Belfast Telegraph

Mind the gap: why Northern Ireland pay lags behind rest of the UK

If a catch-up of average earnings between Northern Ireland and other UK regions or the Republic of Ireland was a critical test of our collective achievements, then we are failing. Our real standards of living, adjusting for the overall lower cost of living, compare favourably with other places but, in monetary terms, there is a conspicuous continuing gap.

The evidence on changes in average earnings is, unhappily, that Northern Ireland still compares unfavourably with changes across the UK.

After making allowance for changes in the cost of living, in the most recent year to April average real earnings here fell by 1%. In the same year average earnings in the UK fell by 0.4%.

In a league table of the earnings levels of full-time employees across the regions of the UK, Northern Ireland was in 10th place of the 12 regions, with earnings around 9% less than the average.

There is a near consistent picture of Northern Ireland making little progress in closing the income gap. Much of the comparative earnings data could attract the simple description of being much the same as in recent years.

The official statistics stop short of an explanation of the outcome.

Are people here paid less than people elsewhere doing the same job, or are more people here in less well-paid jobs because we have a high proportion of occupations that are less skilled and need fewer qualifications?

In an intuitive response, the earnings gap for Northern Ireland is less explained by lower pay for comparable jobs and is more likely attributable to the structure of the economy, which relies on fewer people bringing skills to the labour market.

This year's earnings statistics show some serious changes and new features.

First, real average earnings are still well below the highest levels reached in 2009. Year by year, the trend from 2009 to 2014 was for real earnings to edge downward. After a partial recovery in 2015, they have barely changed. The adjusted value of earnings in 2017 is 3% lower than in 2009.

Second, whilst there has been a fall in real earnings, some evidence points to the spread between high and low earners having narrowed, if only marginally. In the 20 years from 1997 to 2017, the gap between the top earners (in the top 10% of earners) and low earners (in the lowest 10% of earners) narrowed from a multiple of 3.6 in 1997 to a multiple of 3.1 in 2017.

This change has been partially pushed by the influence of the national minimum wage, which comes close to being a proxy for the lowest-paid 10%.

Third, in a striking feature of the analysis of changes in average earnings, each year since 2009 the earnings of full-time female employees has moved to be higher than for males. The trend over the last five years, incrementally and slowly, has been for this difference in favour of females to widen.

It should also be noted that, although part-time earnings are lower (per hour), the difference for females shows a similar advantage. The changing comparison for female and male earnings is believed to be a consequence of the overall changing pattern of employment, with jobs in higher-paid occupations that are more likely to attract female employees becoming a bigger part of the labour force.

The information on the levels and distribution of average earnings needs to be considered in the context that, while incomes have tended to lag, employment levels have remained higher than might have been expected.

Is Northern Ireland keeping employment up as a consequence of seeing earnings fall behind? Is that a useful and necessary trade-off?

Belfast Telegraph