Economic and social policy debates are all too often based on half-truths – or worse. So the publication by the Central Statistics Office of detailed data across a range of areas in its latest “Measuring Ireland’s Progress” series deserves attention. By presenting a wide range of economic and social indicators, and measuring many against EU norms, it provides a useful picture of where we now find ourselves. Predictably it is a mixed picture, showing the heavy impact of the economic collapse and the first signs of stability in its aftermath.
Living standards took a heavy hit over the period between 2007 and 2011, falling by around 14 per cent on one measure of national income per capita, before increasing slightly up to 2013. However, notably, by then it still remained below 2004 levels.
The price level in Ireland also adjusted during the great recession, moving us from the second most expensive country in the euro zone to the fifth. The relatively high level of productivity of the Irish workforce may support this higher than average price level to an extent, but there is a lesson for policymakers here. All too often the price rises there have been in recent years have been driven by areas either under government control or influenced by government policy.
The data also shows the heavy load imposed on the welfare system by the crash. Before taking account of pensions and social transfers, Ireland had the highest percentage of the population, just over 50 per cent, measured to be “ at risk of poverty.” However after pensions and other social transfers are counted in, this fell to just over 15 per cent, slightly below the EU average.
The decision to maintain most social welfare rates during the recession has thus had a major impact. However the figures do show that certain categories of household, for example single parent families and families with a large number of younger children, remain either at risk of poverty or in what is defined as consistent poverty. The fall in unemployment since the figures were compiled – most relate to 2013 – will have helped, but clearly there are a range of other policy issues here, too.
Above all, the legacy of the crisis shows the need to be able to set priorities for policy, based on real evidence. As the economy slowly returns to growth, a range of interest groups are laying claim to the limited resources the Government has available. Among the data presented by the CSO is the extraordinary rise in public spending, which rose from 27 per cent of GDP in 2004 to 38 per cent in 2010, on the back of a tax base driven by unsustainable property revenues. EU rules will limit spending growth in future, but risks remain of not directing resources to the areas where the highest economic or social gains are available.