Over Crisis-ed and Under-Paid

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crisisWe have a housing crisis, a homeless crisis, a health crisis, an investment crisis; our education system is under-resourced, our indigenous enterprise sector is out to lunch and the Dail can’t seem to put together a government.

And if all that wasn’t bad enough, we are under-paid.

Some new data regarding employee compensation and wage levels in Europe has come on stream. Here we will review the headline figures. Over the next few weeks we’ll get into the detail.

First up is a comparison of employee compensation. Employee compensation combines both the direct wage the employer pays you and the social wage which the employer pays to a social insurance fund that allows you access to income supports and public services (e.g. health). This is the standard measurement of workers’ wages, used by the CSO, Eurostat, OECD, etc. So at a total-economy level, how do we compare with other EU-15 countries?

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There’s Ireland – below the EU-15 average and in 10th place, only ahead of low-pay UK and the poorer Mediterranean countries (the data can be found here and here.   To get to the EU-15 average we’d need an increase of 6 percent – but we’d still be in a lowly 10th place.

However, when we look at other central and northern European countries (removing the four peripheral Mediterranean countries), we fall well behind. We’d need an increase of 18 percent.

Employee compensation is not equal to ‘labour costs’ (I really hate that value-laden term). In some other countries, employers pay higher payroll taxes than just employee compensation. For instance, in Sweden, employers pay a social wage (social insurance) of 17 percent of the workers’ wage. However, they also pay an additional 12 percent in other payroll taxes – money that can go into public services and income supports not related to social insurance. In Austria, employers pay 17 percent in social wage and another 7 percent in payroll taxes. In Ireland, employers pay 8 percent social wage and another 0.5 percent in payroll taxes.

So if we were to compare the cost of hiring labour per hour, Ireland would fall even further behind other countries and European averages (we’ll have to wait for the European Labour Force Survey to be published to compare this).

Now, if you’re one of those folk who don’t care about all that social wage stuff – income supports and public services – and want to know how much you get into the hand, we can compare just the direct wage. However, in doing that we have to use purchasing power parities (PPPs) to smooth out currency and living costs (we may get paid 5 percent better off than country X but if living costs are 10 percent higher, we’re actually worse off than country X).

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Again, we find Ireland ranking in 10th place. We’d need an increase of 4 percent to reach the EU-15 level but 17 percent to reach the average of non-Med countries; that is, central and northern European countries.

Some people might find it curious that Finland and Sweden are below the EU-15 average. This occurs because living costs are very high in Scandinavia (every tried buying a pint there?). However, don’t weep for them: they have some of the highest living standards with the lowest poverty levels in the EU – with free education (really free – no textbook costs, transport fares or voluntary contributions), really affordable childcare and free health with lots of free prescription medicines.

So we are under-paid; in comparison with our central and northern European neighbours, really under-paid. We don’t get the direct wage we deserve. We don’t get the social wage we deserve.

But we got crises. Man, do we got crises.

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