Economy

Disposable income back to boom-time levels? We’re not buying it

Cantillon: CSO figures don’t factor in tiny pay rises or the uneven levels of jobs recovery

As unemployment has fallen here, average household incomes have risen – by 17 per cent since 2012 – but wages haven’t risen by anything like that. Photograph: iStock

Tue Dec 18 2018 - 05:40

The notion that we’re almost back at peak disposable household income – it was €48,476 last year, just below the boom-time high of €49,043 recorded in 2008 – is likely to irritate most workers here rather than excite them.

For one, many haven’t had a pay rise in 10 years, and, even if they had, it’s been a trickle compared to privations undergone in the aftermath of the crash when wages were slashed and the tax burden increased to cover the hole in the public finances and the infamous bank guarantee.

These metrics will ring hollow to many hard-pressed workers

The Central Statistics Office’s income metric is a rather blunt instrument when it comes to measuring prosperity, as the average is bid up by the growth in employment rather than rises in wages.

So, as unemployment has fallen here and more people have returned to work, average household incomes have risen – by 17 per cent since 2012 – but wages haven’t risen by anything like that. That’s why these metrics will ring hollow to many hard-pressed workers.

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The rapid jump in gross domestic product (GDP), another pretty blunt metric, has seen the value of the Irish economy rise to €300 billion, 56 per cent higher than it was at the peak of the Celtic Tiger in 2007.

You might be tempted to extrapolate that we’re now 56 per cent better off as a population, but few would agree.

In a recent report, the Central Bank of Ireland forecast average salaries in the Republic would grow by nearly 7 per cent over the next two years, twice the current euro zone rate, affording workers here their biggest pay rise since the crash.

However, it cautioned that most of the gains would be confined to certain sectors, such as professional and scientific services, which include accounting and law firms; financial services; and information and communications, which encompasses the State’s large IT industry. Statistics hide very uneven topographies.

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