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National Wages Analysis

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The proposed new national wage agreement continues the practice of awarding percentage increases "across the board" with only a token nod to the lowest paid. This has helped make our ministers, TDs, and highest earning public sector managers and professionals amongst the best paid in the world and has progressively widened the income gap between low and high paid.

Using data from the CSO's National Employment Survey for 2006, the proposed agreement's impact on employees who account for 82% of the work force can be assessed as follows:

  • Gross earnings of 1.7 million employees amounted to €63 billion and the proposed agreement would increase this by €3.8 billion (6.1%) if applied to all employees. 
  • Because the proposed increases are percentages, lower paid employees would receive much smaller monetary gains. This means that about 233,000 workers earning less than €13,000 a year would share an increase of €173 million whereas the 75,000 employees earning over €75,000 a year would share about €466 million. Put another way, the lowest paid workers (14% of all employees) would get 5% of the cake while the much less numerous highest paid (4% of total) would get a 12% slice.
  • The 0.5% "bonus" for the low-paid employees would be worth less €2 a week per worker. It would apply to about 500,000 workers but account for a mere 1% of the total proposed increase.

Aside from being inequitable, the proposed agreement ignores the fact that world economies are facing a possible serious recession and that, thanks to the excesses of the Celtic Tiger, our open economy has become completely uncompetitive. Given that the global credit crisis has yet to reach our real economy, a much more radical agreement is needed. For example, to restore competitiveness and social equity, the proposed percentages could be reassigned so that the lowest paid get the 6% and the highest get the 0.5% over the agreement's life. If applied on a sliding scale to all workers, the cost would be about €2 billion, just over half that of the proposed agreement.

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This page contains a single entry by Brian published on September 24, 2008 2:09 PM.

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