CSO earning stats used as a cudgel to beat the public sector

Figures suggest many households remain in a recessionary vice grip

Ibec’s Fergal O’Brien makes the point that data for both sectors is skewed by compositional factors. Photograph: Eric Luke

Ibec’s Fergal O’Brien makes the point that data for both sectors is skewed by compositional factors. Photograph: Eric Luke

Tue, Aug 26, 2014, 01:25

Unsurprisingly, the Central Statistics Office’s earning stats were seized upon yesterday to bash the public sector.

The figures suggested average weekly earnings across the public sector were nearly €300 higher than those in the private sector.

Isme’s Mark Fielding savaged the Government for its “shameful failure to address bloated public sector pay.” Several others followed suit, with most blaming the disparity on public-sector increments.

On the surface the pay gap looks significant but the CSO figures are prone to statistical noise. Ibec’s Fergal O’Brien also makes the point that data for both sectors is skewed by compositional factors. By this he means that many workers in the private sector on high wages have taken early retirement as part of restructuring programmes prompted by the financial crisis and/or are being replaced by new staff on lower wages.

This has the effect of depressing average weekly earnings even if pay rates are beginning to rise again.

Equally, in the public sector a “last in, first out” policy may have kept more highly paid staff in situ while lower-paid workers were shown the door.

Overall, the figures showed weekly earnings were still sliding despite recent improvements in the State’s headline economic indicators. This suggests many households remain in a recessionary vice grip.

A breakdown of the figures revealed average weekly earnings rose in seven of the 13 sectors covered by the survey. Significantly, the CSO data suggests average hourly labour costs were €24.89 in second quarter.

According to separate data from Eurostat, which uses different metrics and excludes agriculture and public administration, average hourly labour costs here were €29 in 2013. While this not massively out of kilter with many other euro-zone states, it was significantly more than the €20.90 in the UK, which now ranks as one of Europe’s low-cost economies.