, the IMF and OECD, which in 2013 revealed Ireland had the highest share of low-paid workers among the EU-15 countries that reported their figures.
Those in traditionally low-paid industries like hospitality and retail fell furthest behind the average among Ireland’s European peers, the report added.
Workers employed in the water and sewerage sector were paid nearly 30% below the EU-15 average, while those in accommodation and food services earned more than 20% less.
The figures are all based on pre-tax income, with previous analyses showing Ireland has one of the most progessive tax systems in Europe. Those on low earnings pay some of the smallest effective tax rates in the developed world.
When compared to net annual income, the amount people actually have left to spend after paying their taxes, Ireland ranks slightly above the EU-15 average. However the union argues this “ignores the net benefit of taxation to European households where healthcare is free and childcare affordable”.
The report also said Irish living standard in 2014 were 15% below the EU-15 average, based on Eurostat’s figures for ‘actual individual consumption’.
In his introduction to the report, Unite Ireland secretary Jimmy Kelly said the debate around local wages was “unfortunately dominated by unsubstantiated assertions and misleading claims”.
“The fact is that Ireland is low-waged economy and, compared to our peer group in Europe, Irish wages fall well below average,” he said.
“Ultimately, the issue is not that Irish wages are too high but that wages are not high enough – especially for the low paid. Irish wages are uncompetitively low.
“This results in reduced domestic demand which, in turn, reduces business performance. It also reduces tax revenue which depresses the ability of the state to invest in our economic and social infrastructure. Our low wage culture propels the economy into a race to the bottom.”
Staying competitive
Business groups have consistently maintained that wage rises need to be kept in check if the country is going to stay competitive for enterprise, particularly with unemployment rates remaining high after the recession and inflation low.
The recently published five-year programme for government supported a gradual increase in the minimum wage to €10.50 per hour. The current rate stands at €9.15 per hour.
However in its recent critique of the document, Ibec cautioned that any increased in the floor rate of pay must be “competitive, affordable and appropriate, while taking the cost of living into account”.
Meanwhile ISME, which represents smaller businesses, has warned the growing costs of labour are holding back the country’s SMEs.
Written by Peter Bodkin and posted on Fora.ie
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