Rise in weekly wage being outstripped by inflation

Across all public sectors, the average weekly wage was above the national average at €1,056.

The rise in the average weekly earnings in Ireland is not keeping pace with inflation, as earnings rose 3.2% to €864.32 in the third quarter of this year.

According to the latest data from the Central Statistics Office, wages in many sectors remained static in the year to Q3 with the wages of those in the biggest companies rising the least and just 2% wage growth in companies with 250 employees or more.

It comes against the backdrop of the highest inflation rate in almost 40 years with the latest CSO figures putting inflation at 9.2% in the year to October 2022.

It also comes as the Government’s spending adviser, the Parliamentary Budget Office (PBO), has said that while Ireland’s economy continues to perform well, there are nevertheless “clouds on the horizon”.

The sector showing the largest increase in earnings in the last year was the Information and Communication sector, where average weekly earnings rose 10.8%, which is above the inflation rate, to €1,480.

Earnings in the transportation and storage sector rose 8.6% to €845.25 in the year to the third quarter of 2022, the second largest rise. 

There was relatively smaller single-digit growth in most other sectors with only construction, accommodation and food service and financial, insurance and real estate wages rising by more than 4% in the year.

As these figures do not take into account the public sector pay increases agreed with the Government, rise in public sector wages was just 0.6% in the year to the third quarter of 2022. Across all public sectors, the average weekly wage was above the national average at €1,056.

“An Garda Síochána recorded the highest average weekly earnings in the public sector of €1,365.78 in Q3 2022 while those in Education recorded the highest average hourly earnings in the quarter of €44.12,” the CSO said.

Inflation's effect on real wages

Meanwhile, the PBO, in a post-Budget economic update, said that the current trend of inflation being significantly higher than forecasts is a new phenomenon, with the opposite having generally been the case prior to 2021.

It said that while higher energy costs had previously driven inflation, that mantle has now spilled over onto other items, with 76% of the more than 600 consumer items contained in the CSO’s representative shopping basket experiencing more than 2% inflation at present.

That inflationary pressure has led to a marked decrease in retail spending amongst the population with consumer sentiment having “weakened dramatically” over the past 18 months.

“Once inflation is taken into account, consumers are buying less than they did before,” the PBO said, adding that decrease is consistent across categories, while Ireland’s drop in spending was the largest in the Euro area in September of this year.

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The update contends that while wages across the workforce continue to grow, nevertheless in real terms — once inflation is taken into account — “real wages are falling”.

In terms of the labour market, the update notes that employment levels remain strong with 230,000 more people at work compared with the same period in 2019.

However, business sentiment has “deteriorated significantly” since the middle of 2021, it said, while recent job losses in the tech sector “could hurt the public finances” should the trend continue, given the sector accounts for 21% of Ireland’s corporation tax intake and 12% of income taxes.