Increase in Irish average wages above euro zone average

Hourly pay rates across the Irish economy rose 5 per cent in the year to the end of June, slightly above the euro zone average, according to the latest figures issued by the European Union’s statistics office, Eurostat.

Wider labour costs, which include social contributions and employment taxes, are reported to have risen 8.4 per cent in the State during the same period.

There was significant variation between sectors within the economy, with wages and salaries in the business sector rising 4.3 per cent and 4 per cent in services but those in manufacturing up by 6.7 per cent, well above the euro zone average of 4 per cent in that sector.

Separately, an assessment on earnings published by the Central Bank of Ireland on Friday, showed growth in earnings – as measured by compensation per employee (CPE) – increased 2.9 per cent annually in the first quarter of 2023. However, continued elevated levels of inflation resulted in negative real growth of 4.3 per cent in the three-month period, which represented the sixth consecutive quarter of real earnings decline.

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“Ireland is not unique in experiencing negative growth in real earnings of late,” the Central Bank’s paper noted. “Similar trends have been observed in countries such as the US and UK. Across the euro area, analysis of CPE data shows that no country experienced positive real earnings growth in 2022, reflecting the impact of the negative terms of trade shock experienced by economies across the euro area.”

Eurostat’s data noted that Hungary had the fastest-rising hourly rates in the EU to the end of the second quarter of this year with pay up an average of 17.3 per cent across the economy. Malta experienced the lowest rate of growth at just 2.1 per cent.

The average rate of wage and salary growth for the euro zone as a whole was 4.6 per cent and 5.1 per cent across the wider EU.

The mining and quarrying sector experienced by far the most substantial rise in wage rates, with average hourly rates up 12 per cent across the 27 member states.

Increases in the information and technology sector remained fractionally above the EU average despite post-pandemic uncertainty in the industry and high-profile rounds of redundancies at some of the sector’s biggest names.

[ Irish households increase their savings as wage rises outpace inflation ]

The average pay increases in Ireland are below the rate of inflation for the period in question. The consumer price increase rose by 6.1 per cent to June according to the Central Statistics Office, having peaked at 9.2 per cent in October driven in particular by sharp increases in the cost of electricity and gas.

The rate of pay increases are generally expected to ease if, as expected, inflation continues to fall during the remainder of the year.

Overall, the employment rate across the EU was up in the second quarter at 75.4 per cent, 0.1 per cent ahead of the first three months of the year. Slovenia, Portugal and Latvia experienced the strongest growth with Ireland among the other 17 member states to see an increase.

Across the EU, some 3.1 unemployed people are reported to have moved into jobs during the first six months of the year.