Dáil Éireann Debate, Thursday - 10 February 2022
18. Deputy Mick Barry asked the Tánaiste and Minister for Enterprise, Trade and Employment his views on workers who seek above inflation pay rises given the stagnation in real wages over the past decade; and if he will make a statement on the matter. [7068/22]
View answerIt is understandable that households and businesses are concerned about the higher rates of inflation they are seeing at the moment. I know that people are feeling pressure as the cost-of-living increases and that people on lower incomes are being disproportionately affected.
Ministers across Government, along with their officials, have been tasked with developing proposals for a package to help families with the cost of living and the Government plans to finalise this package shortly.
However, it is important to keep in mind that these higher rates of inflation are expected to be temporary, and we should avoid a situation where wages start to chase up prices, which could in turn lead to more inflation and a harmful spiral.
The annual rate of inflation in Ireland reached its highest level in over twenty years in December 2021. Prices on average, as measured by the CPI, were 5.5% higher in December 2021 compared with December 2020.
The European Central Bank is closely monitoring price developments in the euro area and continue to believe recent price pressures are the result of temporary factors related to the pandemic, which are expected to fade over time. The impact of rising prices is not unique to Ireland, but an issue facing all major economies around the world as the effects of the pandemic unwind with the rapid resumption of economic activity.
Real wages have not stagnated in Ireland over the past decade. Ireland has some of the highest wages in the EU. Median gross hourly earnings in Ireland were €17.97 in 2018, well above the EU27 average of €13.18. The latest Eurostat data, from 2018, shows that Ireland has the 7th highest mean annual earnings in Europe, of €49,790. This is well above the average of €31,492. Ireland has the 8th highest median annual earnings in the EU 27, at €40,074.
Ireland has one of the highest minimum wages in the EU. Recently released data from Eurostat shows that as of 1 January 2022, 21 of 27 EU Member States have national minimum wages. In terms of gross monthly rates of the National Minimum Wage, Ireland has the second highest National Minimum Wage of these 21 Member States. When adjusted for purchasing power standards (PPS) Ireland ranks in sixth place.
Since the establishment of the Low Pay Commission, the National Minimum Wage has increased from €8.65 per hour to €10.50 per hour between 2016 and 2022, a 21.4% increase. This compares with an increase in consumer prices of 7% in the 6 years to December 2021, so the Minimum Wage has increased substantially in real terms in recent years.
There is a commitment in the Programme for Government to “progress to a living wage over the lifetime of the Government”. The Tánaiste has asked the Low Pay Commission to examine and make recommendations on the best approach to achieving this commitment. Its report will provide an overview of the different calculation methods for determining an appropriate rate for the living wage and will set out the policy implications of moving to a living wage in Ireland.
