Pay at Irish micro and small firms fell in year to June 2015
Joan Burton, tánaiste and minister of social protection, in an op-ed piece in the Irish Times today writes on "why public sector workers deserve a pay rise." We are not disputing that point in this analysis, but in support of her case Burton appears to be unaware that official data show that pay at Irish micro and small firms fell in the year to June 2015.
The European Commission gives a breakdown of SMEs using the following definition:
— Micro enterprises: fewer than 10 employees, less than €2m revenue or balance sheet total per year;
— Small enterprises: 10 to 49 employees, less than €10m revenue or balance sheet total per year;
— Medium-sized enterprises: 50 to 249 employees, less than €50m revenue or less than €43m balance sheet total.
While acknowledging that "not every worker has not seen their own pay increase yet," Burton says:
but figures from the Central Statistics Office (CSO) show that average weekly earnings in the private sector rose by 2.3% in the 12 months to June 2015. In addition, employers’ group Ibec has published a survey which suggests 71% of companies will increase basic pay next year, with the median increase set to be 2%.
Based on Eurostat data for 2013, Irish SME firms accounted for 99.7% of all firms and 762,000 employees. Large firms accounted for 0.3% and 325,000 employees.
Micro + small firms accounted for 98% of all firms and 546,000 employees — just over 50% of total private sector employment (ex-agriculture/ forestry/ fisheries and non-market service sectors such as education and health).
CSO data show that average weekly pay for firms with less than 50 employees (micro + small firms) fell 0.8% in the year to June 2015;
Pay for 50-250 employee firms rose 5.6%;
Pay at large firms with 250+ employees rose 2.1%.
The overall private sector rise was 2.3% and public pay was flat in the period.
Ibec represents large firms and the typical employee at a foreign-owned exporter would have both higher pay and an occupational pension compared with a counterpart in an indigenous SME firm.
The exception among big firms are food retailers — Tesco and Dunnes Stores alone with about a combined 30,000 employees, account for almost 10% of numbers employed in big private firms.
The OECD reported in its Employment Outlook 2015 that the percentage of the Irish workforce on low pay — defined as the share of workers earning less than two-thirds of median earnings — at 23.3% in 2013 was the second highest after the US level of 25%, among the 34 member countries (27 are developed countries). Belgium was at 6.0% and New Zealand was at 13.7%.
Average private sector weekly earnings were €615 in 2010 and €632 in 2015.
Average public sector weekly earnings were €908 in 2010 and €918 in 2015.
In five years, the pay of workers in < 50 employee firms rose from €538.49 to €540.19 — €1.70.
The CSO reports that in the five years to Q2 2015 overall average hourly earnings decreased by 0.5% (€0.10) from €21.95 to €21.85. Across the sectors over this period average hourly earnings have increased in 7 of the 13 sectors. The largest percentage increase was recorded in the Information and communication sector (+15.9%) rising from €25.59 to €29.67. The largest percentage decrease in average hourly earnings over the same period was recorded in the Human health and social work sector (-7.0%) falling from €23.81 to €22.14.
Pay in Accommodation and food services — the lowest of the 13 professional sectors with foreign workers accounting for about one-third of employment — was at an average weekly level of €329 in 2010 and €325 in 2015. It fell slightly in the year to June 2015.
Other sectors that incurred 12 month declines were Industry, Construction, Professional, scientific and technical activities, Human health and social work, and Arts, entertainment, recreation and other service activities.
The standard hourly minimum wage will rise 50c or 5.8% in January 2016 from €8.65 to €9.15.
The CSO estimated last year that 4.7% of all employees, or just over 73,000 workers, were being paid the standard minimum wage of €8.65 per hour, or less, in the second quarter of 2014.
Joan Burton in her op-ed is making a pitch to public sector workers to support the Labour Party in the forthcoming election. In 2012 she received a report from PwC, the accounting firm, on pension fund fees, which cited an individual aged 35 who saves €250 per month for a pension for 30 years; a fund of approximately €200,000 is created which results in a pension of about €10,000 per annum. Apply the average charge of 2.18% per annum to this fund and the final fund is reduced by 31% i.e. the fund is reduced by €62,000, resulting in a lower pension of €6,900 per annum. This impact would be significantly higher where the maximum charges apply.
A year later the OECD reported on a private sector pension system where the majority of workers have no coverage while defined benefit guaranteed payout schemes are increasingly being closed to new members.
These are not priority issues for politicians who can avail of generous public schemes themselves.
The Irish Times strapline says:
Tánaiste says private sector pay is rising and more increases on the way next year
There are two economies in Ireland and the significant foreign-owned sector puts Ireland among the most expensive economies in the European Union.
The farmers have the powerful Irish Farmers Association (IFA) to fight for them but low-paid, low-unionised SME workers create no tremours for the political leaders on Dublin's Merrion Street.