How Not To Read A Report: August 21st – The Recession Diaries

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Stop the Presses!

Irish workers earn 4th highest wages in the world!’  ‘Irish workers one of the best paid in the world!’ ‘Wages for Dubliners are among the highest in the world!’

So, all that guff from trade unions and progressives and (and as we will see – just about every official data collection agency) is just that – guff. Misinformed guff. Vested interest guff. For the authoritative statistical report has been published and it shows – Irish/Dublin workers are rolling in it.

Or maybe, just maybe – the people making that claim didn’t actually read that report. For the UBS’s Prices and Earnings report for 2009 makes no such claim. So who’s spinning what? And to what effect?

The UBS report is a triennial affair surveying prices and wages throughout a number of cities across the world. They compile price data on a range of product and on wages in very narrowly defined categories covering 73 cities around the world – from all continents, including developed and developing countries. Dublin is Ireland’s lone representative city.

The UBS report lists 14 ‘professional’ categories in the Appendix – ranging from manufacturing, services, public and private and even managerial categories. In most of them they show Irish wages (in US $) as very high – much higher than the global average and even higher than the average from cities in the EU-15. So surely that should be game, set and match point. It would, if we didn’t read the report.

UBS states very clearly that they are not compiling the data for the purposes of finding ‘statistical averages’.

‘ . . our figures do not represent statistical averages and its collection was limited to just a few companies for each profession and city, data from different sources may differ.’

Indeed, we will see why they make this disclaimer below. But, first, let’s see what more is ‘disclaimed’.

  • RTE News at One headlined the report as: ‘Irish workers are amongst the highest paid in the world’. Yet, UBS doesn’t compile data on ‘Irish’ or national wages. It doesn’t compile data on any other national wage levels.
  • The UBS report doesn’t compile wage data on economic sectors (industry, services, retail, communications, manufacturing, education, etc.)
  • The UBS report doesn’t compile wage data on occupational groupings (sales, clerical, managerial, production, etc.).

So what does it do to allow those who haven’t read the report to make such claims as RTE did? Let’s look at just two of the fourteen categories on which the UBS compiles its data.

Skilled Industrial Worker: this would be a relatively easy category from which to obtain data and compare. But that’s not what the UBS does. It takes data based on:

‘Skilled worker with vocational training and about 10 years’ experience with a large company in the metalworking industry; approx. 35 years old, married, two children.’

First off, it is immediate apparent that there is very little likelihood of getting a scientific sampling of this cohort across a range of companies throughout all the cities. That’s why the UBS didn’t even attempt it.

It’s even worth questioning where they got their data from Dublin. The CSO’s Industrial Production Census shows that in the entire Southern and Eastern regions (from Kerry to Cork to Dublin – all counties outside the BMW region), there are only 16 large (100-plus employees) in the base metal and metal fabricating industry. How many of these are in Dublin and of these how many fit the UBS bill of ‘metal working’? Given that there are less than 3,000 workers (some of them women) in these 16 large companies – how many work in Dublin? In fact, there is a good chance, given that Dublin doesn’t have a large metalworking industry, that there are few if any workers that fit the UBS bill (e.g. 35 years old, married, two children, vocational training, 10 years experience).

The same holds true for the UBS category of Female Factory Workers (‘Unskilled or semi-skilled machine operator in a medium-sized company, mainly in the textile industry; about 25 years old, single’). Textile industry? Dublin? There are only 500 women workers in this sector throughout the entire Southern and Eastern region (and this is the latest figure – from 2006; good chance that some of those companies have shut down as this is a sunset industry in high-income economies).

And, how did they collect their data? From data collection agencies whose remit is to accumulate the information to allow us to make such comparisons? No. It was based on a detailed questionnaire (112 questions) used in the following way:

‘We have drawn on the broad network of UBS branch offices, countless universities and our researchers’ personal contacts . . ‘

Let me stress – I have no problem with this. UBS has been open and transparent about their methodology. The problem is the spin that some have put on this report – spinning without reading.

So, can we get some information on this area? Yes, from agencies whose remit is to collect such data for the purposes of comparison. Let’s take Destatis – the German  equivalent of the CSO. Their information is useful because it is more up to date than most. They examined labour costs (wages, employers’ social security contributions, etc.) in the manufacturing sector in the 4th quarter of 2008. They based their results on Eurostat data ((they have access to the raw data from Eurostat whose own published data lags 2-3 years behind). What did they find?  This is for all manufacturing employees (managers included, who took a pay rise at the expense of all other workers in the first three months of this year):

  • Average Irish manufacturing wages are 2.3 percent below the EU-15 average and 17 percent below the average in our peer group (top-10 EU economies).

No, it doesn’t focus on skilled male metalworking workers or unskilled female textile workers – but if overall average wages are 17 percent below our peer group, then we can reasonably assume that these workers’ wages are below average as well (isnt’ it amazing how official data never gets the headlines?)

How can we reconcile the findings of Destatis and UBS? We can’t. Not because one methodology is superior to another in pursuit of the same goal – constructing a set of data of statistical averages in order to make comparisons. It’s because they have different goals. UBS makes no claim that it is a surrogate OECD, US Bureau of Labor Statistics, Eurostat, Destatis, etc. It doesn’t function on that turf.

If the UBS results were presented in the media with some degree of accuracy, the lead-in probably run like this:

‘Recent data compiled by UBS researchers’ personal contacts shows that wages in a few companies where skilled metal workers with vocational training and about 10 years’ experience with a large company in the metalworking industry; approx. 35 years old, married, two children are working in Dublin are higher than UBS researchers’ personal contacts in a few companies employing the exact same type of workers in other cities.’

Okay, not a very sexy lead in. Best just to run with ‘Irish workers’ wages are one of the highest in the world’.

Not terribly accurate but, hey, when did we ever let accuracy get in the way of a good story.

[You can hear this debate between an IBEC representative and myself on the Last Word –  Wednesday, August 19th, immediately after the headlines on the 5:00 pm slot.]

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