Economic Babelfish

Irish Economics translated

The Mercer Wage Survey and its problem as a rule of thumb for the Irish economy

The Mercer report summary can be found in here: http://www.mercer.ie/summary.htm?siteLanguage=100&idContent=1366355

One particular line leaps out at me:
“The organisations in the survey are primarily subsidiaries of multinational corporations and large Irish companies and represent some of the largest private sector employers in Ireland.
Their sample is skewed towards large multinationals and similar Irish companies thus their study is skewed towards export based companies and suffers from the problem I outlined above.”

There is a stark division in the Irish economy between primarily export based companies and those that service the internal market primarily. Our exports have held up fairly well versus the drop in internal demand which is unsurprising given out much more severe recessionary problems. The sample used in the Mercer report will by its nature overemphasize the export sector given its focus on multinationals and larger Irish firms. This report has been used to justify resistance to the Public Sector pay cuts but its sample is unsuitable as a sample of the population of companies based here or put simply, we wouldn’t expect the wage policies of large companies exporting goods and services abroad to be the same as the wage policies found in smaller companies serving local and national markets where there’s been a much sharper drop in demand. As a survey of multinational and large firm behaviour the survey is appropriate (and this appears to be what its authors intended to do with it) but it has been quoted as a rule of thumb for the Irish economy blindly and without caveats and this kind of misuse of statistics is something that should be below national commentators but it appears it isn’t unfortunately, not that I’m surprised.

In particular if you see this quote: “70% of companies reported that they reduced payroll costs in 2009. On average these were reduced by 11%.” being applied to the general state of Irish companies you’ll know that this isn’t the real picture!

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December 17, 2009 - Posted by | Irish Economy

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