A key part of the case made by Aer Lingus pilots in support of their pay claim was their incomes had been eroded by inflation over the past few years when prices soared in a cost-of-living crisis.

This is a familiar story across the economy.

On average, Irish employees lost out heavily in the high inflation years of 2022 and 2023 and while pay is now increasing ahead of inflation, it will take time to make up all the losses.

Between 2015 and 2020 inflation was very low – the consumer price index even fell in 2020 – and while earnings growth was also low, the rises were ahead of prices. Living standards were rising, albeit slowly.

An important caveat is that the average hides a lot of extremes; for example, for those in the rental market, higher costs were eating more into their income and leaving them worse off. Everyone has their own individual rate of inflation.

This all changed following the Russian invasion of Ukraine in February 2022 and the resulting surge in energy prices and then general inflation. Taking 2022 and 2023 together, figures from the Economic and Social Research Institute (ESRI) show that average earnings growth was close to 8 per cent, but prices rose by more than 14 per cent. The result was a 6.4 per cent fall in what are called real earnings, which is earnings adjusted for inflation, over the two years.

This was a big hit to living standards. It is important to note that Government supports, including once-off payments to all households through energy credits, did much to support living standards.

However, the industrial dispute between Aer Lingus and its pilots shows how some employees are now trying to make up lost ground. The Labour Court compromise, spread over four years, is probably a good pointer that many will succeed, but that it will take some time.

There is a huge spread of earnings growth across different sectors – and so some have been protected from inflation while others have done worse than the average.

Over the past five years, earnings in the information, technology and communications sector have risen by about 40 per cent, while prices have risen by a cumulative total of about 20 per cent. In contrast, public sector earnings over the same period rose by about 17 per cent on average, below inflation.

The figures are not perfect, as individual circumstances differ. But it is fair to say that on average, real incomes are now regaining much of the ground lost as inflation falls, but the strong economy keeps wages on the rise.

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