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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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs 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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs average wage
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
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
Minimum vs average wage
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…
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
Wages an industry is willing to pay
Balance of bargaining power Extra Profits
The average wage
Minimum vs 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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
Wages an industry is willing to pay
Balance of bargaining power Extra Profits
The average wage
Minimum vs 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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
Wages an industry is willing to pay
Balance of bargaining power Extra Profits
The average wage
Minimum vs 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)
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs 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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs 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
y40_49 Between 40and 49 years
y50_59 Between 50and 59 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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs 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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs 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
next
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%
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
The average wage
Minimum vs average wage
Minimum wages are lagging behind the average
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Minimum vs average wage
Public / private sector wages
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
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Minimum vs average wage
Public / private sector wages
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
Public / private sector wages
Inter-industry wage differentials
Occupational wage differentials
Gender pay gap
Public / private sector wages
•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
Minimum vs average wage
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