Recent Posts

twt

Victory to all Retail Workers

, , Comment Closed

Workers at Tesco’s have voted overwhelmingly for industrial action to resist the proposed wage cuts that management is demanding.  The issue is now going to the Workplace Relation Commission.  This post is not about the details of the Tesco dispute (you can read about it here).  However, it is timely to take a step back and look at wages that not only Tesco but all retail workers earn.  And when you sneak that peak you will find that retail workers in Ireland are some of the poorest paid in the EU-15. 

12345

According to Eurostat (the baseline figures are from 2012, brought up to 2014 with the Labour Cost Index), Irish retail workers rank 12th in the EU-15.  And these wages are well behind European averages.

  • Irish retail workers would need a 20 percent increase to reach the EU-15 average.

But when we compare Ireland with our peer group, the comparison deteriorates dramatically.  One peer group are Northern and Central European economies (NCEE).  This is the EU-15 figure excluding the poorer Mediterranean countries (though it’s worth noting that Italian retail workers earn more than Irish).  In this comparison:

  • Irish retail workers would need a 35 percent increase in the hourly average wage.

A second peer group is other Small Open Economies (other SOE).  This is a comparison used by the IMF and it refers to economies with small domestic markets and a high reliance on exports, just like Ireland.   This category includes Austria, Belgium, Denmark, Finland and Sweden.  In this comparison:

  • Irish retail workers would need a 54 percent increase in the hourly average wage.

Some may object to this, claiming that if a company is not profitable, it cannot increase wages.  This is true enough.  But we are confronted with a problem:  the last year we have comparative enterprise data in the retail sector is 2012 – a bottom point in the retail business cycle with the economy still mired in a domestic demand sector.  Although profits per employed was about 15 percent below the EU-15, profits in the foreign-owned sector (such as Tesco) was the highest in the EU-15.  So even with the consumer economy at rock bottom, a substantial part of the retail sector was doing ok.

Read Post →

beaker-512

The Experimenting Government

, , Comment Closed

We will soon have a government.  What kind will it be?  Time and a Programme for Government will tell.  But what we really need is an experimenting government; one that uses resources and creativity to experiment with different proposals.  There are many good ideas out there but it is hard to know how they might impact on the economy and society were they introduced in one go.  Commissions, green papers and studies can only tell you so much.  We should experiment – trialling ideas for a limited period in different contexts and sectors.  We can then assess the results to see if they are runners.  Here are a few examples.

1.    Shorter Working Week

I wrote about this here.  In Sweden a number of trials are being conducted to assess the impact of a shorter working week in terms of cost, productivity, firm or agency performance, customer satisfaction and the health and well-being of the employees.  Why not trial it here?  We could select public and private sector workplaces to run 18-24 month experiments in reducing the working day.  A study of productivity and all other elements would be done before and after the trial period and the results made public for study and debate.

2.    Basic Income

Basic Income – a guaranteed payment to everyone regardless of employment status – is attracting more attention and discussion.  Arguments centre around a new era of reduced formal work opportunities, the growing complexity of welfare states, strengthening workers’ bargaining power (if I have a living income to fall back on, I can walk away from the boss’s grief), etc.

But there are downsides:  the high cost of implementation, inflation, unknown impact on the labour market.  This is complicated by right-wing arguments that with Basic Income we can abolish the welfare state and minimum wages. 

It is unlikely that a Government would introduce Basic Income all at once, or across the board.  If it didn’t work out it would be very expensive to undo the policies and repair the damage.  However, some places are conducting experiments – for instance,Utrecht and other Dutch cities.  It will be limited to a certain cohort but the hope is to discover how it changes people’s behaviour and what the fiscal and bureaucratic impact would be.  So why don’t we do the same thing – we could model it on the Dutch experiments so we don’t have to re-invent the wheel.  It could be run out in urban and rural areas for a time-limited period with the effects to be studied afterwards.

3.    Labour-Managed Enterprises

There has been increased academic interest in the performance of labour-managed enterprises (workers’ cooperatives, employee-ownership and other models).  While extremely limited in Ireland, there are a considerable number operating in other countries – notably France, Spain and Italy – throughout the industrial and service sectors.  Proponents argue that such enterprises increase productivity and firm performance while generating higher investment and reduced wage inequality. 

Here is an opportunity to run a trial programme – through Enterprise Ireland, local enterprise boards or a new agency if that is seen a better fit.  It would provide funding and training, and work with firms that are closing down due to poor performance or owner-retirement as well as greenfield start-ups.  This experiment would take time – a firm may survive the first and even second year but could fold soon afterwards.  However, this could be an on-going process, with periodic reports and analysis.  This shouldn’t be too contentious – after all, it is about generating indigenous enterprises and putting people back to work.  What we might find is that labour-managed firms are a better route to those goals, with positive spill-over effects in the community.

Read Post →

68_alpha2omega_t

From Alpha to Omega Podcast #068 Knowing The Future

, , Comment Closed

This week I am delighted to welcome back Derick Varn to the show. After listening to the previous show about Cultural Marxism with Doug Lain, Derick sent me an email saying he’d like to come on the show and give his two cents. What followed was a wide ranging discussion on ideology, value theory, and the historical emergence of capitalism. We also discussed the possibility of a revolutionary movement based on a system without abstract value, Marx’s critique of the Gotha Program, and Star Trek as a Marxist Tract. And top of all that, the possible productivity of a communist state, game theory and alternative histories, and the Spanish revolution. You can find Derick’s blog here: https://symptomaticcommentary.wordpress.com/ You can find Derick’s and Amogh’s Podcast here:http://sympthomaticredness.libsyn.com/ The music on this episode was: ‘The Order of the Pharaonic Jesters’ by Sun Ra and his Arkestra ‘If Not For Money’ – The Wytches

Read Post →

landsdown_rd

Open Season on Public Sector Pay (Again)

, , 1 Comment

It’s starting.  When the penny drops and the incoming Government finds there is less money in the kitty than their manifesto promises were based on, the scramble for scarce resources will be on.  And the scramble to have a go at public sector workers – that will be on, too.  This from management consultant Eddie Molloy in the Sunday Business Post (behind a paywall):

‘That (the Lansdowne Road Agreement) was clearly a sweetener with the prospect of an election ahead.  Before disability, homelessness, flooding or anything else got a look in, a big chunk of the available funds had already been given away.  The government chose pay restoration over services restoration.’

Ah, c’mon; public sector workers – in particular, the low-paid (the Lansdowne Road Agreement gave these workers an additional boost) – took from the disabled and the homeless?  Interesting that Molloy didn’t write: ‘The Government chose tax breaks for high income groups over services restoration’ or ‘massive subsidies to the corporate sector over services restoration.’   No, just public sector workers.   This is the type of argument we’re going to get – and it will probably get even more extreme.

Colm McCarthy, too, is not too keen about public sector pay increases.  But at least his argument is one that can be engaged with.  He rightly states that there’s little fiscal space; that’s probably an overstatement.  He goes on to say:

‘Should a government be formed, an immediate priority should be to inject some reality into the discussions about public service pay. Are public servants poorly paid, relative to those in the private sector and in comparable public employment in the UK and elsewhere? The best way to compare, taking account of pensions and job security, would be a thorough benchmarking exercise, done openly and with all details published.’

Ok, let’s throw some reality into this discussion.

First, let’s measure public sector pay (employee compensation) as a percentage of GDP.  For Ireland, I use the Irish Fiscal Council’s hybrid-GDP measurement, a compromise between GDP and GNP.

PS Pay 1

Ireland is well into the bottom half of the table, below the average of other countries.  It should be noted that in some countries like Germany not all public sector pay is on the books.  For instance, in the public health system, public sector pay is off-the-books, courtesy of quasi-public corporations (money spent is categorised in different ways). 

It should also be noted that according to the Irish Government, public sector pay will fall from 9.8 percent in 2016 to 8.4 percent by 2021 (using the hybrid-measurement).  And that’s including the full cost of the Lansdowne Road Agreement. 

Read Post →

underpaid

Are We Getting a Fair Deal?

, , Comment Closed

With all the talk about industrial action and wage claims and wage offers and summer of discontent, etc. etc. etc. it is worth taking a step back and to look at the big picture.  Are Irish workers paid too much in comparison with other EU-15 countries?   This blog written by the Director of the Nevin Economic Research Institute, Dr. Tom Healy, looks at the adjusted wage share in the economy.  That’s one way of measuring wages – and it shows Ireland performing pretty badly in comparison. 

Here I am going to approach this issue by quantifying the proportion of the economy that goes on wages.  But whenever you go down this route you are faced with a big question.  Do we use GDP which is inflated by multi-national profits which are not generated here but are imported to take advantage of our corporate tax regime?  Do we use GNP even though this is also inadequate as it excludes actual productive activity?  Or do we use the Irish Fiscal Advisory Council’s hybrid-GDP which attempts to measure our actual economic or fiscal capacity?

Let’s take a cautious, conservative approach and use GNP.  In terms of EU comparisons this means using Gross National Income (GNI) which is essentially GNP including payments from the EU (CAP funding, etc.).  When we do this we find Irish workers, collectively, are paid a small percentage relative to workers in other EU countries.

TEC1

The EU Commission’s AMECO database estimates for 2016 finds that Irish employee compensation is near the bottom of the EU-15 table.  Employee compensation combines both wages and employer social insurance contributions; this is the standard measurement of wages and, as such, can be taken as a very close proxy to ‘labour costs’.  

Throughout the EU-15, wages make up 48 percent of GNI.  In Ireland compensation makes up only 40 percent – equal to Italy and ahead of lowly Greece (if we used GDP or the Fiscal Council’s hybrid-GDP, the percentage would be even lower).

What would happen if Irish wages rose to the average EU-15 level?

  • Total wages would rise by €15.4 billion, or 20 percent more than today.
  • That is the equivalent of €9,400 per Irish employee.

Of course, economies and wages are never so simple; therefore, you can’t run a slide-rule over gross numbers and extrapolate an optimal wage figure.  Much depends on the bargaining power of workers vis-à-vis employers, the position in the business cycle, the sectoral structure of the economy (high-tech?  medium-tech?), compositional effect, productivity levels, etc.  However, we can’t get away from the fact that Irish wages take up far less of Gross National Income than in almost all other EU-15 countries.

Read Post →

SV

The April Issue of Socialist Voice Out Now

, , Comment Closed

The April issue of Socialist Voice is now available online at http://www.communistpartyofireland.ie/sv/index.html

Table of contents:


The 1916 Rising a century later: Eugene McCartan

A century ago this month, on 24 April 1916, members of the Irish Volunteers and the Citizen Army marched out and seized a number of sites mainly in Dublin and a small number of other places around the country. The Rising lasted six days, but its impact still reverberates a century later.

Not a time for diluting our demands: Tommy McKearney

Antonio Gramsci wrote in his Prison Notebooks that “the crisis consists precisely in the fact that the old is dying and the new cannot be born . . .” Although this was written more than eighty years ago and in a very different world, he might well have been referring to the present day.

Venezuela: The struggle continues: Paul Dobson

On 6 December last year the US-backed Venezuelan opposition achieved a victory in the parliamentary elections, winning a two-thirds majority in the National Assembly. As only their second victory in twenty attempts, it must have tasted very sweet following eighteen years of almost continuous losses.

The myth of Irish sovereignty: Eoghan Ó Néill

One hundred years ago Irish men and women lit a spark that they hoped would lead to an Irish Republic, sovereign and free from the stranglehold of British imperialism. The revolutionary forces of 1916 were the product of the economic, political and social oppression visited upon the Irish people by the continued tyranny of Britain.

Strikes and time bombs: Alan Hanlon

The last issue of Socialist Voice referred to the “pensions time bomb.” This is a term dreamed up by the bourgeoisie in the financial sector as part of a campaign to undermine state pensions and defined-benefit schemes. Now some other “time bombs” have arisen.

The Murder Machine: Pearse and education: Graham Harrington

Amid the pageantry of the 1916 centenary, the revisionists and West-Brit media are on overdrive to present the rising as a failed, delusional blood lust. One of the defining characteristics in this is the omission of the real ideas of the leaders, not least Connolly’s socialism and Pearse’s concept of education.

Capitalism is bad for your health: David Hugh Hartery

Going hand in hand with a reduction in the stigma attached to mental illness is a growth in diagnoses. Some of this can be attributed to better health education, leading to fewer sick people going untreated; but with unprecedented numbers now receiving treatment, we have to ask, What part of modern society is making us ill?

Shakespeare today: Jenny Farrell

William Shakespeare died four hundred years ago this month, on 23 April 1616. There is hardly a country or a language in the world that is not familiar at least with his name. Shakespeare’s poetry has had an impact on the English language like no other.

Das Kapital mark 2?: Simon McGuinness

Bernard Murphy’s review of Capital in the Twenty-First Century by Thomas Picketty misses what, for me, is the elephant in the room: the role of the Soviet Union in the expansion of workers’ wealth in the post-1945 period. I can excuse (but not forgive) Picketty, and every single other reviewer for this omission, but hesitate to excuse Murphy, given that his review appeared in the newspaper of the Communist Party of Ireland.

Read Post →

LivingStandards3

Its All About Living Standards

, , Comment Closed

Following on from my recent blog about the squeezed middle which showed that middle income groups received less than the national share of income than the EU-15 average (due to high income groups taking more) it might be worth having a look at general living standards in comparison with other European countries. This is about living standards, not just income.

Eurostat measures living standards through actual individual consumption. Unlike private consumption (i.e. consumer spending) actual individual consumption

‘ . . . encompasses consumer goods and services purchased directly by households, as well as services provided by non-profit institutions and the government for individual consumption (e.g., health and education services).’

It, therefore, measures consumption not only of goods and services, but public services provided by the government. As Eurostat states:

‘Although GDP per capita is an important and widely used indicator of countries’ level of economic welfare, (actual individual) consumption per capita may be more useful for comparing the relative welfare of consumers across various countries.’

In short, actual individual consumption can be treated a proxy for living standards. So what is the relative welfare of consumers (i.e. everyone) across Europe? The following captures the relationship of real (after inflation) living standards in purchasing power parities between al l EU-15 countries and the EU-15 average.

LivingStandards1

We can see that Ireland is in the bottom half of the table – 15 percent below the average. Our living standards are closer to Greece and Portugal than it is to the EU-15 average and the majority of countries.

Read Post →

jacobin_issue_21-cover-1080_thumb3

#Jacobin1916 Launch Tour

, , Comment Closed

DUBLIN LAUNCH CONFERENCE
March 19th, Liberty Hall, from 12pm 
 
In Partnership with SIPTU
Workers’ Republic Conference
Event page -> bit.ly/JacobinLaunch
 

12:00 – Registration

 

13:00 – 13:45 Why #Jacobin1916

Jer O’Leary, James Connolly speech
Bhaskar Sunkara, Jacobin Editor
Karan Casey, Singer (by video)
 

14:00 – 15:30 Ireland’s Revolution

Chair: Tish Gibbons, SIPTU
Padraig Yeates, SIPTU
Niamh Puirseil, Historian
Donal Fallon, Come Here to Me
Sara O’Rourke, Activist
Sarah-Anne Buckley, NUIG
 

16:00 – 17:30 Art of Rebellion

Terry Moylan, Music Historian
Music from the revolutionary period
 

18:00 – 19:30 The Republic in the 21st Century

Chair: Ethel Buckley, SIPTU
Bernadette Devlin-McAliskey, Former MP
Robert Ballagh, Artist
Lynn Ruane, TCDSU President
Dan Finn, New Left Review
Brian Hanley, Historian

Read Post →

Leon_Rosselson_Where_Are_the_Barricades_Cover_Image_1024x1024

Where are the Barricades?

, , Comment Closed

Five years after his 4-CD compendium The World Turned Upside Down – Rosselsongs 1960-2010  the radical English singer/songwriter Leon Rosselson has released a new album, Where are the Barricades? Rosselson turned 80 in 2014, so his announcement that “after some sixty years of songwriting… this is my final recording” is hardly shocking, but will nonetheless distress those for whom his consistent advocacy of social change and support for the underdog has long been an inspiration.

Rosselson, the son of communist Jewish immigrants to Britain, made his name contributing satirical songs to the classic 1960s BBC TV show That Was The Week That Was, and he has never abandoned a very English form of political satire. Indeed some more po-faced purists may well be aggrieved by the sheer frivolity of the first song on the album (the earliest version of which dates back to 1986):

                         Full Marks for Charlie.

                        He’s the bugbear of the bosses.

                        Workers of the world unite!

                        Charlie Marx is dynamite.

In fact the transmission of serious political comment through the medium of cheek, conveyed in a voice that in an earlier review I described as possessing a “vaguely Monty Pythonish quality (Eric Idle comes to mind!)”, is so characteristic of Rosselson that the listener’s response to his music may depend on her/his tolerance of the combination. To which I must add a further comment from that review: “When Rosselson sings, the vocal idiosyncrasies are inseparable from his intractable and endearing integrity.”

The satirical mode is conspicuous in Looters (“You smash up the shops and you get free stuff/ It’s all about the money nowadays…innit?”), Benefits (“Come all you skivers, welfare cheats...”), and the title song, Where are the Barricades? (here making its fourth recorded appearance) which effortlessly manages a direct quotation from the Communist Manifesto:

            See how the bubbles are bursting

            ‘All that’s solid melts into air’

            The stairs are beginning to rattle

            And the rats are beginning to stare.

However, Rosselson’s range is wider than this. While he has admitted to avoiding love-songs (“love, a word that has rarely passed my songwriting pen”), he has instead composed what he calls “relationship songs” entailing “a sideways look at love, sex, marriage, relationships and angst…” Active Ageing is a comical example of this, while Marital Diaries are bitter-sweet slices of married life spoken by Rosselson and Liz (Elizabeth) Mansfield. To the latter (minus Rosselson) is assigned Paris in the Rain, an “attempt at an English French-style chanson”, beautifully accompanied on piano by Fiz Shapur. Fair’s Fair, originally written for Roy Bailey (who participates in a couple of songs on this album, but not this one) is a seemingly apolitical celebration of the fun of the fair, rollercoaster, dodgems and all. Four Degrees Celsius, opening and closing with a line from the fourteenth-century poem Piers Plowman (‘On a summer season when soft was the sun’), is an enigmatic allegory that may or may not evoke ecological apocalypse.

I have previously described Rosselson’s anti-Zionist Song of the Olive Tree as “perhaps his most beautiful composition”, and perhaps the most powerful song on the new album is The Ballad of Rivka & Mohammed, the note on which in the CD booklet is almost an essay on Israel’s persecution of the people of Gaza.

Read Post →

me_and_s2

Historic Screening of Mise Éire and Saoirse

, , Comment Closed

Sunday 13th of March, 2pm, Liberty Hall 

Book now, as tickets for this event are going fast. In what should be an historic day, we feature for the first time ever in a public screening,  both of the great Irish director George Morrison’s  films on the one programme.

Additionally, Peadar Ó Riada, son of the legendary Seán Ó Riada will be playing music from the film scores.

We also have a filmed interview with George by Lelia Doolan, which was specially commissioned for the occasion.

We are now delighted to confirm the attendance of the President of Ireland,  Michael D. Higgins who will make a presentation to George.  

There are still tickets available but you need to book fast. We don’t expect that there will be any available on the day.

In the event of any problems booking please contact :-
Robert – 087 6257521

Tickets available online from box office at Liberty Hall:-https://www.ctb.ie/tickets/ctb/indexframes.htm

Link to TG4 programme :-
http://www.tg4.ie/en/player/home/?pid=4781555736001

Read Post →

invest

Crisis remains an investment crisis

, , Comment Closed

This article appeared originally on Socialist Economic Bulletin on Monday, March 7th. 

Prior to the recent G20 meeting leading international economic bodies such as the IMF and the OECD made tentative calls for increased investment, although this was often confused with increased spending. This is a belated or partial recognition of the real source of the crisis in the advanced industrialised countries. In terms of actual changes to policy it seems to have made no impact at the G20 whatsoever.

As the world economy is once more slowing and there are again a series of spurious explanations offered for this, it is worth revisiting the actual causes of the ongoing crisis which first became widely apparent in 2007. In this piece the advanced industrialised countries as a whole will be the reference point, using aggregate data for the OECD. But each individual economy within the OECD simply provides its own unique combination of these common factors, including Britain.

If one word can summarise the entire crisis in the advanced industrialised countries it is: Investment. The fall in Investment preceded the fall in GDP. It was also the largest component of the fall in GDP and it is the sole component which has failed to recover.

These points are illustrated in Fig.1 below, which shows real GDP, Final Consumption and Investment (Gross Fixed capital Formation, GFCF) for the OECD as a whole, using US$ Purchasing Power Parities.

Fig.1

Investment (GFCF) first fell in the OECD in 2008. Both GDP and Final Consumption Expenditure continued to increase and only fell for the first time in 2009. Falling Investment caused the crisis. On a full-year basis the total decline in Investment was 13% from its pre-recession high to the low-point of the recession in 2009. By comparison GDP fell by 3.5% and Consumption fell by 0.3%. The fall in Investment was far greater in proportional terms than GDP or Consumption.

Even though Investment is a far smaller proportion of GDP than Consumption in the OECD, its decline in monetary terms was far greater. From the pre-recession peak to the low-point of the recession Investment fell by US$1.3 trillion (in PPP terms). Consumption fell by US$ 0.03 trillion, or US$30bn, and barely constitutes a blip in the chart above. The fall in Investment was the largest component of the crisis.

Since the trough of the recession in 2009 real GDP has recovered by US$3.95 trillion. In 2014 GDP was US.55 trillion larger than its peak in 2008. Consumption is stronger. It has increased by US$2.17 trillion since 2009 and is now US$2.26 trillion above its pre-recession peak. By contrast Investment has recovered by only US.94 trillion from 2009 to 2014 and it remains US.37 trillion below its 2007 peak, or US$366 billion. The economic crisis in the OECD remains an investment crisis.

Consumption requires Investment
Economics should be the study and practise of achieving the greatest sustainable material well-being of the whole of society. For most of humanity this still revolves around the struggle for food, shelter and clothing. In the advanced industrialised countries, the required quality of those necessities has increased alongside the desire for good health services, education, welfare, access to recreation and leisure, and so on. Unfortunately, for material reasons a great deal of confusion surrounds that goal and the methods to achieve it. 

The (inverted Say’s Law) argument that increased Consumption will lead to increased Investment has evidently not materialised in the current crisis. As noted above, Consumption has increased but Investment has not. This was also the case in the Long Depression at the end of the 19th century as well as in the Great Depression of the 1930s. In both cases Investment continued to stagnate or fall despite a rise in Consumption. Currently we are in a phase of what Marx called the hoarding of capital. Keynes used the terms liquidity preference.

Read Post →

crisis

Over Crisis-ed and Under-Paid

, , Comment Closed

We have a housing crisis, a homeless crisis, a health crisis, an investment crisis; our education system is under-resourced, our indigenous enterprise sector is out to lunch and the Dail can’t seem to put together a government.

And if all that wasn’t bad enough, we are under-paid.

Some new data regarding employee compensation and wage levels in Europe has come on stream. Here we will review the headline figures. Over the next few weeks we’ll get into the detail.

First up is a comparison of employee compensation. Employee compensation combines both the direct wage the employer pays you and the social wage which the employer pays to a social insurance fund that allows you access to income supports and public services (e.g. health). This is the standard measurement of workers’ wages, used by the CSO, Eurostat, OECD, etc. So at a total-economy level, how do we compare with other EU-15 countries?

Underpaid 1

There’s Ireland – below the EU-15 average and in 10th place, only ahead of low-pay UK and the poorer Mediterranean countries (the data can be found here and here.   To get to the EU-15 average we’d need an increase of 6 percent – but we’d still be in a lowly 10th place.

However, when we look at other central and northern European countries (removing the four peripheral Mediterranean countries), we fall well behind. We’d need an increase of 18 percent.

Employee compensation is not equal to ‘labour costs’ (I really hate that value-laden term). In some other countries, employers pay higher payroll taxes than just employee compensation. For instance, in Sweden, employers pay a social wage (social insurance) of 17 percent of the workers’ wage. However, they also pay an additional 12 percent in other payroll taxes – money that can go into public services and income supports not related to social insurance. In Austria, employers pay 17 percent in social wage and another 7 percent in payroll taxes. In Ireland, employers pay 8 percent social wage and another 0.5 percent in payroll taxes.

 

Read Post →

luas

Un-Squeezing the Middle

, , Comment Closed

Seamus Coffey has been digging up some numbers which he self- deprecatingly refers to as one more ‘silly addition’ to what can be done with income distribution statistic. But silly they are not. They give insight into another aspect of Ireland’s income structure.

When we debate income distribution we usually do so through the prism of the relationship between the ‘top’ and ‘bottom’ income groups or the Gini co-efficient. What Seamus looks at are the fortunes of the middle income group and specifically compares Ireland with Sweden in the middle deciles (a decile represents 10 percent of the population). I reproduce Seamus’s table below but if it is difficult to read you can access it here.

Squeezed Middle 3

The numbers measure the percentage of ‘equivalised income’ each decile receives (equivalised factors in household size). In the table we see that in green Ireland, the lowest 10 percent income group receives 3.2 percent of all income; the top 10 percent receives 24.4 percent – or nearly a quarter of all income. Regardless of the magnitude, there is nothing surprising in this. Top income groups take more than low-income groups.

However, Seamus points us to the middle of the decile group – what has been described in the debate as the ‘squeezed middle’ and compares us to blue Sweden. There is a huge gap between the two countries in these middle deciles – 4th to 7th. Indeed, if Irish squeezed middle households took as much of a percentage of total income as Swedish middle decile households, each Irish household would be, on average, €5,000 better off according to Seamus. That’s a tidy sum.

Using the Eurostat data here is my own take. Rather than compare Ireland to Sweden (Sweden is pretty egalitarian but they’ve been at it for decades), I compare Ireland with the average of our peer group – other small open economies: Austria, Belgium, Denmark, Finland and Sweden. And since I’ve used the middle 60 percent in the past I’ll keep to that and calculate the income for households in the 3rd to 8th decile. That’s a bigger middle.

Squeezed Middle 1

Ireland’s low and middle income groups are below the share of those same groups in the other small open economies. However the Irish top 20 percent group take considerably more than their counterparts in the other five countries. What does this mean in Euros? If Ireland had the same share of disposable income:

  • Households in the lower income group would receive, on average, an extra €2,200.
  • Households in the middle income group would receive, on average, an extra €2,300.
  • Households in the high income groups would, however, lose on average €9,100.

In small open economies, low and average income groups make more at the expense of their high income groups.

Read Post →

posters

The Economy is What Happens When You’re Busy Making Election Plans

, , Comment Closed

An interesting piece of information came out from the CSO last week, three days before polling day. It showed increases in employment falling to a trickle. Are we seeing a new pattern emerging or just a short-term blip on the long road to full employment? Let’s look at the trend.

notf1

There are a couple of points to make here.

First, a significant part of the big increase during 2013 is likely to have been statistical (I discussed this here). During this period the CSO was making adjustments to its sampling base and specifically warned against interpreting trends. Employment increased phenomenally during this period even though we were still in a domestic demand recession which is be a big strange. Once the CSO ended their adjustments employment increases fell to almost nil – one more suggestion that the 2013 surge has to be treated cautiously. This is more than just a historical point; it may go some way in explaining why people weren’t feeling the recovery – because tens of thousands of jobs were only created on paper.

After 2013, employment statistics are more robust. It started off slow and rose to 16,000 jobs created in the second quarter of last year. But now we come to the second point.

In in the second half of last year employment increases slowed substantially. In the last quarter in 2015, employment rose by less than 5,000 – nearly two-thirds down on what was happening only six months previously. In the first half of 2015 employment rose by 30,000; in the second, 12,000. That’s a considerable deceleration.

How do we explain this? As mentioned, it could be a blip – one has to look at the long-term trend. Or we could be seeing pent-up demand coming through in 2014 as the economy burst out of a lengthy period of recession and stagnation. As the economy settles down – the Government expects GDP growth to slow considerably in a couple of years – so will employment. Are we seeing the beginning of those trends?

Read Post →