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« Here We Go Again: The Recession Diaries - August 18th | Main | The Better-Off Shall Be First: The Recession Diaries - August 25th »

August 21, 2009

Comments

Mack

Michael -

You've linked to a comparison of labour costs at Destatis. Are average manufacturing labour _costs_ 2.3% below the EU-15 average or _wages_?

If it's the former, aren't Irish employer taxes quite low? Wouldn't that account for a large portion of the difference?

Similarly, per that report, they ranked Dublin 10th not 4th on wages. Low personal taxes meant that Dublin jumped up the league tables in terms of take home pay (as it tends to jump down leage tables when moving from wages to costs).

Incidentally, their methodology states that they compared wages across 14 different professions that they felt would give a representative balance.

But I agree with your general thesis..

Keith O' Brien

Good job on the Last Word debate. She quickly changed tack!

Niall

Mack, Yes Irish employer PRSI contributions are lower than most other European countries. However in some countries there is a ceiling on the contribution level, while in Ireland the ceiling was removed in 2001. Therefore the net cost may be higher for lower paid and less for higher paid employees. Contributions to pension funds may be higher by many larger employers here because of the need to fund a second pension. The European solidarity model of Social Insurance makes the State (SW) pension much more important than the Irish/UK poverty prevention model.

Mack

Hi Niall,

This 2007 survey by Deloitte got different results than UBS' survey, but they do show employer taxes in Ireland are very low (other costs appear to be too).

http://www.finfacts.ie/biz10/Rumuneration2008.pdf

Michael Taft

Mack - was able to some some examples of employer social security contributions. They date back from 2005 so, while the rate has probably not changed much, the thresholds will have probably increased, at least by the rate of inflation. The refers to the marginal rate (the rate for every extra Euro in wages):

Austria: 21.63% between €4,528 and €50,820

Belgium: 34.69%

Germany: 20.85% for €42,300 and below / 13% for between €42,300 and €62,400 (this is the contribution ceiling Niall referred to above - the maximum contribution is €11,300

Denmark: no contribution (they don't operate a social insurance system)

Italy: 33.08% up to threshold of €84,049

Luxembourg: 15.78% up to threshold of €88,006

Netherlands: 9% at €15,038 and below; 10.9% between €15,038 and €43,079

Portugal: 23.75 percent

Spain: 30.6% between €7,182 and €33,761

Sweden: 32.46%

UK: 12.8% on weekly pay above 94 pounds

These give some comparisons to ours (10.75% - no threshold).

Also, thanks for the link to the Deloitte Remuneration Survey. It mirrors other surveys with the exception of Austria and Netherlands - which are lower than, say the OECD. Ireland comes in mid-table for wages.

Mack

Michael -

The employer tax figures above don't quite square with the data from Deloitte. Could be a case of unknown unknowns?

E.g. From the above employer taxes in the Netherlands should be roughly in line with Ireland's, but according to Deloitte they're about 30% higher on a salary 30% lower (this may hold at least for salaries below €43k).

I'd have thought sustainable high net wages would be a good thing, something we should aspire to as a society (although I presume left and right will disagree on how best to achieve it). It's confusing as to why IBEC see that as a problem as long as labour costs are kept low ( via low taxes, the Deloitte report makes clear we're incredibly low in the aggregate - employer and personal) - your Destatis data and every report I've seen on the issue suggest they're (costs) not out of hand.

The Deloitte survey puts us 2nd for Net Wages but mid-table for wages, and 16th out of 24 for costs! If this is even half-way accurate, where is the problem?

If exports didn't grow from 2001 onwards, perhaps it had more to do with a property bubble sucking in all available capital, entreprenuers and investors with much less available to build or expand sustainable businesses...

Pavement Trauma

The method used in the report is exactly what defenders of the public sector pay premium were saying should be used when that particular debate was raging i.e. compare salaries in like for like jobs across sectors / cities. The specific issue Michael raises on the sheet metal workers looks valid but we do appear expensive in a lot of other areas. Looking at some of the more easily comparable jobs - bus drivers, car mechanics, sales assistants, cooks - their per hour wages rank 4th, 6th, 9th and 15th respectively, out of 73 cities.

Mack

Clarification on the above - we're 8th out of 24 on costs. But really, 9th out of the EU-15 or round about mid-table.

Misinterpreted Michael Hennigans 16th out of 24th on competitiveness as being the other way around.

http://www.finfacts.com/irelandbusinessnews/publish/article_1012329.shtml

Still, I think 9th of the rich countries, behind the UK, France, Germany, Belgium, Denmark, Luxembourg, Finland, Sweden isn't too bad...

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