The latest Earnings Hours and Employment Costs Survey results for the final quarter of 2019 show a number of welcome trends for Irish employees.
Average hourly earnings were up 3.6% and average weekly earnings were up 3.5% in the year to quarter 4 2019 to €24.17 and €783.62. With inflation of 1.1% over the same period this amounts to real term gains of 2.5 and 2.4%, respectively.
Average weekly earnings were up in 12 out of 13 sectors with the largest increase in Accommodation and Food of 7.5% (or 6.4% in real terms) to €381, the sector with the lowest wages. Both an increase in average hours of 3.3% from 27.1 to 28 and an increase in hourly earnings of 3.9% (2.8% in real terms) contributed to this strong growth. The highest wages were in Information and communication at €1,241 which saw the second-highest growth, at 6.2% or 5.1% in real terms.
Average hourly earnings also increased in 12 of the 13 sectors with the highest gains in the Arts, entertainment, recreation and other services activities sector, at 5.8% to €18.72.
Weekly earnings were up by 3.5% across the private sector (2.4% in real terms to €722) and 2.7% in the public sector (1.6% in real terms to €988) with implications for the public sector pay gap. The CSO estimated this to be at between -3.8% and 0.1% in 2018.
However, researchers at the NERI point to a need to consider these gains in context and to highlight how earnings growth has been distributed among groups.
Although real average weekly earnings growth has been strong over the past year at 2.4%, wages are still just 7.8% above the level in quarter 4, 2008 in real terms, 11 years ago. There has also been significant inequality in earnings growth for different groups of workers.
NERI economist Ciarán Nugent highlights differences in wage growth by occupational classification, often used as a broad proxy for socio-economic groups and based on skills level: "It is clear that growth in wages since 2010 (the earliest estimates available) has been heavily skewed towards the group at the top of the income distribution. Average weekly earnings for Managers, professionals and associated professionals have increased by approximately double the amount of the other two broad groups in that time at 20.8%, compared to just 9.9% for Clerical, sales and service employees and 11.2% for Production, transport, craft and other manual workers." Average weekly earnings for the top group were at least twice that of both other groups at €1,297, €523 and €526 in the third quarter of 2019, respectively.
The fact that weekly earnings are up while average weekly hours fell over the year (0.3% to 32.4) is indicative of the effect of a disproportionate share of employment growth in part-time work over the past year identified in last week's Labour Force Survey.
The Job Vacancy rate remained unchanged at 0.9% over the year and Ireland has persistently underperformed the EU average (2.2% in quarter 3, 2019) since 2008, rarely breaching the 1% mark. This represents vacancies over the year of 18,000 out of 1,931,200 employees. This is an important indicator of the dynamism of the Irish labour market and suggests significant remaining slack.
