Ireland – Not yet out of the economic woods

10 years on from the onset of the crisis we could take some time to take stock. The government is keen, as are many, to wipe it from memory – keep the recovery going. The recent undoubted recovery has softened memories for the most part. But if we forget the past we will sure as eggs forget the lessons of the past.

Lets look at the crisis over a ten year perspective.

Screenshot 2017-08-21 08.30.19As we know, Ireland is different. Our economy is distorted by the large MNC sector, so much so that the gold standard of measurement is deemed to be inadequate. Like those supermassive stars that require new measures of size, the CSO have had to create new measures of national output- Modified Gross National Income.  What this shows is that , stripping out the effect of redomiciled firms, of companies moving themselves and intellectual property assets for tax reasons to be blunt, the Irish economy has grown by 12% since 2007. That is a pretty anaemic 1.2% or so per annum.

Looking at per capita figures we see even more clearly why the mantra of “keep the recovery going” was an utterly foolish one on which to campaign. Over the years from 2006 to 2016   the modified national income, reflecting the real world in which we all live, these have risen by a miserable 0.5% per annum, in nominal terms. Add in some inflation… So the crisis is a ten year long one. Median real household disposable income is down , as of 2015, over 10% from 2007. Adjusting for household size median real income is under 20k per annum. This is not a nation of wealthy persons.

In terms of poverty and social conditions, across all measures of same these are higher in 2015/6 than they were in 2007/8. They have come down from the heights of the recession but still suggest that the crisis is still ongoing. A startling figure is that the deprivation rate, being unable to afford some of the basic elements of what we would consider modern living ( meat every second day, that sort of mad socialism) has more than doubled since 2007. The consistent poverty rate has also more than doubled. 25% of the population are deprived on an occasional basis and some 8% on a consistent basis.

To be sure, the unemployment crisis has abated. Having peaked at 15% overall in 2010, it is now at 6.4%. This is remarkable and welcome. Howver, an examination of the duration of claim shows that there is a persistent number, some 113,000 at last count, of persons who have been unemployed for more than a year. Down from its peak of nearly 200,000 it has been falling very slowly, with a pronounced dip each year in September/October reflecting persons transiting to fulltime education.

The recent evaluation of minimum wages has shown clearly that we are a low waged economy. Those who have been getting jobs have been getting lower paid, more precarious ones. Parttime jobs rose to 25% or more of full time jobs in 2006 and have remained at the 20% + level since. To be sure these are better than no jobs but do we really want to transition the economy to a precariat based system? While the % of workers in full vs part time positions has been slowly shifting from the 2010 period, which generally saw the hghest ratio of part to full time employment, this shift is slow.

When we examine inflation we find significant variation. Food is slightly down but education and health are significantly up as are alcoholic beverages and goods and services. Overall headline consumer inflation may be muted but that is of scant relief to the lower paid who consume the items that have risen in greater levels than those that have fallen.

Finally we have the scandal of our age, homelessness. Homeless numbers have been rising inexorably. Homeless family numbers have quadrupled in three years. These see no recovery. With nearly 1/5 of those homeless in employment, something is deeply broken in the economic system.

This is not to say we have not come out of the depths of the crisis. We have. But to focus on bond yields and on the highest macroeconomic is to miss the reality on the ground. We are not yet out of the woods. We have to recognise this.

Published as a column in the Irish Examiner, 21 August 2017

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