Belfast Telegraph

Saturday 2 August 2014

Northern Ireland's average pay packet is £8,000 lighter than one earned in the Republic

Average annual salaries in Northern Ireland are more than £8,000 below pay packets in the Republic, shock new figures have revealed.

Official statistics from the Annual Survey of Hours and Earnings also confirm that take home pay in the province is almost £5,000 less than in Britain (£26,664).

With average pay here put at £21,836, the difference between Northern Ireland and the rest of the UK amounts to an annual £4,828.

But the gap is even wider when it comes to wage comparisons with the Republic, where the pay average is €36,079 (£29,931, a gap of £8,095).

CBI NI director Nigel Smyth (right) said that while wage rates in Northern Ireland remain below the Republic, the gap has closed significantly in recent years as a result of wage freezes and pay cuts in the private sector in the South.

"This is a long-standing issue and will only be addressed over the medium/longer term. Indeed, one of the biggest benefits of devolving corporation tax and reducing the level to 12.5% will be to attract more and higher quality jobs – that is very much the strategy the Republic of Ireland has followed," he said.

"The evidence is powerful that both the quantum of jobs and the quality of jobs secured from a lower corporation tax rate will make a significant difference."

Mr Smyth added: "Over the last five to six years there has been a significant shift in Government policy to attract higher paid jobs here with specific targets set out in the Programme for Government.

"Overall, this has been successful and we are seeing a growing number of higher paid jobs. In the short-term there is clearly a need to promote new jobs at all levels."

He said the Executive's economic, skills and innovation strategies will all have a role to play in helping improve productivity, which should lead to higher paid jobs.

"However, we need to appreciate that other regions and countries are not standing still – hence the only transformative policy tool available is lowering corporation tax, which will help close this gap. We should also not ignore the education system, which is the most important part of Northern Ireland's long-term growth strategy – raising our education standards to the levels of the best in Europe could add over 1% to growth annually."

Public sector union Nipsa referred to a statement from its general secretary Brian Campfield, who said: "Analysis suggests that the gap in wages between a Northern Ireland and a UK private sector worker is not explained by occupational structure, but due to low private sector wages within the region."

And the union added: "In the longer term these facts and the type of economy (exacerbated by privatisation) they demonstrate will only serve to push down wages further. And the union added: "In the longer term these facts and the type of economy (exacerbated by privatisation) they demonstrate will only serve to push down wages further.

"The current data also makes clear that basing an investment strategy on the 'race to the bottom' of a cheap, disposable workforce is both unethical and self-defeating."

Data for the Republic of Ireland is sourced to the Earnings, Hours and Employment Costs Survey (EHECS), carried out by the Central Statistics Office (CSO).

Like-for-like comparisons can never tell the whole story - by Finance Minister Simon Hamilton

There are several factors which could account for the differential in mean gross annual pay.

The figures quoted are from the Annual Survey of Hours and Earnings (ASHE), which does not account for differences in the regional composition of the workforce, meaning that like-for-like comparisons may not be appropriate.

For example, a region might have a lower level of median earnings than another if it has a higher proportion of employees in industries or occupations with relatively low earnings.

It should also be noted that the earnings comparisons take no account of variations in prices for goods and services between regions, and therefore do not necessarily indicate differences in the standard of living.

The Executive's Economic Strategy, published in March 2012, identifies relatively low average wages as being one of a number of inter-related long-term challenges facing the local economy.

The level of average earnings in Northern Ireland is linked to the general performance and structure of the local economy, including factors such as labour productivity as well as the relative demand and supply of suitably qualified staff.

And historically, growth in output and jobs here has tended to be in relatively low value added areas, with employment in higher value-added sectors such as finance and business services being under-represented.

Consequently, the focus of the Economic Strategy is on developing export-led economic growth, particularly in higher value added areas where firms can pay higher wages while still remaining competitive. Significant progress has already been made, but this is a long-term challenge which the Executive remains focused on addressing through the implementation of the Economic Strategy. For example, the strategy contains a commitment to promote 5,900 jobs from inward investors with 75% paying salaries above the NI private sector average.

In terms of the public sector employment, current public sector pay policy is that, following the two-year pay freeze, increases will be constrained to 1%. The public sector remains an important driver of economic activity in Northern Ireland and we are seeking to maximise the positive impact of our spending in this regard.

 

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