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Benchmarking, Social Partnership and Higher Remuneration: Wage Settling Institutions and the Public-Private Sector Wage Gap in Ireland

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Author Info
Kelly, Eilish (Economic and Social Research Institute, Dublin)
McGuinness, Seamus (Economic and Social Research Institute, Dublin)
O'Connell, Philip (Economic and Social Research Institute, Dublin)

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Abstract

This paper uses data from the 2003 and 2006 National Employment Surveys to analyse the public-private sector wage gap in Ireland. In particular, we investigate the impact of awards implemented under a number of wage setting institutions on the pay differential. These include the pay increases awarded by the Public Service Benchmarking Body in its first report and the increases given to higher-level posts in the public sector by the Review Body on Higher Remuneration in the Public Sector, Reports No. 40 and 41. The pay increases that were awarded under the Social Partnership process in Sustaining Progress and the Mid-Term Review of Part Two of Sustaining Progress are also captured in the data used. Furthermore, we assess the impact of pensions on the gap. The results indicate that the public sector pay premium increased dramatically from 9.7 to 21.6 per cent between 2003 and 2006. Furthermore, we found that by 2006 senior public service workers earned almost 8 per cent more than their private sector counterparts, while those in lower-level grades earned between 22 and 31 per cent more. The public premium results derived in this paper relating to March 2006 predate the payment of the two most recent Social Partnership wage deals, along with the pay increases awarded in the second Benchmarking exercise and by the Review Body on Higher Remuneration in Reports No. 42 and 43. The results presented raise serious questions with respect to the justification for any further boosts to the pay levels of public sector workers. Finally, the study highlights the importance of correcting for differences in pension coverage between public and private sector workers when making any assessment of the public-private sector pay differential.

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Publisher Info
Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 40 (2009)
Issue (Month): 3 ()
Pages: 339–370
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:eso:journl:v:40:y:2009:i:3:p:339-370

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. C. Lucifora & D. Meurs, 2004. "The Public Sector Pay Gap in France, Great Britain and Italy," Working Papers ERMES 0403, ERMES, University Paris 2. [Downloadable!]
    Other versions:
  2. Gerry Boyle & Rory McElligott & Jim O'Leary, 2004. "Public-Private Wage Differentials in Ireland, 1994-2001," Economics, Finance and Accounting Department Working Paper Series n1421004, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth. [Downloadable!]
  3. McGuinness, Seamus & Kelly, Elish & O'Connell, Philip J., 2008. "The Impact of Wage Bargaining Regime on Firm-Level Competitiveness and Wage Inequality: The Case of Ireland," Papers WP266, Economic and Social Research Institute (ESRI). [Downloadable!]
  4. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, 04. [Downloadable!] (restricted)
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  5. John Fitz Gerald, 1998. "Wage Formation and the Labour Market," Papers WP095, Economic and Social Research Institute (ESRI). [Downloadable!]
  6. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09. [Downloadable!] (restricted)
  7. Richard Disney & Amanda Gosling, 1998. "Does it pay to work in the public sector?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 347-374, November. [Downloadable!]
  8. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March. [Downloadable!] (restricted)
  9. Boyle, Gerry & McElligott, Rory & O'Leary, Jim, 2004. "Public-Private Wage Differentials in Ireland, 1994-2001," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2004(2-Summer), pages 1-23. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lane, Philip R., 2009. "A New Fiscal Strategy for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(2), pages 233–253. [Downloadable!]
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