Low wage earners suffer loss of income double that of higher earners

Low wage earners in Ireland have suffered twice as large a drop in income levels during 2020 than workers on higher salaries, according to new figures published by the European Commission.

The latest figures show low wage earners in the Republic experienced an average 10 per cent drop in income this year compared with 2019 as a result of the Covid-19 pandemic.

It is the fifth-highest drop in income among low wage earners across the EU after Croatia, Greece, Cyprus and France.

It also compares with a 6 per cent reduction in income for middle earners in Ireland and a 5 per cent fall for the highest earners.

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The same trend was replicated across all 27 EU member states, with higher earners suffering a lower proportionate drop in income than those on the lowest wages.

However, the Eurostat study also showed that measures, such as wage compensation schemes, put in place by national governments including in Ireland helped to reduce the income loss by half.

The study provides the first results on the estimate of income losses due to the Covid-19 pandemic and associated economic shutdown across different levels of wage earners.

However, it only measures the impact of the first lockdown in the first half of the year before restrictions were reintroduced in many countries in the autumn.

The figures show that low wage earners accounted for about 65 per cent of all people who became unemployed in Ireland this year compared with about 2 per cent for the highest wage earners.

Average loss

The report calculated that the average loss of income across all workers in Ireland was 7 per cent compared to 2019 levels. The average reduction in income for all workers in the EU was 5.2 per cent.

“The impact of the crisis is very unequally spread between member states and is particularly strong for the most vulnerable subgroups of the working population, with low wage earners having losses three to six times larger than high wage earners in half of the EU member states,” a European Commission spokesperson said.

The spokesperson said countries that were more reliant on tourism appeared to have experienced the highest falls in income.

Eurostat noted that income loss was due to a combination of workers losing their jobs or not having contracts renewed, temporary lay-offs and reduced working hours.

It said the percentage of people absent from work in the food and accommodation sectors reached “staggering numbers” in April, with more than 50 per cent of such workers in more than half of all EU member states out of work or availing of a temporary government support scheme

It estimated that those working in tourist-related businesses suffered an average drop of income of 16.8 per cent, while people involved in the arts and entertainment sector experienced a 10.9 per cent fall in income.

Younger workers

The figures also highlight how temporary workers and people under 24 suffered income loss more than twice that of adult workers.

Female workers were also more likely to be affected due to the large prevalence of women employed in sectors such as food and accommodation, although Ireland was one of a minority of EU countries where males experienced a bigger drop in income (7 per cent) than females (5 per cent).

Almost 20 per cent of employees in Ireland are classified as low-wage earners, which is based on those earning less than €12 per hour. Low earners are those on incomes less than two-thirds of the national average income.

It is the eighth-highest share in the EU, while the EU average is 15 per cent.

In general, low wage earners in Europe are more likely to be women, younger, have a lower level of education and be employed on a fixed-term contract.

It is estimated that the top 10 per cent of earners in the Republic earn 4.1 times more than the lowest 10 per cent of earners – the sixth-highest level of disparity among EU countries.

Average hourly earnings among the best-paid workers in Ireland are €43.60, compared with €10.60 for the lowest paid.