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Women draw the short straw on wages

Posted on March 03, 2017 by Tom Healy

Tom Healy, Director NERI
Tom Healy, Director NERI

Discussion of low pay ebbs and flows. As pointed out on this Blog over the last two years, macro trends in wages are not a major topic of conversation or public debate. Every so often, the Central Statistics Office publishes new data or updates previous data on earnings. If the matter merits any public attention or commentary it is not infrequently directed to the gap (or ‘premium’) between average public and average private sector pay.  What we do not hear so much is a consideration of how low pay interacts with the difference in earnings between men and women in the Irish labour market. I am grateful to the Central Statistics Office for a special tabulation of the incidence of low pay among women workers in the Republic of Ireland in 2014 (the latest year for which data are available).

Chart 1 shows the incidence of low pay among women by sector of the economy (NACE is the code used).  NACE sector I (Accommodation and Food Service Activities) is top of the list for low pay. Amongst women, 82.5% of the total working in this sector earned less than €400 per week in 2014 (or approximately €20,000 per annum even if they were working full-time).  Many more women workers earn more than €400 per week but, whether voluntarily or otherwise, much less than €20,000 a year due to shorter working hours.  In the same sector, the corresponding figure for men was 66.6% (Chart 2) and for all employees the figure was 75% (Chart 3).

 

Charts 1, 2 and 3 were specially provided, on request, by the CSO. In the published data release [Earnings Analysis using Administrative Data Sources]. For the economy as a whole, 35.3% of all employees earned less than €400 per week in 2014. The corresponding figure for women was 42.3%. However, around every average there is considerable variation. In NACE K-L (Financial, Insurance and Real Estate) the proportion of women earning less than this amount was 17.1% while in Public Administration and Defence; Compulsory Social Security (NACE code O) it was 12.1%.  The CSO report that, on average, women earn much less in the private sector than women earn in the public sector. In the public sector (as defined by the CSO), median earnings of women were €766.21 per week compared to €386.50 in the private sector).  The gap between men and women in the public sector is smaller (see Table 2 here).  What lies behind these differences between the average (median) earnings in the public and private sectors is manifold including factors such as:

  • Average levels of education and skill
  • Incidence of part-time and full-time employment
  • occupation
  • Size of organisation (although some economists dispute whether this is a factor)
  • Age and tenure of employment.

Unfortunately, we will have to wait some time for an update on the very useful and necessary econometrical/statistical analysis of the CSO to compare public and private sector earnings on a more ‘like-with-like’ basis. The last substantive analysis in this regard was in 2012 based on 2009 data.

 What is clear from the raw unadjusted comparative data, however, is that women are among the most lowly paid workers in the private sector. This matters for public-private comparisons.

Let’s say one woman has a post-leaving certificate qualification and works 30 hours a week as an employee in a catering company. Her weekly and annual earnings are likely to be significantly less than those of another woman, also qualified with a post-leaving certificate qualification and working 30 hours a week as a catering worker directly employed in a semi-state company in the public sector.  Furthermore, yet another woman who is a primary school teacher with a master’s degree in social studies will probably earn more than her sister who also holds a master’s degree in social studies but is working as a driving instructor with a driving school.  Within the broad public sector, many women work as teachers, nurses, Garda officers, doctors, senior administrators etc alongside their female colleagues who work in catering, clerical occupations.

It also has to be pointed out that union density in the public sector is very significantly higher than in the private sector. One can look at this in two ways:

  • Union density is a bad thing because it restricts employers’ capacity to keep wage down especially in cut-throat competitive businesses and public sector workers ought to see their wages (and pensions seen as deferred income) lowered relative to the private sector. The implication of this is ‘let’s try and compete with social bargain basement European countries including the UK’.

or

  • Union density is a good thing because it enables employees to combat low pay and ensure that all have a living wage. It may also lift domestic demand in the economy, reduce social inequality and ….. narrow the gap in terms of opportunities and outcomes for male and female workers.  The implication of this is ‘let’s try and compete on efficiency and equity with some of the most economically and socially successful, as well as competitive, Northern European countries

Rather than lower one group of workers to a level experienced by other workers it would be better to raise in a coordinated and negotiated way earnings and lifetime protection and social insurance access for all workers including low paid women workers in the private sector. The best route to prosperity and social equality is through upskilling, uplifting and innovative flexibility. The best route to mediocre living standards and social inequality is through labour market segregation, exclusion and excessive reliance on a handful of sectors or firms.

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