Employment cost in Ireland falls

The cost of employing a person in Ireland fell by more than 2 per cent last quarter, according to EU statistics agency Eurostat.

Only Greece (-6.8 per cent) and Ireland (-2.2 per cent) saw a fall in labour costs per hour in the first quarter of 2011, while the 27 EU member states saw an average increase of 2.6 per cent.

The largest drop in wages was in the construction sector, which saw an 11.6 per cent drop in wages - 10.9 per cent in overall labour costs - compared to a 1.1 per cent decrease in the previous quarter.

The overall cost of labour takes into account wages, including overtime and bonuses, and non-wage costs such as PRSI and other taxes charged to employers.

The cost of wages nationally fell by 2.6 per cent, while the other costs of employing staff increased by the same amount.

The largest increases were seen in Bulgaria (7.8 per cent) and Hungary (5.6 per cent).

A report published last week by the Central Statistics Office in Ireland, using the same data as the Eurostat study, showed the average weekly earnings for individuals dropped 3.6 per cent last quarter, despite a very small increase in hourly payment.

This was due to the average number of hours worked by employees falling from 31.8 hours a week to 30.6 – an annual decrease in paid hours of 1 per cent.

The same report showed that average weekly earnings in the construction sector fell by 10.9 per cent last year, to €18.74 an hour.

The average hourly payment for an Irish person across all sectors, including overtime and bonus payments, is now €22.08.

A spokesman for Siptu said: "It confirms what we’ve been saying for the almost two years now. The effect of this is to further depress consumer spending because it’s taking money out of consumer’s pockets, and that’s contributing to the downward spiral."

A spokesman for Ibec, the employers' organisation, said international competitiveness was the important factor that would lead to increased employment and consumer spending.

Ireland’s productivity has increased recently, he said, in line with reduced costs, putting the country in a strong position. "This is good news," he said. "We are increasing our output. Greece aren’t. While they’re bringing down costs, they’re not increasing their productivity."