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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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Listed:
  • 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)

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.

Suggested Citation

  • Kelly, Eilish & McGuinness, Seamus & O'Connell, Philip, 2009. "Benchmarking, Social Partnership and Higher Remuneration: Wage Settling Institutions and the Public-Private Sector Wage Gap in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(3), pages 339-370.
  • Handle: RePEc:eso:journl:v:40:y:2009:i:3:p:339-370
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    References listed on IDEAS

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    Cited by:

    1. Karl Whelan, 2010. "Policy Lessons from Ireland’s Latest Depression," The Economic and Social Review, Economic and Social Studies, pages 225-254.
    2. Niamh Hardiman, 2013. "Rethinking the political economy of fiscal consolidation in two recessions in Ireland," Working Papers 201316, Geary Institute, University College Dublin.
    3. Sebastian Dellepiane Avellaneda & Niamh Hardiman, 2010. "The European Context of Ireland’s Economic Crisis," The Economic and Social Review, Economic and Social Studies, pages 473-500.
    4. Gorecki, Paul K., 2009. "The Recession, Budgets, Competition, and Regulation: Should the State Supply Bespoke Protection?," Papers BP2010/2, Economic and Social Research Institute (ESRI).
    5. Kelly, Elish & McGuinness, Seamus & Walsh, John R., 2015. "An Evaluation of the Back to Education Allowance," Research Series, Economic and Social Research Institute (ESRI), number RS47.
    6. Philip O’Connell, 2013. "Cautious adjustment in a context of economic collapse: The public sector in the Irish crises," Chapters,in: Public Sector Shock, chapter 9, pages 337-370 Edward Elgar Publishing.
    7. Callan, Tim & Nolan, Brian & Walsh, John R., 2010. "The Economic Crisis, Public Sector Pay, and the Income Distribution," IZA Discussion Papers 4948, Institute for the Study of Labor (IZA).
    8. repec:esr:chaptr:jacb200962 is not listed on IDEAS
    9. Brian Nolan & Bertrand Maitre & Sarah Voitchovsky & Christopher Whelan, 2012. "GINI DP 70: Inequality and Poverty in Boom and Bust: Ireland as a Case Study," GINI Discussion Papers 70, AIAS, Amsterdam Institute for Advanced Labour Studies.
    10. Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2012. "Explaining Changes in Earnings and Labour Costs During the Recession," Papers EC9, Economic and Social Research Institute (ESRI).
    11. repec:esr:wpaper:rn2012/4/2 is not listed on IDEAS
    12. Alison Johnston & Aidan Regan, 2015. "Taming Global Finance in an Age of Capital? Wage-Setting Institutions' Mitigating Effects on Housing Bubbles," LEQS – LSE 'Europe in Question' Discussion Paper Series 87, European Institute, LSE.
    13. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2009. "The Public-Private Sector Pay Gap in Ireland: What Lies Beneath?," Papers WP321, Economic and Social Research Institute (ESRI).
    14. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2013. "Comparing Public and Private Sector Pay in Ireland: Size Matters," Research Notes RN2012/4/2, Economic and Social Research Institute (ESRI).
    15. Brian Nolan & Bertrand Maitre & Sarah Voitchovsky, 2010. "Earnings Inequality, Institutions and the Macroeconomy – What Can We Learn from Ireland’s Boom Years?," Working Papers 201016, Geary Institute, University College Dublin.
    16. Akay, Alpaslan & Bargain, Olivier & Zimmermann, Klaus F., 2012. "Relative concerns of rural-to-urban migrants in China," Journal of Economic Behavior & Organization, Elsevier, pages 421-441.
    17. Javier Olivera & Blanca Zuluaga, 2014. "The Ex‐Ante Effects Of Non‐Contributory Pensions In Colombia And Peru," Journal of International Development, John Wiley & Sons, Ltd., pages 949-973.
    18. McGinnity F & Russell H, 2011. "Workplace Equality in the Recession? The Incidence and Impact of Equality Policies and Flexible Working," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT200.
    19. Jill Rubery, 2013. "Public sector adjustment and the threat to gender equality," Chapters,in: Public Sector Shock, chapter 2, pages 43-83 Edward Elgar Publishing.
    20. Karl Whelan, 2009. "Policy lessons from Ireland’s latest depression," Working Papers 200914, School of Economics, University College Dublin.
    21. Sarah Voitchovsky & Bertrand Maitre & Brian Nolan, 2012. "Wage Inequality in Ireland’s “Celtic Tiger” Boom," The Economic and Social Review, Economic and Social Studies, pages 99-133.
    22. Honohan, Patrick & Donovan, Donal & Gorecki, Paul & Mottiar, Rafique, 2010. "The Irish Banking Crisis: Regulatory and Financial Stability Policy," MPRA Paper 24896, University Library of Munich, Germany.
    23. 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.
    24. Russell, Helen & McGinnity, Fran & Kingston, Gillian, 2014. "Gender and the Quality of Work: From Boom to Recession," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT264.
    25. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2009. "Recovery Scenarios for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS007.

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