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QEO Spring 2016

QEO Spring 2016

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Summary

This edition of the NERI’s Quarterly Economic Observer (QEO) outlines our latest expectations for the economic outlook in the Republic of Ireland and Northern Ireland (Section 3) and provides an examination of women who are low paid in the Republic of Ireland (Section 4). In particular, we focus on establishing a more detailed evidence base for understanding the nature and shape of low pay among this group.

Economic Outlook

Progress and uncertainty dominate the economic outlook for both parts of the island of Ireland. In the Republic, the economy continues to improve although vulnerabilities remain given the weakness of the broader European and International economies, the forthcoming UK Brexit referendum and the sustainability of positive benefits associated with low interest rates, low oil prices, accommodative ECB monetary policy and favourable exchange rates. Domestically, differences persist in the pace of recovery across the country.

In Northern Ireland economic growth remains positive, but small. Although also exposed to the possible impact of changes to the broader international economy, it faces two specific concerns. First there are short-term uncertainties associated with the forthcoming UK referendum on its continued membership of the European Union; these may persist if the UK votes to leave. Second, there are ongoing challenges related to the performance of Northern Ireland’s manufacturing sector.

In both economies challenges remain given high, if declining, long-term unemployment and lower than ideal levels of public investment.

Based on the assumptions and expectations outlined in Section 3, our current projections for the Republic of Ireland include:

-        Strong GDP growth of 4.4% in 2016, declining marginally to 3.5% in 2017.

-        Consumption will continue its recovery driven by rising real disposable incomes, improving household balance sheets and a strengthening labour market while investment will grow strongly from its currently low base.

-        The improvements in the economy will impact positively on the exchequers finances with the General Government Balance falling to -0.6% in 2016 and moving to balance in 2017.

-        A steady decrease in unemployment out to 2017, with the 2016 figure reaching 8.3%. By 2017 we expect unemployment to reach 7.8%.

-        Further employment growth of 2.2% in 2016 and 1.8% in 2017. We expect the numbers employed to exceed 2 million during this year.

-        A steady recovery in average earnings which we expect to rise by 2.0% in 2016 and 2.2% in 2017.

-        Domestic political uncertainty may have some short-term impact on government bond yields and financing costs but we expect the effect of this uncertainty on growth to be marginal and temporary. The overall fiscal stance is unlikely to be    meaningfully altered even if the detail of fiscal policy may change.

Women and Low Pay in the Republic of Ireland

Section 4 presents an insight into the nature and shape of low pay among one group with a high probability of being low paid: female employees. It finds that:

-        There were 207,000 female employees working for low pay, representing 60% of all those in low pay.

-        Female employees carry a 29.3% risk of low pay, meaning that almost three in every ten female employees are low paid. The corresponding situation for males is two in every ten employees.

-        Female low paid workers feature across all the age groups, although they are concentrated among those under the age of 40.

-        Just over 60% of low paid women work in three sectors of employment: Wholesale & Retail (24%), Accommodation & Food (19.7%) and Health & Social Work (18.4%).

-        Looked at from a risk of low pay perspective, seven out of every ten female employees in the Accommodation & Food sector are low paid, while it is almost five out of every ten female employees in Wholesale & Retail and in Administration & Support Services.

-        One in every two female employees on a temporary contract is low paid while it is one in every four of those women on a permanent contract.

-        Almost a quarter of all low paid females work in the Dublin region, with almost one in five (17.2%) in the neighbouring Mid-East region. The lowest concentrations are in the South-East, West and Midlands.

Our examination has also allowed us to gain a greater understanding of the average hourly earnings of low paid women and the importance of their income to that of the households they live in. Among these findings are:

-        In 2013 the average hourly rate of pay among all low paid employees was €9.49 per hour. For low paid male employees this was €9.62 per hour while it was €9.41 for females.

-        For female employees the average depth of low pay was €2.04 per hour.

-        On average the earnings of low paid female employees’ represents 55% of their household’s total earnings. Some 34% of low paid women provide all of their household’s total earnings while 28% provide less than one quarter.

-        46% of low paid women are the main earners in their household; 54% are secondary earners.

-        Low paid women, who are the main earners in their household, are concentrated in the bottom half of the income distribution. 

 

Erratum

The edition above includes minor corrections to data initially published in the March 2016 edition. This affects the first six lines of data in table 7.1 (p51).

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