The pay gap between workers in the public and private sector has always been significant, especially in Ireland. This divide is not common in many other countries in the European Union, which is why Irish government officials and economists have been extremely diligent in tracking the changes over time. Although there is usually a difference, Ireland has in the past decade faced a 46pc inequality; this was at the peak.
In general, the Irish public sector has proven to be paying more and growing quicker than the private sector. This is interesting, given that the public sector is owned and operated by or within the federal, county or local governments.
The private sector is companies that have no governmental ties, and allow the privately owned establishments to set their own wages; some examples of this are corporations, both in not for profit and profit, and partnerships.
The Central Statistics Office reported in 2018 that state workers on average earned around €947 a week, which at the end of the year would total just around €49,390. People doing similar jobs in the private sector would only receive around €35,218, or 71.31pc, of a public sector salary.
These wages are continuing to grow, but at different rates. Additionally, all of these changes are dependent on basic pay, bonuses and premium payments; two of these are extremely dependent on the economic wellbeing of the company.
In the end of 2018, the Irish Small and Medium Enterprise Association (ISME) called for a decrease in the gap to 10pc by 2025. As of 2019, the gap has narrowed to 40pc which has shown to be great progress towards the ISME’s goal; this 6pc decrease was valued at €14,000.
Figures still show a difference in the wage growth of the two sectors, and the government has begun taking action. Over the years 2019 and 2020, public workers are looking at extra taxes to make up 7pc to “restoration” funds. Private sector wages are also expected to pay their part in the changes by increasing wages by 2pc to 3.5pc each year. This is yet to prove its efficiency, and could have many negative effects.
If a company were to increase wages in this way without increasing profits, they may have no choice but to let some workers go or reduce/ cease increases all together. Overall, there are many possibilities that have yet to play out in regards to these wage difference, but hopefully Ireland will be able to reach their 10pc gap goal.