OECD: Ireland’s minimum wage lags behind median wage

Ireland is one of three OECD countries whose minimum wage has fallen relative to its median wage, according to a report released today.

Spain and Turkey’s minimum wages have also fallen, while in Greece, the nominal value of its minimum wage was cut. The nominal value of Ireland’s minimum wage has stayed the same from 2008 to 2013, apart from a short decrease in 2011.

The OECD Employment Outlook 2015 provided an annual assessment of key labour market developments and prospects in member countries.

The report focused on minimum wages; skills and wage inequality; activation policies for more inclusive labour markets; earnings mobility; labour market risk and long-term inequality; and job quality in emerging economies.

‘Gaining momentum’

"The jobs recovery is becoming more widespread and gaining momentum, putting unemployment on a declining path in most countries, including those hardest hit by the crisis. However, the recovery is still far from complete and time is running out to prevent millions of workers from being left trapped at the bottom of the economic ladder," wrote Stefano Scarpetta, OECD director of employment, labour and social affairs.

According to the OECD, employment is growing too slowly to close the jobs gap created during the economic crisis.

Employment levels for people aged 15 and over in the OECD area remains 1.4 percentage points lower than it was in the fourth quarter of 2007, just before the crash.

Jobs gap

While this jobs gap is projected to decline by the end of next year, Ireland remains one of the countries where the gap is largest, at 9.6 percentage points, along with the other two hardest-hit countries in the Euro area: Greece (10.8 percentage points) and Spain (9.7 percentage points).

In contrast, the employment rate is at least five percentage points above its pre-crisis levels in countries like Chile, Israel and Turkey and is significantly up in Germany, Hungary and Poland. But a total of 25 out of the 34 OECD countries have yet to regain their pre-crisis employment rates.

Unemployment among young people has risen in general, but it has decreased in Ireland since the peak of the unemployment crisis. Ireland has seen an 8.7 per cent decrease in youth unemployment.

‘NEET rate’

However, there has been an increase in the number of people aged 15 to 29 who are neither employed nor in education or training. The so-called “NEET rate” increase has been particularly strong in Ireland, Greece, Italy, Portugal, Slovenia and Spain, specifically among 20- to 19-year-olds.

During the seven years since the start of the crisis, the incidence of part-time work has increased substantially in Ireland: over five percentage points.

The report examined wage gaps due to factors like gender and nationality.

In the case of native versus foreign-born workers, 72 per cent of the overall wage gap could be explained by differences in skills.

In Ireland and Italy, however, skills played no role in explaining the wage gap. In other countries, like Norway, Germany and Austria, it accounted for almost the entire gap.