This document summarizes a presentation given by Dr. Micheál Collins on earnings and low pay in the Republic of Ireland. It uses data from the CSO SILC 2013 survey to analyze the distribution of earnings, hourly earnings, and the prevalence of low pay. The analysis finds that approximately 345,000 to 400,000 employees earn less than the living wage or low pay threshold. Low-paid workers are more likely to be women, young, in certain sectors like agriculture or food service, and on temporary contracts. The conclusion discusses implications for policies around taxation, redistribution, minimum wage, and interventions to help low-income working families.

1. Dr Micheál Collins
NERI (Nevin Economic Research Institute)
Dublin
mcollins@NERInstitute.net
@ MLGCollins
www.NERInstitute.net
Earnings and Low Pay in
the Republic of Ireland
Statistical and Social Inquiry Society of Ireland
Cork, 14th April 2016

2. Outline
1. Introduction
2. Context
3. Data
4. Earnings
5. Hourly Earnings & Low Pay
6. Modelling Low Pay
7. Conclusion

3. 1. Introduction
• NERI research project on incomes and low pay
o QEO Spring 2015 (& 2016)…
• Limited understanding of earnings (of all types)
• Few detailed examinations of low pay (recently)
o including the MW
• Relevant to know:
o for policy formation
o for measuring progress etc

5. 2. Context
• Increasing interest in earnings:
o Recovery
o Literature on segmentation/polarisation etc
o Low Pay Commission
o Sustainability of redistributive system (tax & welfare) to
smoothen the income distribution
• direct income  disposable income
• relevance of changes to the pre-distribution
• not looked at for a while
• Literature
o Blackwell (1989), Nolan (1998), Barrett et al (2000)
o MW related / OECD annual estimates on low pay…

6. • Throws up some research questions around:
o The structure and distribution of earnings
o The low paid:
• how many
• who
• where

7. 3. Data
• CSO SILC 2013 (released January 2015)
o Sample of 4,922 households and 12,663 individuals
o Detailed income data (direct, gross, disposable)
o Income data cross checked with tax and welfare records
o Detailed socio-economic characteristics
o Weights for non-response etc
o Never perfect, but…
o Earners
• 4,449 earners
• 3,825 receive employment income
• 654 self employment income
• 3,369 employees whose PES = at work
o normal monthly gross earnings in main job & normal hrs per week

9. • Market income or ‘direct income’

10. • leaving out employers PRSI contributions
• pensions…
• Looking at:
o all individuals aged 17 years or more
o excluding those with no market income

11. 4. Earnings
• x3
o Overall
o Employees
o Self Employed
• Chart
o each bar = €1,000 range of income
o height = no of individuals
o merge all those with €150,000+

13. 80% 20%

14. 15%

15. 15%
50%

16. 15%
50%
Top 10%

17. 15%
50%
Top 10%
Top 5%

18. Gini Coefficient = 48.99

23. 5. Hourly Earnings & Low Pay
• Looking at hourly earnings data for employees
• Data:
o PES = at work and who are employees
o gross monthly earnings & no. of hours usually worked
o main job
• Three thresholds:
o Minimum wage of €8.65 per hour (2013)
o Living Wage of €11.45 per hour (2014) = 66% median
o Low Pay Threshold €12.20 per hour (2010)

25. Approximately:
• 345,000 employees below €11.45
• 400,000 employees below €12.20

27. Who are the low paid? (incidence)
o Of all those who are low paid:
• 60% women
• 35% aged 18-29; 28% 30-39yrs; 17% 40-49yrs…
• 24% in wholesale and retail sector
• 18% in accommodation and food sector
• 43% work 35hrs+ ; 26% work less than 20hrs
• 82% permanent contract
• 50%/50% split across full-time and part-time

28. Who is most likely to be low paid? (risk)
o Of all employees who are:
• male 21% are low paid; female 29%
• aged 18-29 = 53%; 60yrs+ = 25%
• Sectors:
o Agri, forestry, fishing = 65%
o Accommodation and Food = 61.5%
o Admin and Support Services = 52%
o Wholesale and retail = 43%
• low hours = 49%
• Temporary contract = 48%
• In poverty = 59% are low paid

29. Living Standards and the Income Distribution
All Employees The Low Paid
Living below the poverty line 3.2% 7.4%
Difficulty making ends meet 27.5% 35.9%
Unable to afford unexpected costs 45.9% 66.1%
Borrowing for ordinary living
expenses over last year
15.2% 20.7%
Experiencing Deprivation 19.4% 31.6%

30. from Table 8: Distribution of those at Work by decile, 2013

31. from Table 8: Distribution of those in Low Pay by decile, 2013

32. 6. Modelling Low Pay
• Concluding section of the paper
• Getting a little deeper
• Logit where dependent variable is earning less than
€12.20 per hour

35. • Findings:
o Risk of low pay higher for:
• temporary contract workers
• women
• private sector workers
• younger workers (non-linear effect for age)
o Risk of low pay lower for:
• part-time
• household with children
• Dublin based workers
• firms of 10+ employees
o no effect:
• low hours
o Splitting into high-income & low-income, but limited difference

36. 7. Conclusion
• Some policy implications/relevances:
o structure of worker income
o taxation policy
o the starting point for redistribution (direct income)
o the effectiveness of the minimum wage
o effectiveness of interventions for low income working
families?
o firm size & temporary contracts
• Raises questions
o women and young people….

37. Dr Micheál Collins
NERI (Nevin Economic Research Institute)
Dublin
mcollins@NERInstitute.net
@ MLGCollins
www.NERInstitute.net
Earnings and Low Pay in
the Republic of Ireland
Statistical and Social Inquiry Society of Ireland
Cork, 14th April 2016