Fears low pay could become ‘embedded’ in labour market

The Nevin Economic Research Institute has warned of the potential for low pay in certain sectors of the economy to become “embedded” and a permanent feature of some individuals within the labour market.

NERI, the trade union-affiliated economic think-tank, has published a study of earnings and low pay in the economy as well as policy issues which, it says, need to be addressed.

It points to the latest pay profile for the country which shows 25.6% or 345,000 of the population earn less than the “living wage” of €11.45 per hour and some 30% earn less than Eurostat’s “low pay threshold” of €12.20.

“The overall scale of low pay, involving at least one in every four employees, and its concentration within specific sectors of the labour market, points towards a need for policy to retain an interest in this topic and monitor any risk that it may become both embedded in certain areas of work and a permanent feature of the experience of some individuals within the labour market,” said the report’s author Micheál Collins.

He found that low pay was most common among women and was concentrated in specific sectors of the economy including wholesale and retail, accommodation and food, administration and support services, and in the agricultural, forestry, and fishing sector. It was also found to extend across age groups.

“The risk of being low paid declines with age, with 60% of all workers under 30 years being low paid,” said Mr Collins. “The risk falls to 19.1% for those employees aged between 50-59 years, although it increases once again for older workers. Risks also decrease with increases in the level of completed education; 53% of employees with only primary education are low paid while the risk is less than 20% for those with some completed third-level education.”

Mr Collins said, despite State intervention in the form of low income taxation rates on low incomes and subsidies such as Family Income Supplement, there remains a “concentration” of the low paid in households experiencing difficulties in meeting ordinary living expenses.

One issue raised by Mr Collins is the prevalence of low pay among workers in small firms with fewer than 10 employees.

“It is often the case that low pay is measured using firm level surveys which do not include small size firms, and firms in areas such as agricultural, forestry and fishing; measuring low pay in this way will invariably underestimate it,” Mr Collins said.