July 24th Lunchtime: The Recession Diaries

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a0_watch.JPGIf it wasn’t great over the last few years, how much worse can it get?  Recently, we have had to endure a mish-mash of confused debates over the ‘middle class’, the ‘coping class’, the ‘aspiring class’.  I’ve gone over this ground before but in these recession days it is always well to remind ourselves of our ‘actually existing living standards’.

The CSO’s EU Survey of Income and Living Conditions give us a real insight into people’s income.  Let’s look at the vast 60% of the working population – those in the middle between the poorest 20% and the wealthiest ‘20%.  In 2006, what was the average income of this middle group?  €572 per week.

Yep, that’s all.  But that’s not the only depressing thing about these figures.

You’d assume that their income, at least, grew by a reasonable amount during the salad days of the economy.  Well, you’d assume wrong.  Between 2003 and 2006 this vast middle income group received an annual weekly increase of €23 per week.

But there’s one more turn of this dismal screw. What do the increases mean in the real world – that is, when inflation is taken into account?  Accounting for inflation, the vast middle income group managed to earn an amazing €8 per week increase on an annual basis over the three years.

Ponder that for a moment – €8 per week increase.

But why should we be surprised? The CSO’s Employment Survey from that same year showed that half the working population earned less than €13.80 per hour.  And given that nearly 30% of those employed in the non-financial service sector were part-time, one can see how little people take home at the end of the week.

For some, all this may seem counter-intuitive.  How can this be in the Celtic Tiger economy?  What about all those product write-ups in the Irish Times Saturday Supplement (yes, you, too, can own a Raymond Weil Nabucco – a ‘masculine watch of power and charisma’ whose ‘sturdy steel case contains carbon fibre – the main material used in Formula 1 cars’; all for a cool €1,695).

Well, it depends on what circles you run in.  Also, these income figures don’t count borrowings (either loans or credit).  And the numbers on this, too, are instructive:  almost all households (except the wealthier ones) are spending more than they make.

When we connect the dots from various reports we get a picture of an economy where people are relatively low-waged and have relatively low-incomes, struggling and juggling to make ends meet.

And that was in the good times!

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