Monday, March 22, 2010

Private Sector Wage Cuts

The RTE website carries a story this morning on a survey carried out by the Small Firms Association (SFA):

Almost Half of Small Firms Cut Wages Last Year

The headline would lead us to believe that there had been falls in wages in small firms last year.   In actual fact, the survey indicates very little about wage changes, though we do get some detail on wage levels. 

The only wage change that information is provided on is for entry-level graduate positions, which '”decreased across almost all job categories”.  More details of the survey are available at the SFA website here.

In RTE’s defence the text of their story is correct.  About half of the small surveyed cut their overall wage bill.  This can be done through two means.

  1. Cut wage levels
  2. Reduce employment numbers

The survey reveals that 43% of the firms cut employee numbers.  Although we are given little detail on wage levels we can infer that a large amount of the fall in payroll costs can be accounted for with the fall in employees.

We still have little evidence of wide-ranging private sector pay cuts.  The CSO collect data on pay levels with the Earnings Hours and Employment Costs Survey (EHECS).  An analysis of the most recent figures (Q2 2009) is available here

The CSO are due to publish the Q3 2009 before the end of the month.  That should add to our understanding of the pattern of wages in the current recession.

Data on all other EU countries are available up to Q4 2009.  See this release from Eurostat where the only missing data are for Ireland.  Across the EU wages rose 2.2% in 2009.  The only countries to show a decrease were: Denmark (-0.3%), Estonia (-6.2%), Latvia (-6.5%), Lithuania (-11.4%), Malta (-0.4%), Slovenia (-2.5%), and Slovakia (-0.3%).

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