Irish workers more productive but getting lower wages

Irish workers are receiving lower wages now than they were at the start of the crisis, despite an increase in their productivity.

As a result more of the value of their work is going to the company — a trend has been increasing across the developed world in the past few years.

“Workers are getting a smaller share and owners of capital are benefitting more,” said the report by the respected International Labour Organisation.

Wages after a sharp drop in the crisis years of 2008/2009 began to grow again in 2012, but last year slowed down again, the report said.

The average real wages in Ireland, Greece, Italy, Spain, the UK and Japan, in 2013 was below the 2007 level. Real wage is equated to productivity.

Since 1999 labour productivity has outstripped wage increases in Germany, the US, and Japan, and this is reflected in the drop in the share of GDP going to workers in these countries.

Inequality between those with the least income and those with the most has been growing too in developed economies but in Ireland it has hit the middle classes most with their household incomes falling further behind the most wealthy.

Inequality between the top 10% and the bottom 10% of the population grew most in Spain and the United States over the past five years.

The report shows globalisation has some good effects, with workers in China and emerging economies such as Argentina and Brazil beginning to close the gap with developed nations. Inequality fell most in the two South American countries.

While wages were rising faster in China than elsewhere, they are still a third of that in the US in terms of their purchasing power in the respective countries.

Some of that is due to increased jobs and incomes for workers in the poorer countries, but some is due to a drop in real wages in the developed economies.

But discrimination against women and migrants in every workforce is still rife and shows little sign of getting better other than in some developing countries.

The ILOs economists analysed the wage gap and said just some of it was due to the kind of work women and migrants do. The vast majority of the difference was down to discrimination. They found, in fact, that women and non-nationals were doing work that would have reversed the pay scales, giving them higher salaries than that paid to men and nationals.

In Sweden, Slovenia, Lithuania, Russia, and Brazil women would earn more than men while in Germany, Denmark, Netherlands, Poland, Sweden, Luxembourg, Norway, migrants would be paid more than nationals.

Collective bargaining and a minimum wage were the best policies to eliminate unfair pay differentials, the ILO concluded.