Income inequality rises as private sector wages down

image Constantin Gurdgiev breaks down the latest CSO earning figures which show significant falls in private sector earnings down 6.8% between Q2 2008 and Q2 2009, along with falls in earnings in some public sector sub-sectors (education) and in the semi-states. Earnings in some private sector sub-sectors actually rose slightly, particularly at managerial level, but the average is down significantly.

Earlier CSO reports had failed to show significant private sector drops which had led some to claim they weren’t occurring. The statistics provided by the CSO suffer from ‘Survivorship bias’ in that they take no account of loss of earnings due to being made redundant. Redundancy will impact some sectors much more than others, with the private sector as a whole having overwhelmingly borne the brunt thus far..

These figures pertain to the Republic of Ireland.

  • LGO

    ….waits for the “bash”….

  • Peadar O’Donnell

    Clearly its the parasitic midwives and lay about remedial teachers who caused the crunch, who closed down Dell and Team Aer Lingus and brought our heroic bankers, property developers and Chicago ‘economists’ crashing down to earth.
    That’s why none of the latter figure in this ‘comparison’. They are the wealth creators, the dynamic hub of our great economy and so beyond comparison or blame or responsibility.

  • Mack

    Actually Peadar, Education earnings are included and are down (something I did highlight).

  • Mack

    Property developers are (hopefully) bankrupt. Many set up unlimited companies in order to maintain privacy, which makes them personally liable for the whole kit and kaboodle. If the government / bailed out banks have the cajones to chase them.

    Earnings are down significantly in the banking sector, while lot’s of the top bankers have been removed, the government could have done better insuring insiders didn’t replace them. Unfortunately, that seems to have occured.

    Chicago school economists, are mostly based in the USA, but if you mean our home grown variety, academic economists may have done particularly well with 3rd level earnings up nearly 10%.

  • slug

    Is this southern Irish data? Please clarify in your blogs.

  • Guest

    I thought more of you Slug.

  • slug

    Guest – if you read the entry it does not say WHERE the inequality relates to. I suppose the normal convention is that if you don’t say the country then is means the US? But generally best to say which economy one is talking about.

  • Mack

    Slug, a fair point. Normally I do mention location, though can assume that most of my posts are about the south as a general rule. Although in this case it could cause confusion / result in erronerous beliefs.

  • slug

    Mack-I guess it was a bit picky on my part (which is perhaps Guests point), on the other hand I think it good to say where it relates to. Thanks for taking the point!

    PS as an economist myself I like your blogs a lot.

  • ganb

    **LGO/Peadar, rant begins here.**

    I’ve heard a value of 33% of annual salary being put on a teacher’s pension. These valuations are of course fantastical. In reality money could not buy such a thing. But if it could then going by Gurdgiev figures we can tack an extra 33% onto the average secondary teachers salary:

    * €57481.84 + €19,160.61 = €76,642.45 per annum

    Are there any valuations out there on the monetary value of a job you cannot be fired from? Such at thing of course has a monetary value beyond the earnings it guarantees. It has a value that can be measured in money also in the sense of the opportunities it opens it’s beneficiary e.g. when applying for a mortgage, etc.

    That is before we even begin to get into the question of term of employment.

    ** CAUTION: SERIOUS RANT BEGINS HERE **

    I have three sisters that are teachers (two public sector, one private sector). I was gob smacked to hear one discuss a scheme whereby teachers could take leave of absence for up to two year while still being paid half their salary! When I asked her what the benefit of such a thing was to me, a tax payer, I was told that the benefit was that it would mean that more people were being kept in employment. I was too gob smacked to reply, that a that rate someone was being paid not to work at nearly three times the cost of the dole. Literally being paid not to work!! You couldn’t make this stuff up!

    And don’t get me started on how they describe early retirement – which isn’t really “retirement” as we all know, it’s only taking a extended break. They say it’s for the “mad, bad or sad”. Well, in the real world there are also means of dealing with such a thing. If you mad, you won’t get a job. If you’re bad, you won’t keep a job. And if you sad, get another fucking job.

    ** OK: END OF SERIOUS RANT PORTION **

    There was a time when the difference between public and private sector was one of swings and round-abouts. The private sector had the benefit of greater wages and opportunities over decreased job security and terms of employment. The public sector had decreased wages and opportunities over guaranteed job security and cosy terms of employment.

    Somewhere over the Tiger years, in times when we thought there would never be a bust, it seemed that the private sector had no downside and the public sector felt aggrieved. Fair enough … when we were deluded. But now that we have woken up the public sector need to wake up too.

    It’s this simple: We were fools to agree to pay you so much. Now, we can’t afford you. Either take a pay cut or get out the door.

  • Guest

    Slug,

    Apoligies.
    I was being picky too.

  • Mack

    Ganb

    I was gob smacked to hear one discuss a scheme whereby teachers could take leave of absence for up to two year while still being paid half their salary!

    That might go some way to explaining why earnings in Education fell last year.