Stating the facts again .... and again

Michael Taft: Apologies for going over this ground again but if employers’ organisations insist on misrepresenting the issues, we have to keep correcting them. Yesterday I was on Today FM’s the Last Word with Brian Fallon from the Restaurant Association of Ireland, discussing the RAI’s latest call to cut the wages of low-paid workers. Mr. Fallon claimed that workers in the Irish hospitality sector are some of the highest paid in Europe. I pointed out that he was entirely incorrect and stated that I would put up the facts on the Progressive-Economy.ie website. So that’s what I’m doing.

The EU Commission’s data collection agency, Eurostat, publishes hourly labour costs on a sectoral basis; including the Food and Accommodation sector. For the latest year, this is what they found:

Ireland is in the bottom half of the EU-15 league table – 6 percent below the average of the other countries. This was in 2008 – the last year of rising personal income. In 2009 and 2010, Irish labour costs in this sector have fallen further behind the EU-15 average.

Caution is needed here: the EU labour cost index has a different methodology and is not seasonally adjusted. But the general trend is corroborated by other indexes – the EU Ecfin Directorate and the OECD.

If the above holds, then we should expect hourly labour costs to be approximately 9 percent below the EU-average in 2010 – falling even further behind this year and next.

By all means, lets have debates about whether increasing or cutting low wages is the best direction to take.

But let’s start that debate from verifiable facts. And the fact here is that hourly labour costs in the hospitality sector are below the EU-15 average.

I look forward to seeing Mr. Fallon’s evidence and sources to the contrary.

Posted in: Fiscal policy

Tagged with: subsidies on wages