Dáil Éireann Debate, Thursday - 3 July 2014
13. Deputy Ruth Coppinger asked the Minister for Finance the effect the Government policy of downsizing the public sector and cutting wages has had since 2007 on the wage share-wages as a percentage of GDP; and if he will make a statement on the matter. [28548/14]
View answerThe economic crisis exposed a large underlying mismatch between public expenditure and revenue, much of which was structural in nature and unrelated to the economic cycle. This necessitated substantial fiscal consolidation in order to ensure that the public finances remained on a sustainable path. Given the size of the fiscal imbalances, adjustments were needed on both the revenue and expenditure sides of the accounts. In the choice of consolidation instrument, the Government has always been conscious of the need to minimise the impact on economic activity.
Roughly two-thirds of the adjustment since 2008 has been on the expenditure side. Part of this has been achieved with public sector payroll savings which have been achieved in a largely progressive manner.
In the private sector, hourly earnings have remained broadly flat in the aftermath of the crisis. These wage developments have played an important part in the ongoing improvement in Irish competitiveness and are one of the main reasons why employment is now growing so strongly - I would point out that the level of employment is nearly 4 per cent higher than its low-point and FDI inflows have been very strong. It is unlikely that either of these would have occurred without the improvement in competitiveness that we have seen in recent years.
The wage share of national income has remained broadly constant during the crisis years.
