View from Dublin: our econ­omy is al­ways out of step with the times

Belfast Telegraph - Business Telegraph - - Economy Watch - BY BREN­DAN KEENAN

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.

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