wage differentials in greece inter-industry wage differentials occupational wage differentials...

Wage differentials in Greece

• Inter-industry wage differentials

• Occupational wage differentials

• Gender pay gap

• Minimum vs average wage

• Public sector / private sector wage differentials

Elias IoakimoglouInstitute of Labour GSEEAthens, GreeceJanuary 2007 next

Average Compensation per Employee (2006)(Euros)

12061535 1504

1685

2474 24062758

2487

2947

3357

2603 26452832

3252

242

200 356

406

658

725539

603

704

400

221

647772

616

398

2019

P CY Gr E I S D FIN F IRL DK A B NL UK

Source: Ameco & Employment in Europe

Inter-industry wage differentials

Occupational wage differentials

Gender pay gap

Minimum vs average wage

Public / private sector wages

The average wage

next

Average Remuneration per Employee (2006) (PPPs, EU-15=100)

61

72

81

85

89

95

99

103

105

105

108

109

118

131

86

P

CY

Gr

E

I

S

D

FIN

F

IRL

DK

A

B

NL

UK

Source: Ameco &

Employment in

Europe



Gender pay gap


The average wage


next

Labour Productivity and Average Wage

(at 1995 prices per person employed)

1960=100

100

150

200

250

300

350

400

450

500

1960 1965 1970 1975 1980 1985 1990 1995 2000

Real compensation per employee

Labour productivity



Gender pay gap


The average wage




Gender pay gap


The average wage

Industry wage differentials (2002)Hourly earnigns plus overtime, Euros

12,0

8,9

16,0

9,8

7,0

6,0

13,2

15,3

8,2

7,7

4,2

Mining and quarrying

Manufacturing

Electricity, gas and water supply

Construction

Wholesale and retail trade

Hotels and restaurants

Transport, storage and communication

Financial intermediation

Real estate and business activities

Education

Health and social work

Wages an industry is willing to pay

Balance of bargaining power Extra Profits


The maximum average wage that an industry is willing to pay depends on industry profitability, itself depending on

• labour productivity

• capital productivity and

• the ability of the industry to impose prices higher than competitive prices

k

kcapkkk Rppw

where (wk) is the maximum nominal wage industry (k) is willing to pay(πk) is labour productivity(πk/κk) is capital productivity(pk) and (pcap) are value added and fixed capital prices(R) is average profitability across industries

The average industry wage depends on industry profitability…



Gender pay gap




The average wage


The maximum average wage that industry (k) is willing to pay is not what is actually paid (wk)

When bargaining at the industry (k) level, workers target the maximum average wage that industry (k) is willing to pay, if there are extra-profits in this industry (); otherwise they target the “necessary wage”, which acts as a wage floor.

They obtain then a wage that depends on their target one hand and on their bargaining power on the other.

kkk wW

where (Wk) is nominal wage actually paid in industry (k)(wk) is the maximum nominal wage industry (k) is willing to pay (λk) is an index of the balance of power between workers and employers

… and on the bargaining power of workers



Gender pay gap




The average wage


• When demand persistently exceeds productive capacity

• Progress in technology and work organization is continuous and

• Competition is reduced for long periods of time

Industry rates of return deviate from average profitability



Gender pay gap




The average wage


9,3

16,2

13,8

10,8

8,5

6,3

9,9

10,2

6,6

9,6

8,8

Total

Legislators, senior officials and managers

Professionals

Technicians and associate professionals

Clerks

Service, shop and sales workers

Craft and related trades workers

Plant and machine operators and assemblers

Elementary occupations

Non manual

Manual workers

Occupational wage differentials (2002)Hourly wages (plus overtime)



Gender pay gap


The average wage


next

• Differences in occupational wages within industries are independent of industry-specific characteristics.

• Occupational wages vary around the average industry wage depending on the characteristics of occupation (j) in industry (k).

• Characteristics of occupations: years of schooling, age (professional experience) and tenure in (j,k).

• Job variables: shift work, overtime and other variables leading to compensating differentials in (j,k).

The quality of the workforce explains occupational wage differentials



Gender pay gap


The average wage


next

Hourly earnings by occupation and ageEuros per hour (overtime included)

-

2

4

6

8

10

12

14

16

18

20

22

24

26

y0_29 Less than 30years

y30_39 Between 30and 39 years



y60_max 60 years andover

Senior officials and managers

Professionals

Technicians

Clercs

Service, shop & market sales workers

Elementary occupations

The accumulation of professional experience is faster for non manual workers



Gender pay gap


The average wage


Occupational wage differentials by gender (2002)Hourly wages (plus overtime)

17,2

15,1

12,3

10,2

7,1

10,8

10,6

7,6

13,5

11,5

8,0

7,1

5,4

5,9

6,2

5,3

Legislators, senior officials and managers

Professionals

Technicians and associate professionals

Clerks

Service, shop and sales workers

Craft and related trades workersPlant and machine operators and

assemblersElementary occupations



Gender pay gap


The average wage


next

• Accumulated labour market experience

• Formal knowledge and skills, ability to performcomplicated tasks

• Accumulation of firm-specific skills, recent work experience

• Family allowances, wage premium for men, andwage discount for women related to familyresponsibilities

• Discrimination against migrants

• Increased average hourly wage rate for extra work

• Increased average hourly wage rate for shifts

• Lower bargaining power of part-timers but higher non-wage costs

• Compensating differentials

• Market power and productivity of the firm

• Higher bargaining power of employees in the firm (collective)

• Higher bargaining power of employees (individual)

• Impact of occupational and industry segregation on wages

• Under-valuation of female work (effect of gender segregation on average occupational wages)

Factors affecting the gender pay gap

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Decomposition of the Gender Pay Gap in Greece

Industry Services

Share of the gap Share of the gap

Segregation effect of which: Under-valuation effect Distribution effect

56.5%

17.8%38.7%

50.4%

18.3%32.2%

Gender differences inobserved characteristics

16.9% 25.6%

Wage discrimination byemployers

0,7% -3.0%

Gender differences in unobserved characteristics + wage discrimination by employers unrelated to observed characteristics

25.9% 27.0%

Gender Pay Gap(% of the average male pay)

100% 100%



Gender pay gap


The average wage


Minimum wages are lagging behind the average



Gender pay gap



1078

498

963

312

553

924

802

844

452

169

296

392430

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1990 1992 1994 1996 1998 2000 2002 2004

Euro

s.

Average net wage

Minimum net wage

The average wage

next



Gender pay gap



40%

41%

42%

43%

44%

45%

46%

47%

48%

49%

50%

51%

52%

53%

54%

55%

56%

1990 1992 1994 1996 1998 2000 2002 2004

Euro

s; a

t cur

rent

pric

es

.

Net minimum wage as a % ofthe average wage

Gross minimum wage as a %of the average wage

Minimum wage is now 42% of the average wage

The average wage




Gender pay gap


•In Greece, the average wage is higher in the public sector than in the private sector for both genders

•The difference in wages between sectors is mainly attributed to the employee’s endowment. •However, in the lowest quantile a significant part of the wage difference between sectors (almost 50%) is due to the advantage of public sector and the disadvantage of the private sector. •In the highest quantile the wage difference is mainly attributed to the employee’s characteristics •The pattern of this finding is similar for male and female employees. •These findings may explain the behaviour of the less-skilled male and female employees who prefer to be employed in the public sector at the early stages of their career than accept the relatively low-paying jobs in the private sector. •On the other hand, the advantage of the private sector in the upper range of the wage distributions may explain the flight of senior managers from the public to the private sector

Papapetrou E (2006)

The average wage


wage differentials in greece inter-industry wage differentials occupational wage differentials...

Documents

average industry wage

maximum average wage

necessary wage

wage floor

maximum nominal wage

hourly wages

capital productivity

fixed capital prices