From top: Wages have barely exceeded inflation over the last 10 years; Michael Taft
Tom Healy, Director of the Nevin Economic and Research Institute, put up the graph (below) on Twitter with the comment:
‘Average Weekly earnings flat in real terms since 2009. Yet, non-labour incomes rising significantly.’
Seamus Coffey, Chair of the Irish Fiscal Advisory Council, responded with a graph of his own (below) commenting:
‘Current trends are surely more informative? Ireland has had the fastest real wage growth in the EU15 for nearly 18 months.’
I threw in my two cents. I tweeted a graph (below) of the CSO’s average weekly earnings for three employee types: managers & professionals; clerical, sales and service workers; and manual workers (production, transport, craft and other manual). My comment:
‘But we have to look at who’s benefiting. Weekly earnings increases are taken up by the higher income groups with white and blue-collar workers trailing.’
Managers and professionals have experienced a 22 percent increase in weekly earnings over the last eight years; white and blue-collar workers received a 14 and 8 percent increase respectively.
With inflation running at nearly 6 percent over this eight-year period, most of the gains for manual workers have been wiped out with white-collar workers seeing nearly half of their gains eaten away. Managers and professionals are still well ahead of the game.
And ahead of everyone else.
Unsurprisingly, the group that received the highest increases is the highest income group. Managers and professionals earn more than twice as much as other employees.
What does all this tell us? First, it’s good that people swap graphs on social media rather than insults. Second, data tells you what it tells you. It is the framing and interpretation that fuels the debates.
For instance, Tom Healy is right to point out that wages have barely exceeded inflation over the last 10 years. Seamus Coffey is right to show that in the recent past (18 months) wages are starting to rise, faster than other EU-15 countries (though if you go back a few years the story changes).
I hope that I have shown that the gains over the last eight years (that’s as far back as that CSO dataset goes) have gone to the highest income groups.
Of course, all the data in these graphs beg questions. And the answers can slightly alter the conclusion. For instance, when looking at the data for types of employee, we should remember that the numbers could change – not because of actual pay increases or working hours increase – but because the composition of the group has changed.
However, the main point I would draw from all three graphs – growth in real wages, relationship to other countries and the distribution of those earnings – is that we’re heading into greater inequality if we rely on ‘market forces’.
We need a wage market that is negotiated between employers and employees. Such negotiation has a tendency to favour low and average income earners whereas market forces tend to favour higher income groups who have stronger bargaining leverage.
In short, we need a negotiated economy.
Michael Taft is a researcher for SIPTU and author of the political economy blog, Notes on the Front.