# Wage increases



## bearishbull (6 Apr 2006)

http://www.finfacts.com/irelandbusinessnews/publish/article_10005457.shtml
data from cso shows average industrial wage(per hour) only increased by 2.1% last year(2005) after factoring in increased working hours(people worked 1% longer in 2005). basically wages only increased in line with inflation but utility bills and house prices increased far in excess of inflation,how long can this continue? did you see your wages increase by more than inflation(now running at 3%) ? could this be because of the immigrant worker effect? if average wages for many arent increasing by more than inflation how can people be affording to buy homes and spend so much?


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## onekeano (6 Apr 2006)

bearishbull said:
			
		

> if average wages for many arent increasing by more than inflation how can people be affording to buy homes and spend so much?



Think you've got it in one BB - Dublin prices in particular have become unsustainable!

Roy


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## ClubMan (7 Apr 2006)

bearishbull said:
			
		

> did you see your wages increase by more than inflation(now running at 3%) ? could this be because of the immigrant worker effect?


Is this post a trojan horse for a bit of immigrant bashing?


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## bearishbull (7 Apr 2006)

ClubMan said:
			
		

> Is this post a trojan horse for a bit of immigrant bashing?


dont be so cynical


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## ClubMan (7 Apr 2006)

How is asking as straight question deemed to be cynical? 

Why single out immigrants as a possible cause for wage inflation allegedly lagging behind consumer price inflation so when, if this phenomenon exists, there could be innumerable other causes (not necessarily mutually exclusive) for it?


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## Purple (7 Apr 2006)

Surly it must be good for the economy if wages don’t grow faster than inflation while the economy does. If this is due to emigration then it’s another reason to welcome them here, they increase our economic output and reduce wage inflation. As prices are set on the margins I don’t think it’s unreasonable to suggest that emigrants are having this effect. I would like to see some hard data before I accept it as anything more than a suggestion though. 
Anything that improves the efficiency of out economy has to be a good thing. Unfortunately I think it will take more than a few thousand emigrants to cause any real change.


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## Duplex (7 Apr 2006)

The tide of low cost labour in the global economic ocean will have a deflationary effect on Irish incomes.  I very much doubt if it will be possible to realize real incomes growth i.e. incomes growth in excess of inflation for a decade or so.   To suggest that Ireland or any high labour cost location can remain remotely competitive in the face of fluid labour market arbitrage, without incomes falling to a degree, is facile.   It is worth noting that American incomes have fallen in real terms from 2000.  

Immigrants have helped to suppress wage inflation so far.  There will come a time when the number of immigrants required will fall and they are likely to suffer most from any tightening in the labour market.    American immigration legislation is being tightened after several years of strident protest, the timing is interesting.


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## bearishbull (7 Apr 2006)

i agree with you duplex but how can house prices be rising so much and debt levels rising so much if we are standing still? yes population is increasing but house repayments stealth taxes and utility bills are rising well in excess of wage inflation so every year that passes cost of living is eating up more and more % of incomes,factoring in rising rates something has to give and in my opinion it will be house prices. house prices rose around 15% since last year so for average man buying average house if he waited for a year he would be around 45k worse off! and for people who wait 2,3,4 years they are hundreds of thousands worse off in space of several years,this cant continue.
purple if wages arent increasing above inflation then on a per capita level we arent getting any richer from working! this means people can afford to buy less and economy suffers,wage inflation is welcome if the cost of everything else isnt rising at same time! these inflation figures will lead unions to look for even more in partnership deal which will further errode competitiveness of the economy but i dont blame them with the massive house price inflation(do you think thats a bad thing like wage inflation?) and consumer prices inflation(is this a bad thing too like wage inflation?),if workers are more productive then they should get raises in line with productivity but this aint happening.


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## bearishbull (7 Apr 2006)

ClubMan said:
			
		

> How is asking as straight question deemed to be cynical?
> 
> Why single out immigrants as a possible cause for wage inflation allegedly lagging behind consumer price inflation so when, if this phenomenon exists, there could be innumerable other causes (not necessarily mutually exclusive) for it?


i was joking  suggesting you were being cynical regarding my reasons for asking the question.


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## bearishbull (7 Apr 2006)

delete please


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## bearishbull (7 Apr 2006)

http://www.rte.ie/business/2006/0407/consumer.html

the consumer sentiment survey out today seems to reflect the near zero(or negative) changes in per capita living standards. people getting more negative.


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## Duplex (7 Apr 2006)

BB The way I figure it.

The attempts to reflate the Japanese, American and European economies in the early part of this decade have failed to a great extent to channel money into the most productive sector of any economy, manufacturing;  while asset prices have inflated massively and service and retail sectors have boomed.    I think that the central banks have now forsaken attempts to reflate the dwindling manufacturing sector, as unintentional asset bubbles currently threaten both consumers and financial institutions.    

While the price of a home in Ireland has risen dramatically, far in excess of incomes, rents have mirrored (slightly lagged) incomes growth.   The speculative bubble has caused this unhinging of the fundamental relationship between the price of a house and its value, in terms of the income it can generate through rent.  In all probability that relationship will reassert itself, either through rent inflation( ensuing incomes inflation) or by price deflation.


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## tyoung (7 Apr 2006)

There is no doubt that large scale immigration drives down wages particularly for low skilled workers with whom they are competing. While immigration has an overall positive benefit there are winners and losers. Because most immigrants are low skilled workers the usual losers are their native conterparts with whom they compete. now if Ireland could import a flood of hospital consultants and barristers it might be different but the professions keep tight control over the entry into their professions.
To Purple's point I think it is wrong to talk about a strong growing economy if a significant number of peopls's wages are stagnating. Any economy should only be considered successful if most of the people are benefiting.
 Regards


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## Amygdala (7 Apr 2006)

Tyoung 





> now if Ireland could import a flood of hospital consultants


Just to clarify
Hospital consultant posts are goverment appointed.... And there is free movement of all doctors within europe


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## tyoung (7 Apr 2006)

Regardless. The barriers to entry for professionals are much higher than for unskilled labour. Compared with unskilled  and semi skilled labour professionals are not feeling any downward competition on their income. Immigration is primarily hitting the lower end of the workforce 
 Regards


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## Purple (10 Apr 2006)

I agree with the point made by Duplex above that the problem is that the economy is growing in its most inefficient sectors. These are construction and public the sector. I have been going on about the loss of manufacturing jobs due to this loss of competitiveness for ages on AAM but Duplex is far more succinct.
tyoung, I accept your point from the perspective of the individual, the growth in Africa's economy for the last 20 years has been high, just not higher than the rate of increase in its population. this is a good example of what you are talking about. My point was that anything that can reduce the rate of our loss in competitiveness is a good thing for the economy. 
On the point about hospital consultants and barristers, neither will be able to trade their services internationally so they will be bugger all use to the economy. In fact they both operate in protected, and so inefficient, sectors of the economy so I would suggest that they would do more harm than good to the economy.
What we need is another Intel, or even better a real strategic plan to develop an indigenous hi-tech manufacturing base that does more than sit at the back gate of the local IDA industrial estate feeding off scraps and goes out into the rest of the world and played with the big boys. There are a few examples, but not many.
IMHO we won’t so we’re screwed and will look back on the last 10 years as the great wasted chance for us to build a world class economy.


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