View from Dublin: our economy is always out of step with the times
THE Irish economy, like some plodders I’d rather not mention, just wouldn’t make it on “Strictly.” It always seems to be out of step.
The 1930s Great Depression? Ireland’s new tariff-protected industry created lot of jobs. 1950s post-war boom? Much of the population had to flee to find it. 1980s global recovery? Had to sit that one out for another 10 years.
I suppose the country has been more in step with the rest of the world since then, although with very extreme moves that would earn no points for artistic method. The Irish recovery from the very depths of 2010 astonished the judges. Five years into that recovery and the economy is still skipping along, with last month’s Central Bank quarterly report forecasting growth of 3.3% this year; once again more than double the eurozone average.
The most astonishing figure of all — that for unemployment — is down around 7%. The bank reck- ons it will be 6% next year, which would be the lowest figure in a decade and bring the numbers in work back above two million. Some economists think that is about as low as one would want it to go without causing problems.
To the intense frustration of Government politicians, this achievement is not something they have much success boasting about. Indeed, there is some evidence that such boasting does them harm in the polls.
The usual explanation is that people have found nothing astonishing about the recovery in their own finances. The survey of living standards from the Central Statistic Office gives support to that view.
One useful figure, the median, or most typical, level of disposable real income, continued to fall until 2013, but rose by 2.5% in the following two years. No doubt the 2016 data will show further improvement but, at €19,800, the typical individual does not yet enjoy the inflated living standards of 2007.
Personal consumption may not regain those levels until 2019. This may be what disgruntles most voters but poverty and inequality stir at least as much media comment.
Perhaps the best measure here is the ‘deprivation rate’, based on inability to afford two or more essential items. At its worst, also in 2013, almost a third of the population reported itself in this situation. It fell to 25% in 2015 — still an alarming proportion and the only noticeable change in the various poverty measures. With a bit of luck, it is now around the 2010 figure of 23%, if not better.
The obvious political difficulty is that improvements on this scale, however welcome, bear no relation to the 25% increase in national income recorded over the same period.
Part of the explanation is a paradox which might elicit sympathy even for politicians. The income figures are for individual incomes and circumstances, and it is individuals who vote.
The increase in output has a much less direct impact, but a powerful one nonetheless. It is seen mainly in those employment figures and the 200,000 extra people in work since 2012.
They are voters too but those who managed to remain in a job will be fretting about lost income, while those in their first job, or who came out of unemployment, are more likely to be concerned about rents, childcare and commutes than the policies which made those jobs possible in the first place.
We now have the latest edition of the Action Plan for Jobs but government is struggling to stay ahead of the curve. Employment has been the central issue in Irish economic life since before independence but it is now more complicated than just jobs.
Working conditions, job quality, age profiles and being employable at all (known in the trade as labour force participation) are becoming more important, economically and politically, than further reductions in headline unemployment.