A central argument used by Aer Lingus pilots to justify their wage demands hinged upon the deterioration of their earnings due to heightened inflation during the previous years as a result of the cost-of-living crisis, in which prices escalated spontaneously. This is a common narrative that permeates the entire economy.
Irish workers, on the whole, were significantly impacted during 2022 and 2023, the years when inflation peaked. Although wages have recently begun to exceed inflation, it will necessitate time to recuperate the total losses. Inflation, from 2015 to 2020, remained remarkably low and in fact, the consumer price index experienced a dip in 2020. Even though wage growth was quite modest, it still surpassed the price increases, contributing to a gradual improvement in living standards.
Nevertheless, the average is shrouded by numerous extreme deviations. Notably, tenants carrying the burden of escalating rental costs found an increased proportion of their income being consumed, leaving them financially worse off. Every individual experiences a unique rate of inflation.
The situation took an unforeseen turn following the Russian invasion of Ukraine in February 2022, which led to skyrocketing energy prices and consequently, inflation. Based on data obtained from the Economic and Social Research Institute (ESRI) for 2022 and 2023, there was an approximately 8 per cent average growth in earnings, whereas prices inflated by over 14 per cent. Subsequently, real earnings—earnings adjusted to accommodate inflation—dropped by 6.4 per cent over this two-year span.
This posed a significant threat to living standards. It is noteworthy that government interventions—including one-time energy credit payments to all homes—played a major role in safeguarding living standards.
Yet, the labour conflict arising between Aer Lingus and its pilots underlines how certain employees are striving to recover lost ground. The negotiated settlements by the Labour Court over a duration of four years could be seen as an indication that several will triumph, albeit it might require patience.
Earnings growth varies immensely across diverse sectors, hence some have been sheltered from inflation while others have grappled with an outcome worse than the average.
Over the preceding five years, earnings in the information, technology and communications sector have augmented by approximately 40 per cent, while prices have incrementally ascended by around 20 per cent. Conversely, public sector average earnings within the same period have increased by roughly 17 per cent, trailing behind inflation.
While the statistics may not be flawless due to varying personal situations, it’s reasonable to assert that, typically, actual earnings are reclaiming a lot of the territory lost as inflation declines, with the robust economy ensuring consistent wage growth.