This will not be good news to anyone working at AIB, but those static salaries have actually amounted to a pay rise
As we noted a few weeks' ago, there is upset at AIB. Senior management want to freeze pay until 2014. Given that pay for AIB staff has been frozen since 2009, this is causing some upset. The finance union IBOA says staff are ready to go out on strike if the freeze is prolonged.
Ostensibly, a five year pay freeze does seem excessive. Particularly, as AIB has been spending lavishly on consultants' fees (€100m), paid generous retention bonuses to senior staff (£426k paid to 24 senior managers at subsidiary First Trust) and generally seemed willing to reward senior staff before everyone else.
On the other hand, however, it's worth bearing in mind what's happened to inflation in Ireland since the freeze was imposed. As the graph below - based upon Irish consumer price inflation - shows, prices fell heavily between January 2009 and July 2010.
In 2008, AIB paid its average employee around €74k. When this was kept static during 2009 and 2010, employees actually received a pay rise: cumulative deflation was -1.6% over the period. Inflation returned in 2011: prices rose by an average of 2.59%. This year, inflation is running at an average of 2.07%.
By the end of 2010, for an AIB employee's €74k salary to have remained genuinely static it should have fallen to €73k. By 2011, it should have risen to €75k. This year, it should have risen by another €149. AIB's staff are therefore hard done by - just not that hard done by.
