Friday, June 19, 2020

Irish material standard of living per capita below EU-27 average in 2019

Ireland Actual consumption per capita

A proxy for per capita Irish material standard of living based on household consumption of public and private goods and services, released by Eurostat on Thursday, shows that in 2019 Ireland again trailed Italy and was 3% below the EU-27 average.

A crosscheck with Organisation of Economic Cooperation and Development (OECD) data issued in 2019 show that Ireland's average household net adjusted disposable income per capita was at 19th rank of 40 countries (36 OECD countries + 4 others) and 21/40 for household net wealthBetter Life Index data 2019.

The EU's statistics office says that Actual Individual Consumption (AIC) is a measure of material welfare of households that captures all goods and services that are actually consumed by individual households, irrespective of whether these goods and services are purchased and provided by households, by the State or by non-profit organisations. In international comparisons, AIC is used as an indicator of households’ material welfare.

AIC per capita expressed in Purchasing Power Standards (PPS) to strip out price differences varied from 59% to 135% of the European Union (EU) average across the 27 member states.

Nine member countries had an AIC per capita above the EU average in 2019. The highest level in the EU was recorded in Luxembourg, 35% above the EU average (this rate is distorted as over 40% of the duchy's workforce live outside its borders). Germany was 23% above, followed by Austria, Denmark, Belgium, the Netherlands, Finland, Sweden and France, which all recorded levels between 5% and 20% above the EU average.

AIC per capita for a further 12 countries were between the EU average and 25% below. In Italy, Ireland, Cyprus, Spain and Lithuania the levels were 10% or less below the EU average, while Portugal, the Czech Republic, Slovenia and Malta were between 10% and 20% below. Poland, Romania and Greece were between 20% and 25% below the EU average. Six other countries had an AIC per capita 25% or more below the EU average. Estonia was 25% below, Slovakia, Latvia, Hungary and Croatia between 25% and 35% below, while Bulgaria had an AIC per capita 41% below the EU average.

In the EU Ireland's price level index was third-highest after Luxembourg and Denmark.

The data used are produced by the Eurostat-OECD Purchasing power parities programme. The data are updated every 12 months in cooperation with national statistics offices. See here.

The countries included in the comparison are the 27 EU member states, United Kingdom, three EFTA countries (Iceland, Norway and Switzerland), five EU candidate countries (Albania, Montenegro, North Macedonia, Serbia and Turkey) and one potential candidate country (Bosnia and Herzegovina).

EU GDP Ireland income components

GDP per capita

Ireland had the second-highest GDP per capita in 2019 among the EU-27, at 91% above the EU-27 average, followed by Denmark, the Netherlands, Austria, Germany and Sweden, each with a GDP per capita 20%+ above the average. The EFTA countries Switzerland, Norway and Iceland had a level of GDP per capita of 53%, 44% and 30% above the EU-27 average, respectively.

Eurostat has provided a breakdown of the income components of 2019 GDP in the chart above.

Eleven member countries had a higher share of GDP than the EU average for compensation of employees. In Germany (53.8 %), France (51.2 %), Denmark (51.1 %) and Slovenia (51.0 %), this accounted for over half the value of GDP. Sixteen countries had a share of GDP that was below the EU average for compensation of employees, with the lowest proportions in Ireland (29.0 %), Greece (34.7 %), Romania (38.2%) and Poland (39.3 %).

Multinational tax avoidance reflected in the large operating surplus is the explanation for Ireland's low rate.


World Bank 2020: Real size of world economies

World Bank chart on right: Ireland has 25th world ranking for consumption per capita.