Publications from the Central Statistics Office (CSO) and the Revenue Commissioners give new information on what people are earning and where the biggest increases were before the pandemic hit. After years of stagnation after the last crisis, pay was finally on the rise – but now the jobs market has been turned upside down. Looking at an economy-wide level, the sharp rise in unemployment is leading to a significant fall in total earnings, even if Government supports are limiting this for now. Here are the key figures on what we earn – and what we know so far about the Covid-19 hit.
1. Average earnings
The latest CSO earnings data shows that average earnings last year were €40,283, up 3.6 per cent on the previous year. Provisional data for the first quarter of this year shows wages were continuing to rise until the pandemic hit. After a period of stagnation after the last recession, wage growth has been steady in recent years, totalling almost 12 per cent since 2014, with most of the gains in the later years. The headline data includes full- and part-time employees. Looking just at people in full-time employment, average earnings were just under €49,000. Average part-time earnings were just over €18,300. The growth in full-time earnings – 9.2 per cent since 2014 – has been slower than in part-time earnings, which have risen 14.8 per cent. Increased working hours for part-timers has contributed to this rise.
Over the past five years the average pay rise has been 14.4 per cent
It is worth remembering that the average figures are the mean, the total amount earned divided by the total number of employees. A relatively small number of high earners mean that the median often gives a better picture of “average” earnings. At the median the same number of people earn a higher amount as earn a lower figure. We do not have up to date CSO figures here, though if we assume the relationship is similar to the historical pattern, median full-time earnings are probably in the €39,000 to €40,000 range. Both averages have their uses – it is just important to understand what is being discussed.
We now have a new set of data from the Revenue Commissioners, which gives another perspective. This follows a change in the administrative arrangements for PAYE collection, which allow the Revenue to collate new data. As with the CSO, this is mainly concerned with employees, but it also includes people in receipt of occupational pensions – and so this brings down the average significantly. It shows average gross pay last year of €33,394, for full- and part-time employees. Interestingly it also calculates the median, which it puts at €25,421.
Overall, it shows that more than six out of 10 earners make less than €36,000 a year while at the other end of the spectrum, just 3.5 per cent earn over €100,000. These figures do not include the self-employed who pay under schedule D.
2. Big sectoral gaps
There are big gaps between the highest and lowest paid sectors , as shown in the graphic. Average weekly pay in the first quarter of 2020 was €801.83. At the top of the pile are those in the information and communications sector – including the big digital multinationals – with earnings of €1,322.78 per week on average (including full and part-time employees), followed by finance, insurance and real estate at €1,276. At the far end of the scale is accommodation and food, at €366.49 per week, and arts,entertainment, recreation and other services at €535.56. Both these sectors have high numbers of part-time employees.
Over the past year there were increases in pay in 12 of the 13 sectors measured – interestingly health and social care led the way with a 5.4 per cent rise, followed by construction at 5.3 per cent. Over the past five years the average rise has been 14.4 per cent – the administration and support services sector had the higher percentage rise, at 27.9 per cent , with finance at 20.1 per cent and accommodation and food at 19.2 per cent.
The Revenue Commissioners have also produced a breakdown by sector, using slightly different classifications. Again this includes full- and part-time employees and also those getting occupational pensions. The electricity and mining and quarrying sectors leading the way are both tiny and are subsumed in other sectors in CSO data. Otherwise the line-up is similar, with ICT and finance figuring high on the list and accommodation and food near the bottom, with only “domestic personnel” featuring lower on the list.
3. Covid-19 impact
Recent CSO survey data shows that seven out of 10 people report no change in income due to the pandemic, though excluding over-70s this falls to around six out of 10. A significant 22.1 per cent report a decline in earnings – many will not be working now – with 7.6 per cent saying their income has increased. Around one in three in the 35 to 54 age group report a loss in earnings – in the younger 18-34 group this falls to around a quarter.
The generally younger and less-educated group that work in the lower paid sectors are now the most exposed
Since we know from other data that a higher proportion of the younger age group have lost their jobs, this suggests that the pandemic unemployment payment (PUP) has protected earnings in this group –and that those who do not return to work will face losses as this payment is, at some stage, run down. The minority reporting that they are better off – 14 per cent in the younger age group – reflects other evidence that for some employees, including many part-timers, the PUP has left some people earning more.
At an economy-wide level, of course, the total amount of income being earned from work has fallen sharply during the lockdown. Research by NUI Galway and the ESRI suggests that the supports put in place have helped to protect incomes especially for the lower paid. But many families are still worse off , even if it is hard at this stage to disentangle the impact of job losses, temporary lay-offs and pay cuts.
Redundancies will be the biggest cause of income loss in the months ahead, but a loss in pay, bonuses, overtime and working hours will also hit incomes in many areas of the private sector. In the public sector, a final round of pay rises due under the deal due to expire in the Autumn are to be paid.
In the months ahead, pay in the sectors where earnings are already low looks the most vulnerable , as sectors like accommodation, food, entertainment and non-food retail are under pressure. In contrast, the better-paid sectors look, in general, less vulnerable, though of course in a global recession everyone is exposed. So the pay gap between sectors could grow.
The new Revenue data also puts some perspective on what has been happening. It shows a fall in gross pay by companies across the economy from €8.6 billion in January to €6.5 billion in May. Average gross monthly pay falls from €3,286 to €2,864. Now this overstates the drop in earnings as it is measuring what the company is paying out, and not the Government wage subsidy. And of course many companies were closed, or only starting to reopen so it will take a while to get a clear picture. But it is still a measure of the squeeze on jobs and businesses.
There is some better news, too, in the Revenue data. Even as many jobs were lost, new job creation continued in some sectors. So half the income tax losses for jobs lost in April and May were made up by gains as jobs were created elsewhere. This will go some way to protect tax revenues – in general the jobs created were higher paying and thus give a bigger tax return to the exchequer. The top 10 multinational taxpayers increased employment by a remarkable 11 per cent in both April and May, according to the Revenue. The Revenue warns, however , that income tax is still well below last year, even if the 20 per cent drop pencilled into the official forecasts may now look a bit pessimistic.
The Revenue data is further evidence of the two-tier nature of the Covid-19 impact on earnings and jobs, with the less well-off sectors hit more heavily. If the good news is that the supports vital tax revenues, the bad news is that it is evidence that the generally younger and less-educated group that work in the lower paid sectors are now the most exposed.