Wages Aren’t Really Rising. It’s Not a Problem – Yet

Late last month headlines heralded the return of the pay rise citing wage growth in the order of 1.8% year on year, with some sectors strongly outstripping that figure (particularly IT and Administration). The reports neglected to say, that at €697.52 the average weekly wage was only marginally above the corresponding figures for the whole of 2011 (€690). The fact is we have seen wages stay pretty static over the last 5 years, however, because of a muted rise in the cost of living over that period (inflation in the economy was down 0.2% last month and up only 1.9% since 2011) this lack of wage growth is not seen as a big problem – yet.

The European Central Bank’s stated objective is growth in inflation by about 2% per year and they are currently pumping €1.1 trillion into the system to achieve that. If they have their way and inflation grows while wages remain static, we could be in for some industrial unease here. After years of economic strife most Irish people deserve more in their pockets, (we are some of the most productive workers in the world and work some of the longest hours in Europe) however the discussion on wages has focused solely on increasing income as opposed to cutting costs. In most cases, It doesn’t matter how much you get paid in gross terms, but how much you take home and more importantly how far your wages stretch.

If inflation rises bring higher wage demands this will lead to the costs of our goods and services rising, damaging our competitiveness and potentially our economy. Rather than wait for this to happen, we should act now to boost pay packets and cut costs in our economy so that standards of living can rise without wages having to go up dramatically.

The government has signaled a cut in taxes in the upcoming budget, and this should be continued in subsequent years to give back more to people who are working hard (especially those on lower wages).In terms of cutting costs, first on the list is the cost of having a roof over your head. A huge portion of Irish incomes goes on paying for accommodation, and in recent years these costs have only gone one way. Increasing the allowable height of buildings in our cities, utilising derelict spaces over shops in the heart of the city and taxing land owners who are intentionally holding on to sites without developing them in the hope of selling on at a higher price are simple ways that landlords and the government could act to reduce these costs. We must also look at the cost of healthcare and indeed childcare in the country which see no signs of abating. The statutory cost of doing business can also be easily reduced, the benefits of which could be passed on to consumers and used to hire more staff. These measures cost the government very little but could have a significant impact on quality of life without requiring huge rises in wages.

Our economy is growing again, and wages will rise in the coming years, but by focusing more on the cost of living, we can better address the underlying problems of our economy, keep competitive and vastly improve our people’s standard of living.

If you want to get a higher salary, Call us on 01 845 6312. we would be happy to help you buck the trend! Send CVs to info@linkpersonnel.ie 

This article will be published in the Dublin People Newspapers in Sep 2015

Cormac Spencer