Dáil Éireann Debate, Tuesday - 19 July 2016
153. Deputy Alan Kelly asked the Minister for Finance his views on the recent Organisation for Economic Co-operation and Development, OECD, report which details the fall in real wages here over the period of the economic crisis; if he is considering any measures to address wage pressures in the economy; and if he will make a statement on the matter. [22723/16]
View answerIn its Report entitled "Employment Outlook 2016", the OECD notes that Ireland was one of the countries to experience falling wages during the crisis. The report outlines how real hourly wages declined in Ireland during the crisis. This wage moderation also served to reduce nominal unit labour costs and as a result was key to underpinning the gains in competitiveness which Ireland has recorded in recent years. These competitiveness gains, together with prudent management of the public finances, have underpinned GDP growth, rising employment and falling unemployment.
The Report further outlines that whilst the surge in unemployment experienced in Ireland during the crisis was followed by falling nominal wages, once unemployment began to recede, wage growth began to rebound with real wages growing by 0.4 per cent in 2015. This is relative to an OECD average of 1.2 per cent.
There is at present, however, no evidence of significant wage pressures, notwithstanding the sharp declines seen in unemployment. The Government's approach as confirmed in both the Programme for Government and Summer Economic Statement is to continue to boost labour supply by rewarding work for those at the lower and middle-end of the pay spectrum.
It is crucial, particularly in the context of sterling depreciation, that cost competitiveness is maintained in Ireland. To this end, the Government will continue to actively monitor overall developments and take remedial action where necessary. This will allow us to ensure that developments in unit labour costs continue to support Ireland's overall competitiveness.
