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Posts in the "Wages" category

Researching the macro-economic impact of the Living Wage

Posted on September 12, 2014 by Tom Healy

Tom Healy, Director NERI - Tom Healy, Director NERI
Tom Healy, Director NERI

The idea of a ‘living wage’ is gathering momentum in many parts of the world. It is conceived and measured as a wage rate which is adequate to meet the needs of workers and their families in a given society at a given time. But affordability of life for workers is one thing – what about affordability for companies and employers? Would the application of a ‘living wage’ across the economy lead to businesses closing or jobs being lost or young people failing to find employment?  The answer depends on what level of increase is required to reach a ‘living wage’ (and how the latter is measured) as well as how different impacts play out in the economy with gains and losses added up. 

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Permanent link | Categories: Living wageNorthern Ireland Wages

The Earnings Distribution: the bottom, the middle, the top and the very top

Posted on September 09, 2014 by Micheál Collins

There has been lots of talk in recent months about ‘middle-earners’ – almost all of it without any basis in the various numbers available on the income and earnings distribution. Indicator 4.5a in the latest edition of the NERI’s Quarterly Economic Facts (p75-76) provides a basis for a more informed understanding.

The indicator uses the latest earnings data from the Revenue Commissioners’ Statistical Report to profile the distribution of earnings. Dealing only with taxable income the data details the distribution of tax cases (individuals or couples who are jointly assessed) by total gross income for the 2011 tax year – the latest available.

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Permanent link | Categories: IncomeInequalityWages

Wage repression – the new orthodoxy

Posted on September 05, 2014 by Tom Healy

Tom Healy, Director NERI - Tom Healy, Director NERI
Tom Healy, Director NERI

 Wages have been falling since 2009 in the Republic of Ireland. This deterioration has been accompanied by (i) an erosion in purchasing power as the prices of most goods and services rise and (ii) less money in people’s pockets as taxes and public charges have risen and many social payments have been cut (or have not kept pace with inflation). The surprising story – perhaps – is that the fall in wages has continued into 2014 even though employment and output have been picking up since at least 2013.

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Permanent link | Categories: Wages

Ireland’s Low Pay Problem: time for a Living Wage

Posted on August 25, 2014 by Micheál Collins

Ireland joined a growing international living wage movement in July when the Living Wage Technical Group launched the 2014 Living Wage. In principle, a living wage is intended to establish an hourly wage rate that should provide employees with sufficient income to achieve an agreed acceptable minimum standard of living. In that sense it is an income floor; representing a figure that allows employees working full-time to afford the essentials of life. The figure for 2014 is €11.45 per hour, equivalent to €446 per week.

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Permanent link | Categories: IncomeInequalityJobsLabour costsLiving wageWages

Wages stagnation in Northern Ireland a brake on recovery

Posted on August 22, 2014 by Tom Healy

Tom Healy, Director NERI - Tom Healy, Director NERI
Tom Healy, Director NERI

The speed of economic recovery in the UK has taken many by surprise. First the good news. Employment is up. Retail sales are up and business investment is expanding. This is good news for exporters in the Republic of Ireland especially those in sectors such as agri-food where, traditionally, the UK market has been an important destination. It is also good news for Northern Ireland where, even if timely data are lacking, it appears that output and employment are on the rise. See Section 2.3 of the latest NERI Quarterly Economic Observer . It also appears that many households are drawing on savings to spend a bit more in shops and local economies.

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Permanent link | Categories: Northern Ireland Wages

Employment up, but wages ominous

Posted on August 13, 2014 by Paul Mac Flynn

UK Labour Market data released this morning show that the trend of rising employment and falling real wages is set to continue. At a UK-wide level, the decreases in unemployment are quite impressive, particularly for youth unemployment but figures for earnings at GB level paint a more sober picture. Regular pay in Great Britain was only up 0.6% from this time last year and with inflation running at about 2% this indicates a significant drop in real wages. We do not have reliable monthly earnings figures for Northern Ireland, only the Annual Survey of Hours and Earnings can report the extent of wage growth here. Interestingly there are indications that wages growth is stronger for those who have been in consistent employment for the last number of years. A lot of the weakness in wage growth may be due to compositional changes in the workforce i.e. people who have come back to work are in lower paying jobs than before. This has interesting implications for the recovery in the labour market in Northern Ireland as highlighted in a recent NERI working paper here.

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Permanent link | Categories: JobsNorthern Ireland Wages

Examining Unemployment Traps in the Republic of Ireland

Posted on July 29, 2014 by Micheál Collins

As individuals transition from unemployment to employment they experience losses of welfare payments and entitlements, gains in earned gross income and they begin to pay income taxes and social insurance contributions on their earned income.

To assess this impact it is possible to calculate a ‘participation tax rate’. It attempts to measure the collective impact of these experiences by estimating by how much changes to taxes and benefits reduce the financial gain of moving into work. A participation tax rate of 50% implies that half of the gains in earnings from commencing work are lost through changes to taxes and benefits.

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Permanent link | Categories: IncomeJobsLiving wageTaxationWages

Hours and Earnings in the Northern Ireland Labour Market

Posted on July 29, 2014 by Paul Mac Flynn

As noted in this blog last week, there has been a significant recovery in the labour market for both Northern Ireland and the rest of the United Kingdom. However it was also noted that the pace of recovery in the labour market has not so far been reflected in economic growth. While UK economic growth is now reaching 3% per year, the economy has only just returned to its pre-crisis peak and it is nearly the last of the G7 economies to do so (Italy still lags behind). Furthermore most of the recent growth has been fueled by population increases as GDP per capita is still almost 5% below peak. In Northern Ireland the situation is arguably worse, as the quarterly Northern Ireland Composite Economic Index showed a contraction in the first quarter of 2014.

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Permanent link | Categories: Northern Ireland Wages

Productivity a danger for UK and NI

Posted on July 16, 2014 by Paul Mac Flynn

There were conflicting messages in the statistics released today on the Northern Ireland economy and labour market. On the labour market side, both measures of unemployment have fallen significantly for the three months from March to May of this year. The claimant count (literally a count of those receiving unemployment benefits) shows a consistent decrease over the last 18 months. However a claimant count is an imperfect measure of unemployment as it only includes those entitled to claim benefits and is unresponsive to changes in those entitlements. More importantly the Labour Force Survey measure of unemployment decreased as well.

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Permanent link | Categories: JobsNorthern Ireland Wages

The Living Wage points to broader understanding of low pay

Posted on July 04, 2014 by Micheál Collins

Living wage ROI 2

Yesterday’s launch of the Republic of Ireland Living Wage adds to a growing international set of similar figures. The number, which will be updated annually from here on, was calculated by the Living Wage Technical Group. It is €11.45 for 2014.

 There are a number of contexts for this figure: 

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Permanent link | Categories: IncomeInequalityLabour costsLiving wageWages

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