Saturday, April 13, 2019

Irish median income at 13th in Europe, UK at 14th rank

Irish median income in 2017, adjusted for price differences called PPS, was at 13th in Europe (EU28 + Switzerland [2016], Norway and Iceland [2016]) closely followed by the UK and Malta, according to data this year from Eurostat

The median is the mid-point where half or 50% of a sample is above and 50% below.

The EU statistics office says, "The median equivalised net, or disposable income, is the median of total income of all households, after tax and other deductions, that is available for spending or saving, divided by the number of household members converted into equivalised adults; household members are equalised or made equivalent by weighting each according to their age, using the so-called modified OECD equivalence scale."  See additional information here.

Eurostat says the use of the median (in contrast to the arithmetic mean/average) avoids any potential distortion that may be caused by the existence of extreme values, such as a few extremely rich households that may raise the arithmetic mean.

In 2017, median disposable income averaged PPS 16,748 in the EU, ranging from PPS 5,239 in Romania to PPS 28,820 in Luxembourg (data for the Duchy are distorted as about 40% of its workforce live outside its borders).

Ireland's PPS 18,186, was 8.6% above the EU28 average.

In 2017, the EU median disposable income was almost 70% higher for people with a high education level compared with those with a low education level. 

Median equivalised net income fell in real terms, in 2 out of the 28 EU Member States in 2017 — they were Sweden and Belgium. A decrease was also noted in Switzerland and Norway based on 2016 data compared with 2015.

Compared with other advanced economies (excluding Spain and Greece), both Ireland and the UK (the UK's slightly fell) had no median earnings rises in the period 2008-2017.

Eurostat report March 2019

This week the annual Cost of Doing Business report was issued by the Irish National Competitiveness Council.

The NCC said Dublin is one of the most expensive cities in the EU with a cost of living 18% more expensive than living in Brussels. This makes Dublin the 5th most expensive capital city in the EU (and
on a par with Paris and Helsinki).

While consumer inflation has been low in recent years in Ireland, in the 10 years to 2018, the price of goods has fallen while the price of services has increased by 13.6%.  

The Council notes:

"EU estimates suggest Irish rents increased by 6.4% 2018 after similar annual increases in rental prices starting in 2014. Estonia is the only EU Member State to have experienced faster rent increases. The Irish experience is even more stark when compared to the annual average increase in the EU, Euro Area and UK of roughly 1%.

Childcare costs are higher relative to the other EU Member States. According to the OECD, net childcare fees (i.e. when childcare benefits and any tax reliefs are considered) in Ireland make up 28% of the average wage of a couple. This is much higher than the EU average, where net childcare costs account for only 12% of the average wage of a couple."

According to the Q4 2018 rental report, the average market rent nationwide has risen by 81% since bottoming out in late 2011 and, having exceeded its 2008 peak in 2016, is now 30.8% above the previous high. In Dublin, rents are now an average of 37% above their previous peak while in Cork and Galway cities, rents are 30% and 47% above levels recorded a little over a decade ago. Outside the cities, the average rent is 22% above its previous peak.

The main findings of the report are:

  • Ireland is a high-cost economy (we are the 5th most expensive country in the EU), but average prices are rising slowly (the slowest in the Euro Area), however, "there are particular areas of concern that can have a significant impact on all firms based in Ireland";
  • Labour costs have started to increase faster than previously, which is particularly concerning, as they are now increasing four times faster than inflation;
  • The cost of credit in Ireland (3.3%) is significantly higher than the Euro Area average (2%) – meaning Irish businesses have to pay more to borrow money to invest; 
  • The price of business services (which includes services such as consultancy services, legal services, and computer programming) is increasing at the 4th fastest rate in the EU. The only EU comparator country where prices increased faster was Luxembourg
  • Commercial rents and the cost of constructing office buildings are also high in Ireland relative to international competitors.
Low pay refers to the share of workers earning less than two-thirds of median earnings. Here is OECD data from 2016/2017 and at 22.5% of the workforce, Ireland has the third highest incidence of low pay after Latvia and Romania.  
Average Dublin (comprising the council areas of Dublin City, DĂșn Laoghaire-Rathdown, Fingal and South Dublin) residential property prices peaked at 135 in March 2007 (2005=100) in the Central Statistics Office Property Price Index and fell to a low of 54.5 in February 2012 and rising to 105.1 in February 2019  — a rise of 93% from the trough.