Michael Taft: Closing Wage Gaps

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From top: CSO infographic on wage trends; Michael Taft

The CSO has published new data that will greatly assist in analysing wage trends. Here I just want to focus on a small selection of the data provided in Earnings Analysis Using Administrative Data Sources 2018 and Econometric Analysis of the Public / Private Sector Pay Differential 2018; in particular, high and low pay, and public / private sector pay.

A useful measurement that the CSO has produced is median pay. This measures the mid-point in wages where 50 percent are above and 50 percent below.

This contrasts with average, or mean, pay which can be skewered by high earners. For instance, in 2018:

Average weekly pay was €740

Median weekly pay was €593

Even though average pay was €740,63 percent of employees earned less than this. 50 percent of employees actually earned less than €593. That is the distinction between average and median.

Where are the High and Low Earners?

Information & communication leads the table which is not surprising. The mid point in weekly earnings is nearly €1,000, followed by the Public Administration and Financial sectors.

At the bottom is Wholesale & retail, Arts and recreation and, the lowest sector, Hospitality (hotels and restaurants). It should be noted that reduced working hours contribute to low weekly earnings.

For instance: Information & communication average weekly earnings are 3.6 times that of Hospitality However, Information & communication average hourly earnings are 2.5 times that of Hospitality

The difference is working hours. Information & communication average working hours are 36 hours per week compared to a Hospitality average of 27 hours.

We can identify high and low earners by sector. The following shows the percentage of workers earning less than €400 and more than €1,600 per week.

29 percent of all employees earn below €400 per week. However, over two-thirds of Hospitality workers earn below this amount while workers in the arts, distributive and administration sectors also have a disproportionate share of low earners.

At the other end we find the Information, Financial and Professional sectors had the highest percentage of employees earning more than €1,600.

There is one interesting sector – Public Administration. This is made up of civil servants, Gardai, prison officers, employees in non-commercial semi-states and agencies – approximately 100,000 employees. This sector is 100 percent public sector, unlike the Health and Education sectors where there is a considerable proportion of private sector workers.

While Public Administration had the second highest median weekly earnings, it had the lowest level of low-income earners. But it didn’t have a big proportion of high earners either.

This suggests a more ‘egalitarian’ pay structure; that is, the gap between the highest and lowest earners was smaller than other sectors. To test this suggestion, let’s turn to the CSO’s second release on the public / private pay differential.

Public and Private Sector Pay

Headline data shows public sector weekly earnings significantly exceeding private sector earnings.

But there are serious flaws in this headline comparison. First, there are many jobs in the private sector that don’t exist in the public sector – hospitality, retail, etc. Second, weekly earnings don’t take account of hours worked. Third, the comparisons are not like-for-like.

Thankfully, the CSO has performed an analysis which attempts to compare similar jobs in the public and private sector. This means factoring in a range of variables: gender, age, full-time/part-time status, supervisor status, temporary/permanent status, hours worked (including shift work and overtime), length of service with current employer, union membership and enterprise size.

When factoring in these variables, they compare permanent, full-time jobs for people aged between 25 and 59. This is what they found (a negative figure indicates that public sector pay is below their private sector counterpart).

The CSO uses two measurements – including and excluding enterprise size (as there is debate over how relevant that is). Overall, on a like-for-like basis, public sector pay is between 3 and 4 percent below the private sector.

Public sector men earn between 10 and 11 percent less than their private sector counterparts

Public sector women earn between 3 and 5 percent more

The result for women is understandable given that the gender pay gap is much less in the public sector. Eurostat shows that, in the Irish private sector, the gender pay gap was 19.7 percent; in the public sector the pay gap was less than half that at 9.6 percent.

In testing the proposition that the pay structure in the public sector is more equal than in the private sector, the CSO shows the following:

Here we find that the public sector has a premium for low and average income earners. In the lowest 10 percent, public sector wages are 13 percent higher than their private sector counterparts.

At the higher income levels, public sector employees earn 17 percent below their private sector counterparts. In short, the gap between the highest and lowest-paid is much narrower in the public sector.

* * * *

What can we draw from this selection of CSO data?

First, the level of working hours is an important contributor to low weekly earnings. 75,000 work part-time because they can’t find a full-time job. However, 200,000 work part-time because they have family and caring responsibilities.

Clearly, precarious contracts are an issue. But lack of social supports (in particular, childcare and eldercare) may limit people’s ability to take up more work.

Second, the public sector succeeds in reducing both inequality and the gender pay gap because their wage structure is ‘managed’ through collective bargaining. Collective bargaining is a key tool in reducing inequalities.

Greater employee-based management (through the right to collective bargaining) of wages throughout the economy could have a beneficial effect.

Reducing precariousness, increasing social supports, and wage management – if we are serious about a more equal society that can boost living standards, we will need to create policies to achieve these ends.

Michael Taft is a researcher for SIPTU and author of the political economy blog, Notes on the Front. His column appears here every Tuesday.

Rollingnews

12 thoughts on “Michael Taft: Closing Wage Gaps

  1. dav

    Thank you Michael, the government and their stooges won’t like it since all they care about is vulture funds and tax dodging corporates

    Reply
    1. curmudgeon

      It’s comments like this that makes me think we should issue people internet licenses, that can be rovoked at any time for making comment sections worse than they have to be. This one is defintely worth a few internet penalty points.

      Reply
  2. curmudgeon

    “While Public Administration had the second highest median weekly earnings, it had the lowest level of low-income earners. But it didn’t have a big proportion of high earners either.” – Only if you don’t count their defined benefit pensions.

    For the clueless & blissfully ignorant it means that the data shows public and civil servants are out earning most private sector workers, i.e. the tax payers. What it neglects to show is that they get to cream it later on in life too via earlier retirement and DB pensions and have far more paid holidays and fewer working hours.

    Also I laughed at “First, there are many jobs in the private sector that don’t exist in the public sector”, because those jobs are there by necessity. Their are positions in the public sector that only exist there because successive governments refuse to fire anyone in it and private companies frankly wouldnt tolerate the waste of money. Clerical Officer is a deprecated role in most businesses due to basicaly the passage of time and onward march of technology but the public sector have them en masse and on 37k with a leaving cert. Thats about 8k/year more than an office administrator wih 3rd level qualifications will make in the private sector and even then they have no job security or pension.

    “There is one interesting sector – Public Administration. This is made up of civil servants, Gardai, prison officers, employees in non-commercial semi-states and agencies – approximately 100,000 employees. This sector is 100 percent public sector” – All get earlier retirement, some like gardai and army (literally 15 years early) and are on huge money relative to their international peers and private sector education standards.

    This particular group have incredible political leverage too, here’s a classic from the archives
    https://web.archive.org/web/20121017074350/https://www.irishtimes.com/newspaper/frontpage/2012/1017/1224325341332.html

    Reply
    1. Cian

      No. I think the suggestion is that the role of ‘soldier’ or ‘fireman’ or ‘prison officer'(and other specific public service roles) doesnt exist in the private sector.

      Reply
      1. curmudgeon

        I think you’ll find that it’s illegal to be a soldier or a Gard in the private sector thus hampering employment in the lucrative area of mercenary or patriotic vigilante. Of ocurse this doesn’t apply to Gardaí who have been double jobbing as hired muscle for donkeys years:
        https://www.irishtimes.com/news/gardai-s-double-jobbing-is-damaging-the-force-s-relationship-with-public-1.76544

        Be really nice if all that money we spend on pur armed forces could be put to use instead we have to hang our heads in shame that our retire early do-nothing Defence Force and Coast Guard is so unfit for purpose we have to outsource search and rescue to CHC Helicopter. RIP Rescue 116, no state funeral for you though – you’re not public sector Defence Forces. You just do their job.

        Reply
    2. Clampers Outside

      You just compared a starting salary for a 3rd level administration job to a Clerical Officer in the job for at least 14 years.

      What other silly comparisons have you made in that rant. A few at least by the look of it.
      I understand you are trying to make a point, but your unfortunately the argument has been very poorly made.

      Reply
    3. Clampers Outside

      Where’s the political leverage in that link? They were told to go to MABS for assistance – is that “political leverage” now?…. anyone can go to MABS. Not sure your link proves anything.

      Reply
      1. curmudgeon

        Smack bang in the middle of the recession and this Gda Sgt. on 65K a year, job for life and early retirement with massive pension yet “There are weeks when I can’t put food on the table. I call them ‘cornflakes days’ when all we eat all day is cornflakes..” No mention if the wife works either

        Of course not all of us are gullible idiots happy to give in to public sector pay lies
        http://www.boards.ie/vbulletin//showthread.php?t=2056782951

        That thread from 2012 is historically important. You can really see the anger and frustration the private sector workers, having seen their incomes slashed and spirits fall as the recession cut in & would continue to do so for another year, felt. And all as the protected public sector make out like nothing ever happened and have politicians fall over themselves to keep that gravy train going.

        Maybe you dont take boards.ie threads seriously So here’s David McWilliams instead:

        http://www.davidmcwilliams.ie/public-sector-the-insider-story/

        Reply

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