Pay relativities have always been a divisive topic in Irish industrial relations. When one group of workers moved ahead, others sought pay increases to maintain previous relativities, a process that often led to leapfrogging pay claims. In the more recent years of full employment, where companies have had to compete to attract and hold skilled workers, those dissatisfied with their current pay and conditions have been able to move jobs to remedy their situation. And as industrial muscle has become less important in securing extra pay, there has been a decline in private sector unionisation. When Ireland was much poorer and jobs were hard to come by, workers who faced limited job opportunities at home still had the alternative of emigrating to benefit from better labour market conditions elsewhere. To attract young workers to replace those retiring, Irish employers therefore had to offer pay and conditions not far off those available in London or Leeds.Wage rates in the State, which had been well below those in England in 1960, had risen close to the English level by 1970. Ease of international travel, along with more multicultural societies in destination countries, has led to even stronger international labour market competition today for young, mobile and skilled workers. Young Irish workers consider whether they would be better off working in Manchester or Melbourne, and know they will find a GAA club if they do make the move. Workers in India, Poland or the US check whether they would earn more by moving to Ireland, and know they will meet compatriots here. The small number of graduate workers in the 1960s in Ireland earned a lot more than those with lower education levels. Despite the huge growth since then in graduate numbers, their higher earnings have persisted over much of the past 60 years because the demand for graduate workers rose at least as fast as supply as sectors such as ICT, pharmaceuticals and professional services flourished.However, in recent years, there is evidence of some reduction in the education premium, as more than half the labour force now has third-level qualifications. The ICT sector, the highest paid in the economy, has recently shown particular signs of a slowdown, possibly because of the impact of AI. In the first quarter of this year, hourly pay in that sector was lower than in early 2025, whereas, across the economy, pay rates generally were 4 per cent up on early 2025.[ Yes, AI could steal your job – the real question is: should it?Opens in new window ]As the structure of the Irish job market has changed, there has been a change in relative earnings between the public and private sectors. In 1966, well over half the graduates at work here were in the public sector, with another 15 per cent in professional services, like law or accountancy. The IT sector didn’t exist. Today the picture is very different. Only a third of graduates are in the public sector, with another third in sectors producing goods and services for export. In the last years of the Celtic Tiger, before the economic crash in 2008, pay rates in the public sector in the State rose faster than elsewhere in the economy. Public sector workers, on average, earned 50 per cent more per hour than private sector workers in 2008, a greater differential than their higher average qualifications would have warranted. While many private sector workers lost their jobs in the crash, public sector workers saw significant and painful cuts in their nominal pay rates as the State took steps to tackle the crisis in the public finances. As a result, the public sector premium had fallen to 40 per cent by 2014, and to 30 per cent by 2021.Since then public and private sector earnings have risen in tandem, aided by the gradual unwinding of the emergency cuts in public sector pay rates.The gradual fall in the public sector pay premium over the decade to 2020 meant that, while income tax revenue from the private sector was rising rapidly as the economy recovered, public sector pay grew more slowly. Along with the boom in corporation tax, this allowed the government to increase public services and welfare payments without having to raise taxes. In the coming years, the public sector will have to recruit and retain the workers needed to deliver the public services for a growing, increasingly elderly population. Already there are problems recruiting in specialist areas: from the Naval Service to occupational therapists and teachers. In ICT, some easing of the public sector recruitment challenge may follow lay-offs by the tech companies, but across most areas, the Government will have to at least match private sector pay rates to achieve its workforce goals.