Only 70% took pay cuts in the Private Sector?

K-9 · 09-12-2009 11:23PM #1

Here's some statistical data on how the private sector is cutting pay. It is slightly more detailed than the IBEC survey so oft quoted!

http://www.finfacts.ie/irishfinancenews/article_1018498.shtml

I've read a poll from one of the recruitment companies I think, saying 69% took cuts, but I prefer this data over surveys by IBEC or recruitment companies.

Labour costs are coming down through redundancies, wages cuts, less overtime, cuts in hours and more productivity.

lmimmfn · 09-12-2009 11:26PM

still wont please the PS/CS as thats not them, but ill not paint everyone unfairly with the same brush, there are a lot of PS/CS out there who realise we need the current cuts, and i have the utmost respect for them.

Dannyboy83 · 10-12-2009 12:16AM

Good post, Thanks.

Do we have any figures available for the set of all workers who have not taken a pay cut (30%), intersecting with the set of all workers who have a partner that took a 100% pay cut?

I imagine the set of people who have not been affected in some way; not taken some hit in some form by now, is very small indeed.

george67 · 10-12-2009 12:23AM

Or maybe their office/workshop staff have been reduced by 10/20% leaving them with same pay more work .
Bonus' not payed this year amounts to a cut of sorts if they were given one every year for last decade or so.

K-9 · 10-12-2009 12:46AM

Dannyboy83 wrote: »

Good post, Thanks.

Do we have any figures available for the set of all workers who have not taken a pay cut (30%), intersecting with the set of all workers who have a partner that took a 100% pay cut?

I imagine the set of people who have not been affected in some way; not taken some hit in some form by now, is very small indeed.

Oh, doubt you'd have CSO stats on that but yes, definitely some Public Sector workers are being hit with a double whammy. Big cuts in pay plus partners losing jobs are big hits in income.

Overall, reduced labour hours cuts are being made by redundancies (about 10% in industry), less hours worked and more productivity.

Brian Devine, economist at NCB stockbrokers commented;
Ireland is becoming more competitive but the adjustment is more subtle than deep cuts in basic pay
Ireland is becoming more competitive relative to its Euro area counterparts by virtue of the fact that core CPI is falling by approximately -1% y/y versus a Euro-area core inflation rate of +1.1% but Ireland needs to improve and maintain a competitive advantage given the frailty of domestic demand. There is evidence in the long-awaited Q2 earnings data (albeit covering just 18% of the private sector workforce) to suggest that the private sector is reducing labour costs, albeit in a different way than is commonly presumed. An important consideration in this regard is the concept of Unit Labour Costs (ULCs) which is discussed below.
Ireland is becoming more competitive as ULCs fall. Increases in productivity (stemming from employee and hours cuts), sharp falls in irregular bonuses (as firms pare back margins) and steady hourly wages rather than deep cuts in basic hourly pay are the ways in which ULCs are falling in Industry and the Financial services sector.
The Q2 earnings data show that there was a large q/q% fall in hourly earnings in both Industry (-4.8%) and the Financial & Insurance sectors (-6.1% q/q). A large part of the fall was seasonal and related to irregular earnings declining. Average hourly earnings excluding irregular earnings were marginally down on a q/q% basis. On a y/y basis hourly earnings in Industry were still up +4.2% while they were down -11.6% in the Financial sector.

Labour costs are coming down, which considering we are now outside the top 20 economies to invest in, is encouraging. More needs to be done.

Interestingly, you can have wage rises and still a decrease in labour costs.

PS. the ESB would be included in the industry figures, might skew them a bit.

nesf · 10-12-2009 12:50AM

Hmm, the pay cuts issue can be fudged a bit too by counting people who've lost regular overtime hours as not as having gotten pay cuts because their basic pay rate is unchanged. I know of a few industry areas where regular overtime no longer exists because of falling demand and workers have seen substantial cuts in take home pay because of it but they wouldn't count as having taken a pay cut since their hourly pay rate is still the same.

What's interesting is the reports that the number of people paying tax at the higher rate has halved. This would indicate rather substantial changes in wages in the private sector.

K-9 · 10-12-2009 01:16AM

nesf wrote: »

Hmm, the pay cuts issue can be fudged a bit too by counting people who've lost regular overtime hours as not as having gotten pay cuts because their basic pay rate is unchanged. I know of a few industry areas where regular overtime no longer exists because of falling demand and workers have seen substantial cuts in take home pay because of it but they wouldn't count as having taken a pay cut since their hourly pay rate is still the same.

What's interesting is the reports that the number of people paying tax at the higher rate has halved. This would indicate rather substantial changes in wages in the private sector.

Yep, good point. The IBEC survey was a bit leading in that respect. People where asked "was pay cut?"
As you say, just like say Guards in the Public Sector, overtime was cut.

And yes, the drop in people paying higher rate taxes is telling. It is a big reason in why the the top 4% are paying 50% of the taxes. Obviously, people paying 20% tax are losing jobs too, but good point.

nesf · 10-12-2009 02:39AM

Thread stickied since the 70% haven't taken pay cuts soundbite is turning up a lot in threads and in interviews.

Head The Wall · 10-12-2009 07:33AM

We can also use the unions crap line about not getting a raise this year so thats a pay cut we have received also

gent9662 · 10-12-2009 01:31PM

Question:
am I right in saying that in a round about way the private sector tax take goes to funding union officials wages?

conorhal · 10-12-2009 01:33PM

That 70% figure often quoted by the unions masks simple reality, many people, (and very, very few of them from public sector) are now unemployed and thus taking a 100% pay cut and all of that nonsense about 70% of the private sector not taking a cut just deliberately obfuscates a simple truth:

It doesn't matter how many people in the private sector took a pay cut (or got a pay raise for that matter) because such things are implemented on the basis of your employers financial health.

If you work in the public sector your employers financial health is poorly with a 50% chance of survival, you're employer is broke, out the back door and over the fence, whistling for pennies.
In such circumstances corrective action has to be taken, and screwing private sector workers to the wall for a bail out is not the corrective action necessary because business as usual is no longer an option, it's addressing the long term structural problems with the way the public sector spends and functions.
In private sector terms, it's time for a program of cost cutting and re-structuring. If my employer was in the state the public sector is in, I guarantee you that redundancies, pay cuts and an efficiency/flexibility drive would be on the cards and nobody in the rest of the private sector (nor the public) would be expected to bail out my financially irresponsible employer or suggest that we all collectively pay more into a social fund so that I can keep my job and current salary level. The fact is, no more is being asked of the public sector than has been expected of many private sector employees that work for companies in financial dificulty, so it seems to me that the public sector is behaving like the banks, they consider themselves too big to fail and thus expect everybody else to dig deep and bail them out.
It amazes me that the public sector unions can bellow about bank bail outs and then in the next sentence demand a 20 billion euro per annum bail out of an equally mismanaged, overpaid and corrupt institution, theirs, or whine about bankers pay and bonuses but see no irony in demanding that they keep their own automatic bumps regardless of competence or performance.
Time to take it on the chin chaps, the 'benchmarking ATM' is reporting 'insifficent funds'.

CoDy1 · 10-12-2009 01:36PM

It wouldn't matter if there haven't been any paycuts in the private sector as far as I'm concerned.

Even if every private sector's pay was increased, there still would've had to have been cuts in Public Sector pay.

The company(government) they work for cannot afford to pay them the same wages anymore regardless.

GSF · 10-12-2009 01:46PM

What public sector people often forget is that the exporting sector has been under pressure since 2001-02 and has been very tight with wages. Those that didnt manage costs went to the wall. This was exasperated by other costs (rates, insurance, etc) rising quickly. When you are exporting and competing versus the rest of the world you cannot pass on higher wage cost in higher prices.

So why should these people take pay cuts now? The costs that need to come down are insurance, ESB, rates, etc NOT wages in exporting companies.

egan007 · 10-12-2009 01:48PM

I got an 11.5% payrise -:)

ceret · 10-12-2009 02:02PM

Hang on, doesn't that statistics refer to 'industry', i.e. manufactoring, mining, etc. That page refers to about 200,000 people employed. But there are more than 200k people that make up 'the private sector'. What about people in the construction, retail, or other commerical sectors?

I think when you say "X% took a pay cut in sector Y in the last 12 months", you need to qualify if you include people who had a job 12 months ago, but now have no job, or if you're not including them.

Assuming there are circa 1mil private sector workers, and about 150k (~15%) have lost their job in the last year (source: CSO Live register figures), then that skews the 70% figure.

howtomake · 10-12-2009 03:57PM

george67 wrote: »

Or maybe their office/workshop staff have been reduced by 10/20% leaving them with same pay more work .
Bonus' not payed this year amounts to a cut of sorts if they were given one every year for last decade or so.

That's me. Same pay, more work, late nights, weekends (& more work because we are trying to develop new products to get into new areas so we can have a company next year while trying to keep legacy systems going), less resources, no bonuses and I'm not sure if I'll have a job coming Spring unless we can get 2-3 more clients. Our client list is actually dropping, so far one a month since Aug. Some people have taken pay cuts here, have been made part time and some redundancies. Could be much worse, but it ain't pretty. Funny thing we are shopping for office supplies on ebay.

peter_de_tool · 10-12-2009 07:08PM

You should bear in mind that large sections of the private sector earn the minimum wage (i.e. retail, hospitality). This certainly not the case in the public sector

irish_bob · 10-12-2009 07:40PM

an often overlooked fact is that a significant percentage of the private sector workforce are on minimum wage and it is not leggaly possible for this group to have taken pay cuts

also , employers ( unlike the goverment ) who are in a weak financial state more often than not simply let people go rather than just tinker around with pay cuts , the unions dont consider loosing ones job to constitute a pay cut it seems , the whole debate is a distraction anyhow

ronbyrne2005 · 10-12-2009 09:19PM

PAy cuts can take a long time to happen in private sector as companies are reluctant to do this as staff have commitments and many staff can leave if wages are cut and go to other competitor. Also those who cut the wages in private sector themselves dont wanna have to take pay cuts so are reluctant to cut the pay of them under them instead prefering to reduce staff, reduce working week, reduce bonuses and OT etc. BUT eventually a private company will go bust if wages are too high and cant be cut and new firms that emerge with lower cost bases to replace the previous firm will only pay lower wages.
The collapse in income tax shows how much private sector is getting hit.

K-9 · 10-12-2009 10:50PM

ceret wrote: »

Hang on, doesn't that statistics refer to 'industry', i.e. manufactoring, mining, etc. That page refers to about 200,000 people employed. But there are more than 200k people that make up 'the private sector'. What about people in the construction, retail, or other commerical sectors?

I think when you say "X% took a pay cut in sector Y in the last 12 months", you need to qualify if you include people who had a job 12 months ago, but now have no job, or if you're not including them.

Assuming there are circa 1mil private sector workers, and about 150k (~15%) have lost their job in the last year (source: CSO Live register figures), then that skews the 70% figure.

Industry and the financial sector. Unfortunately, for various reasons its difficult to get a more representative source.

It does say about 10% have lost jobs in industry, one of the main reasons costs have come down. Indeed, redundancies account for part of the reason wage costs went up!

AFAIK, the total labour market was 2 million or so, its closer to 1.5 million now. Unemployment and emigration would play a big part in that reduction.

irish_bob wrote: »

an often overlooked fact is that a significant percentage of the private sector workforce are on minimum wage and it is not leggaly possible for this group to have taken pay cuts

also , employers ( unlike the goverment ) who are in a weak financial state more often than not simply let people go rather than just tinker around with pay cuts , the unions dont consider loosing ones job to constitute a pay cut it seems , the whole debate is a distraction anyhow

In 07, it was about 3-4% on minimum wage. I posted a link a few days ago on another thread. Think it was maybe 10% on what would be the existing minimum wage. When people see the 50% or whatever it is pay no taxes figure, they assume a large part is minimum wage workers. Part time workers and married couples whose partner is a Stay at Home Parent would make up a lot of that 50%, more than the minimum wage percentage.

ronbyrne2005 wrote: »

PAy cuts can take a long time to happen in private sector as companies are reluctant to do this as staff have commitments and many staff can leave if wages are cut and go to other competitor. Also those who cut the wages in private sector themselves dont wanna have to take pay cuts so are reluctant to cut the pay of them under them instead prefering to reduce staff, reduce working week, reduce bonuses and OT etc. BUT eventually a private company will go bust if wages are too high and cant be cut and new firms that emerge with lower cost bases to replace the previous firm will only pay lower wages.
The collapse in income tax shows how much private sector is getting hit.

Personally, I think larger companies, multinationals, banks etc. prefer redundancies, smaller companies prefer pay and hour cuts.

ceret · 11-12-2009 09:22AM

ronbyrne2005 wrote: »

PAy cuts can take a long time to happen in private sector as companies are reluctant to do this as staff have commitments and many staff can leave if wages are cut and go to other competitor. Also those who cut the wages in private sector themselves dont wanna have to take pay cuts so are reluctant to cut the pay of them under them instead prefering to reduce staff, reduce working week, reduce bonuses and OT etc. BUT eventually a private company will go bust if wages are too high and cant be cut and new firms that emerge with lower cost bases to replace the previous firm will only pay lower wages.
The collapse in income tax shows how much private sector is getting hit.

It can depend. In a SME people don't know what their collegues are on. It's not uncommon in my experience for more senior/skilled people to be on less or the same as a new start. Hence it wouldn't suprise me if managers gave the lower levels a pay cut and didn't cut their own pay.

RGS · 15-12-2009 09:21PM

This allegation is well and truely shown to be untrue by the results of a survey conducted by Mercer and published in the Irish Times today. The companies surveyed were from the multinational and large corporate sector.
Only 9% of private companies implemented pay cuts.
33% introduced pay freezes.
50% intend to implement pay freezes in 2010.
12% introduced unpaid leave---What private sector employers giving their employees more days off!!!!!!!!--
So the Public Sector wanted to implement a private sector scheme but the private sector didn't like it.

So cuts in basic pay in the private sector are not happening as previously alleged.

ceret · 16-12-2009 10:22AM

RGS wrote: »

This allegation is well and truely shown to be untrue by the results of a survey conducted by Mercer and published in the Irish Times today. The companies surveyed were from the multinational and large corporate sector.
Only 9% of private companies implemented pay cuts.
33% introduced pay freezes.
50% intend to implement pay freezes in 2010.
12% introduced unpaid leave---What private sector employers giving their employees more days off!!!!!!!!--
So the Public Sector wanted to implement a private sector scheme but the private sector didn't like it.

So cuts in basic pay in the private sector are not happening as previously alleged.

That article is a bit confusing. It referres to the Mercer Survey, and a Hays Survey, which quotes salary reductions of 10% - 30%. The Mercer study as you pointed out seems to tell a different story. So who is right?

I'm curious about the Mercer study (and have emailed them for more info). However they seem to be counting individual organisations, not workers, making the figures possibly misleading.

Imagine if there were 2 companies, e.g. Dell and HypoGlobalMegaCorp. HypoGlobalMegaCorp has a Dublin office and employes 7 people here. Dell (used to) employ 2,000. Dell closes it's Limerick plant and lets 2,000 people go. HypoGlobalMegaCorp has pay freeze. It is misleading to say "Only 50% of organisations have had staff loses, so it's not that bad!"

I can't find the Hays Survey anywhere, and I've asked them for it.

References: The Irish Times article, The Mercer Survey Summary

woodseb · 16-12-2009 10:55AM

RGS wrote: »

This allegation is well and truely shown to be untrue by the results of a survey conducted by Mercer and published in the Irish Times today. The companies surveyed were from the multinational and large corporate sector.
Only 9% of private companies implemented pay cuts.
33% introduced pay freezes.
50% intend to implement pay freezes in 2010.
12% introduced unpaid leave---What private sector employers giving their employees more days off!!!!!!!!--
So the Public Sector wanted to implement a private sector scheme but the private sector didn't like it.

So cuts in basic pay in the private sector are not happening as previously alleged.

why did you leave out the first line of the data?

70% of companies reduced payroll costs in 2009 by an average of 11%.

also, i assuming they could only survey the multinationals that are still here....

K-9 · 16-12-2009 11:35AM

RGS wrote: »

So cuts in basic pay in the private sector are not happening as previously alleged.

Indeed, the data in the OP points to that too. But Labour costs are still coming down!

RGS · 16-12-2009 08:03PM

Woodseb--The OP indicated 70% of private sector employees took pay cuts--this is patently untrue based on this Mercer survey.

Companies reducing payroll costs by various methods is not the same as implementing pay cuts.
Example---company employees agree to work 10% longer per week for same salary--pay roll costs reduced due to extra productivity but basic pay rate remains the same--not a pay cut in the strictist meaning of the word.

I work in the private sector and work longer hours for same pay rate--i do not consider this a pay cut, whereas my jobsharing wife, a nurse, has suffered an 11% pay cut in 9 months. She has always contributed to her pension since she commenced working, 25 yrs ago, at a rate of 6.5%.

irish_bob · 16-12-2009 09:00PM

RGS wrote: »

Woodseb--The OP indicated 70% of private sector employees took pay cuts--this is patently untrue based on this Mercer survey.

Companies reducing payroll costs by various methods is not the same as implementing pay cuts.
Example---company employees agree to work 10% longer per week for same salary--pay roll costs reduced due to extra productivity but basic pay rate remains the same--not a pay cut in the strictist meaning of the word.

I work in the private sector and work longer hours for same pay rate--i do not consider this a pay cut, whereas my jobsharing wife, a nurse, has suffered an 11% pay cut in 9 months. She has always contributed to her pension since she commenced working, 25 yrs ago, at a rate of 6.5%.

everything is relative , regardless of whether more public servants have taken pay cuts than private sector workers , public sector workers earn considerabley more than than in the private sector

ixoy · 16-12-2009 09:06PM

RGS wrote: »

Companies reducing payroll costs by various methods is not the same as implementing pay cuts.

We'd need more of a breakdown rather than hypothetical examples. For instance I haven't taken a pay cut - but that's at the expense of some of my fellow workers who took a 100% cut. It was by this means they were able to cut their pay roll costs down.

RGS · 16-12-2009 09:11PM

irish_bob wrote: »

everything is relative , regardless of whether more public servants have taken pay cuts than private sector workers , public sector workers earn considerabley more than than in the private sector

So the argument is now changing to cut the pay anyway not because its happening in the private sector but because they are paid more.

I reported the survey from mercers to counter the allegation that 70% of private ector workers took a pay cut.

K-9 · 16-12-2009 09:37PM

RGS wrote: »

Woodseb--The OP indicated 70% of private sector employees took pay cuts--this is patently untrue based on this Mercer survey.

No it doesn't. Its a response to the often quoted "70% of the Private Sector haven't had pay cuts" line.

Bear in mind it just includes Industry and Financial Services.

GSF · 16-12-2009 10:02PM

RGS wrote: »

So the argument is now changing to cut the pay anyway not because its happening in the private sector but because they are paid more.

So you would prefer if the government had made 10% of the PS redundant and retained pay levels? Then that would be consistent with the majority of the private sector.

Only 70% took pay cuts in the Private Sector?

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