Hike of 6% in ISME’s wage bills

WAGE bills at Irish Small and Medium Enterprises increased by 6% in the last year, well ahead of inflation and more than twice the increases in wages in the eurozone.

The increases are just behind 2003 (6.2%), but the annual survey by the Irish Small and Medium Enterprise Association (ISME) indicates that wages have increased by almost 20% over the last three years, in comparison to 9% in the rest of the EU.

The organisation has identified stealth taxes, a tightening of the labour market and the lack of affordable housing as the key drivers of wage inflation in the Irish economy.

The survey of 400 companies employing 12,000 staff found that wage rates for manual employees increased across all sectors in the last 12 months by 6.3%.

The biggest increase was in the services sector up 6.9%, followed by manufacturing up 6% and distribution, up 5.95%.

“The typical rate of pay for manual employees across all sectors is €21,371 ranging from €17,541 for unskilled staff to €25,012 for skilled staff,” the survey found.

The survey found that the typical rate of pay for office workers across all sectors and categories of employees is €22,009.

The survey also found that 43% of employees participate in a pension scheme, up from 39% in the previous year. While there has been a 15-percentage point improvement in those availing of pensions in the last two years the figures indicate that the take-up of PRSA’s has been lower than anticipated.

ISME said that not surprisingly the highest wage costs were in Dublin with some categories showing rates over 20% more than in other regions. Connacht and Ulster reported the lowest wage costs.

“The anomaly, which is the CSO’s Average Industrial wage, is highlighted by the fact that the average wage in SMEs is approximately €22,000 and well below the €29,500 quoted as the official rate,” ISME said.

The increase in the minimum wage in February from €6.35 to €7.00 per hour helped put pressure on wage increases. It imposed an artificial floor on wages and created a knock-on effect, as higher paid employees used it as a benchmark from which to negotiate wage increases.

“While fringe benefits tend to be the exception rather than the rule, there has been an increase in benefits being offered by all sectors over the last number of years,” said ISME.

“Together with significantly increasing wage rates, SME Employers must provide benefits as incentives in retaining and recruiting key staff. There has been evidence however in the last 12 months that employees are less inclined to accept fringe benefits as part of their salary packages due to the Government application of BIK.”