Wednesday, August 29, 2012

29/8/2012: Some facts about Irish average earnings: Q2 2012


Q2 2012 earnings and working hours data for Ireland has been released today by the CSO. Here are top changes and trends:
  • Average hourly earnings were €21.91 in Q2 2012 compared with €21.90 in Q1 2011, representing no real change over the year. [Note: either CSO has not heard of inflation, or there was no inflation in Ireland Q2 2011-Q2 2012]
  • Average weekly paid hours were 31.4 in Q2 2012, which was the same as those recorded in Q2 2011.
  • Public sector numbers were 380,800 in Q2 2012, a fall of 25,800 (-6.3%) from Q2 2011 when the total was 406,600 (including temporary Census field staff).
The above are straight from CSO analysis. Excluding census workers, public sector (including semi-states) employment stood at 380,800 in Q2 2012 down on 401,300 in Q2 2011 and on 421,400 in Q2 2008 - a decline of 20,500 y/y of which 17,600 came from outside semi-state bodies.

Table below lists changes in earnings in broad sectors:

However, on aggregate, year on year to Q2 2012, per CSO:
  • Weekly earnings in the private sector fell by 0.5% annually, compared with an increase of 2.8% in the public sector (including semi-state organisations) over the year, bringing, average weekly earnings in Q2 2012 to €611.66 and €918.99 respectively. 
  • In the three years to Q2 2012 public sector earnings have fallen by €27.10 (-2.9%). This compares with a decrease of €24.95 (-3.9%) in private sector average weekly earnings in the four years since Q2 2008.
Here's the chart showing decomposition / breakdown of declines in public sector employment:

In Q2 2009, the peak year for average weekly earnings in the public sector, the gap between private sector average weekly earnings (€618.08) and public sector average weekly earnings (€946.09) was 53.07% in favour of the latter. In Q2 2012 the gap was 50.3% - slightly smaller, but not significantly so and factoring in that between 2009 and 2012 many more senior (higher paid and more experienced) public sector employees have retired (including via incentivized early retirement schemes), leaving the workforce in the public sector less skilled and experienced than it was in 2009, the gap has probably increased, like-for-like. Also, the same is exacerbated by the heavy younger workers losses of jobs in the private sector, which has left private sector workforce on average probably more experienced and senior in tenure than prior to the crisis.

In Q2 2008, the gap was 46.2% which was lower than what we are observing today.

Remember, we are being told that everyone should take proportional 'pain'...


7 comments:

Anonymous said...

Those figures simply beggar belief. There's two Ireland's now. How can the govt let this continue? FF/FG/Labour are all pro Croke Park and haven't come forward with any realistic proposals to reform the public service. By "reform" I mean flatten the organisational structures and redeploy expensive, non-productive layers of middle
and higher mgt to the front line.

Do I have to vote for Sinn Fein now? At least they'd cap the pay at 100K, it's a lot more radical than anything FF/FG/Labour have proposed.

When are you on TV again Constantine? You should mention these figures.

Joseph Condron said...

Those figures of €611.66 and €918.99 for private versus public are almost worthless by themselves.

You need to have a better breakdown and compare similar positions with similar amounts of experience in order to draw any meaningful conclusions.

There are a lot of highly qualified positions in the public sector - arguably more so than in the private sector given the fact that it comprises of doctors, consultants, teachers, solicitors, judges and lecturers, among others.

People with those positions are naturally going to draw much larger wages than the average worker in the private sector. Plus it isn't difficult to imagine that the private sector contains more menial and hence lower-paid jobs.

Of course there are a lot of overpaid people in the public sector but they are far from the majority.

Your post is too simplified and until you analyse like-with-like your findings will continue to be erroneous and misleading.

Joseph Condron said...

Those figures of €611.66 and €918.99 for private versus public are almost worthless by themselves.

You need to have a better breakdown and compare similar positions with similar amounts of experience in order to draw any meaningful conclusions.

There are a lot of highly qualified positions in the public sector - arguably more so than in the private sector given the fact that it comprises of doctors, consultants, teachers, solicitors, judges and lecturers, among others.

People with those positions are naturally going to draw much larger wages than the average worker in the private sector. Plus it isn't difficult to imagine that the private sector contains more menial and hence lower-paid jobs.

Of course there are a lot of overpaid people in the public sector but they are far from the majority.

Your post is too simplified and until you analyse like-with-like your findings will continue to be erroneous and misleading.

TrueEconomics said...

Joseph, all complaints to CSO, please. This is OFFICIAL data for Ireland. If you have a problem with the way data is reported and collected - do engage with them.

TrueEconomics said...

Joseph, in fact, your comment is either purposefully dishonest or erroneous sloppy. I make no conjectures you accuse me of making.

Joseph Condron said...

Apologies, if I came across as accusing you of being deliberately dishonest. That is not the case at all and anyway such a position would be extremely hard to reconcile with working in the public sector.

I read your site from time-to-time and invariably find it extremely helpful. Likewise, though I find the politicians, with few exceptions, to be excruciating on Vincent Browne your input is always interesting and informative.

I still maintain though that unless you are comparing like with like - the findings will be erroneous and misleading and was critical of your post for those reasons.

You say you make no conjectures yet the final sentence reads. 'Remember, we are being told that everyone should take proportional 'pain'...'.

Now this may very well turn out to be true but it is impossible to say for definite from this data. If you have two identical jobs with the same level of experience and responsibility and the private sector wage is lower - then the statement is true.

Sorry, I should have been more explicit the first time.

TrueEconomics said...

Hi Joseph,

Not a worry, I understand what you are saying.

In terms of comparing like-for-like, I agree, we have to adjust for skills, experience etc. In a way, I usually do some of it by referencing longer tenures, on average in public sector. Not always and perhaps not enough. These are not areas I work in in terms of research, and one cannot and need not, in fact, do so every time we touch the subject.

I never subscribed to the doctrine that 'everyone should take proportional pain', by the way. Even argued against it. So my concluding statement is not about my belief, but about the actual fact of the Government intention.

Now, suppose we start with two different glasses, containing different volumes of water. We can still compare the rate of change in the two glasses to see if they are being drained proportionately at an equal rate.

That is exactly what is being done in the post.

The Table from CSO shows that higher skilled in both public and private sectors have suffered far lesser rates of earnings contraction than lower skilled private sectors.

mY argument, however, still stands - with opposed movements in average tenure (speculated, of course, as no data is provided by the CSO), the shift in earnings has been significantly to the disfavor of the private sector.

There are many factors that drive these differentials. In some public sector occupations, such as for example medicine (at higher end of earnings - e.g. doctors and specialist nurses) and education (third level), the duration of experience (tenure) is linked with continued education requirements and thus tenure is positively linked to skills. same as in many private sector occupations. However, in many public sector occupations there is deterioration in skills relative to starting educational attainment. So the argument that public sector workers are, on average better educated, may be true, but it does not automatically imply they are more skilled or more productive.

In other words, just because more public sector workers have a starting third level qualification does not mean they are doing more productive or higher value-added jobs.

We can go on and on about these differentials and dynamics etc, but the fact remains - no matter how you spin it:
1) Public sector is not getting dramatically more productive compared to private sector;
2) Public sector is becoming more expensive in terms of wages/earnings than private sector.

That's the point I make.