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News : Irish Economy Last Updated: Mar 3, 2015 - 2:08 PM


Low pay and high pay in Ireland
By Michael Hennigan, Finfacts founder and editor
Mar 1, 2015 - 7:01 AM

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The Organisation for Economic Cooperation and Development (OECD) reported last year that the US and Ireland had the highest percentage of low pay jobs in the developed world.

The think-tank for 34 mainly developed country governments categorises "low-paying" as jobs that earn less than two-thirds of a country's median income (mid point of population or sample where half are above and half below) — on average, around 16% of jobs in OECD countries are considered low-paying.

The ratio in the US was 25%; Ireland was at 22%, the UK at 21%. Switzerland and Finland had rates below 10%.

Employees in Northern Ireland are among the lowest paid in the UK — with some earning more than 80% less for doing exactly the same job as their peers elsewhere.

On Thursday, just a day ahead of the opening of the Labour Party's annual conference, the Government launched a new Low Pay Commission to examine the rate of the national minimum wage.

The commission will report back to the Government by mid-July, with annual reports from then on.

Eurostat, the EU's statistics office, reported also on Thursday on monthly minimum wage levels across Europe.

It said for those countries where the national minimum wage is not fixed at a monthly rate (i.e. Germany, Ireland, France, Malta, the United Kingdom and the United States) the level of the minimum wage is converted into a monthly rate according to a standard number of hours worked per month that may differ across countries.

The 22 EU member states that have national minimum wages can be divided into three main groups based on the level in euro. In January 2015, ten member states  had minimum wages below €500 per month: Bulgaria (€184), Romania (€218), Lithuania (€300), the Czech Republic (€332), Hungary (€333), Latvia (€360), Slovakia (€380), Estonia (€390), Croatia (€396) and Poland (€410). In five other member states , minimum wages were between €500 and €1,000 per month: Portugal (€589), Greece (€684), Malta (€720), Spain (€757) and Slovenia (€791).

In the remaining seven member states, minimum wages were well above €1,000 per month: the United Kingdom (€1,379), France (€1,458), Ireland (€1,462), Germany (€1,473), Belgium and the Netherlands (both €1,502) and Luxembourg (€1,923).

For comparison, the federal minimum wage in the United States was just over €1,000 per month (€1,035) in January 2015.

Shaun Connolly of the Irish Examiner commented on Saturday on the launch of the Low Pay Commission in Dublin:

It’s a bit rich of Mr Kenny to launch a commission on low pay when his salary is €185,000 a year, or €3,500 a week, which is more than the leaders of the much larger Britain and France earn

It was Enda Kenny’s Marie Antoinette moment. Reality and regality diverged as the taoiseach showed how out of touch he is with the people he aspires to lead.

Launching a low-pay commission, Mr Kenny was asked by the Irish Examiner if there was scope to further cut the salary of the taoiseach, or if he was worth the €3,500 a week we pay him. He replied: “Very much so.”

So, there you have it, our very own L’Oreal Taoiseach, paid more than the leaders of Britain or France — because he’s worth it."

Irish public service pay cuts began in 2009 but differentials remain high while in contrast with members of the Oireachtas (parliament), the typical SME firm employee has no occupational pension, is on low pay and can only expect basic redundancy compensation.

It's not surprising that politicians who can get a pension of 50% of pay after 20 years ignore a reality that Ireland and New Zealand have the worst occupational pension coverage in the developed world — see here.

Dr Richard Boyle of the Institute of Public Administration wrote in a 2011 report on public pay levels:

Comparing compensation levels at the different grades, there is a distinct difference that emerges between Ireland and the UK and the Nordic countries of Finland, Denmark and Sweden. The Nordic countries have a much flatter compensation structure (particularly Finland and Sweden), whereas the UK and Ireland have opted for higher compensation at the higher levels. On average, top managers compensation in the UK and Ireland is 7.7 times that of secretaries whereas for the Nordic countries top managers compensation is 3.5 times that of secretaries. Similarly middle managers compensation is 4.15 times that of secretaries in the UK and Ireland and 2.20 times greater in the Nordic countries."

A 2013 ranking by the Economist shows that the basic pay of Irish politicians is better than that of UK and Swedish counterparts.

It was also reported in 2013 that some 3,000 European Union civil servants earn more than Dutch prime minister Mark Rutte’s gross salary of €144,108 (including €7,887.24 expenses), according to Dutch social affairs ministry figures.

The Daily Telegraph reported last May that more than one in five European Union officials takes home more than David Cameron gets from his £142,000 salary, leaked documents show.

The eurocrats get special living allowances and are subject to a special 13.4% tax rate.

Not exactly austerity!

The expenses of Irish politicians are eye-watering compared with their Swedish counterparts.

The Irish Independent reported last November that members of Dáil Éireann (TDs) pocketed an average of €147,000 in expenses and allowance payments each since the General Election in early 2011 but only one in 10 of them are asked to provide receipts. It says Labour's Eamonn Maloney does not claim expenses — and he admits to being criticised by colleagues over his stance.

The basic pay of a member of Dáil Éireann is €87,258. A member of Sweden's Riksdag is paid SEK 61,000 per month or €78,000 annually.

The annual travel & accommodation allowances for TDs range from €9,000 per annum for Dublin based TDs to €34,065 per annum for those living 360 km or more from Leinster House.

Journeys made by members of the Riksdag within the framework of their official duties are regarded as official journeys. Members living more than 50 kilometres from the Riksdag are entitled to reimbursement of up to SEK 8000/month for overnight accommodation in Stockholm. This is about €10,300 annually. Members are entitled to an annual season-ticket on the Swedish State Railways; where use of a car is necessary, costs are normally reimbursed at the rate of SEK 26.50 per 10 kilometres, of which SEK 18.50 are exempt from tax.

The annual salary of the Spanish prime minister is €78,000.

Ireland is not a wealthy country and is among the poorer countries of the Euro Area.

German per capita standard of living highest in Europe; Ireland below EU average

We are not suggesting that politicains and senior policy makers should be near breadline levels but when the majority of the private sector workforce have only pension entitlement to less than a third of average national earnings at the age of 66, a better balance is required.

Of course the situation has improved from the crazy years of the Celtic Tiger when lawyers who were public contractors working on corruption tribunals became multi euro millionaires — see Page 16 of a 2011 Public Accounts Committee report on what happened when a civil servant at the Department of the Taoiseach made a clerical error in a letter on daily fees for the lawyers!

Despite a commitment to reform legal services in the 2010 bailout agreement, the Government has been in office 4 years but it has yet to have the courage to push through significant legal services reform.

As George Orwell wrote in 'Animal Farm': "All animals are equal, but some animals are more equal than others."

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