Indo - "There is no cost of living crisis for majority of people in Ireland says IBEC CEO"


We already know the causes:

(1) very high energy costs
(2) high insurance costs - this is linked to the judicuary and the size of awards
(3) very high commercial rents - the retail rents in Galway are higher than in UK cities 10x larger
(4) high professional fees / dental / medical / legal costs
(5) lack of competition allows higher pricing power and high net margins (Diageo is a good example)
(6) small size of market / less economies of scale / not as many wholesalers / lack of competition in supply chains
(7) being an island and transport costs doesn't help, but is a small factor
(8) VAT at 23% is a bit higher than most places, but our ER SI is lower than other countries

Am I missing anything?
 
joe sod said:
Maybe the government should task the esri to do a comprehensive study into what is actually causing these high prices, is it high taxes, regulatory burdens or infrastructure deficits, but need a quantitative analysis of what is causing it?
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Maybe the State sector is too big and getting bigger and as more of the national income is taken from the private sector and spent by the public sector the less value for money, or bang for our buck, we get.
 
Protocol said:
A fair point.

I am trying to highlight that the very high price level is not caused by very high labour costs.
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Okay, good idea. It's very easy to blame wage increases for low paid employees for businesses making a loss. The usual example is restaurants, even though labour costs are between 30% and 39% of total costs, with rent, rates, energy and insurance all bigger factors than a modest increase in the minimum wage.
 
When we switch from using euro to using PPS, our median equivalised income drops from fourth to eighth place.

This shows that our purchasing power is reduced by the high price level.



 
Protocol said:
This is median equivalised income data from the SILC for 2024. [ilc_di04]

We are at EUR 32,955, fourth in the EU.
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Okay, but that doesn't really tell us anything since its primary purpose is for the calculation of the "at risk of poverty" and "poverty" statistics which are themselves rubbish since they just measure relative income distribution and don't take household expenditure into account.
 
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Protocol said:
When we switch from using euro to using PPS, our median equivalised income drops from fourth to eighth place.

This shows that our purchasing power is reduced by the high price level.
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That's useful. It shows the weight of the non wealth creating sectors on the rest of the economy. Many of them, such as public administration, education, healthcare etc, are absolutely necessary but inefficiencies within them act as a drag on the rest of the economy and society. I struggle to see where or how most of the activities of the legal industry, the insurance industry and the financial services industry actually create wealth or add anything to society.
 
Purple said:
Maybe the State sector is too big and getting bigger and as more of the national income is taken from the private sector and spent by the public sector the less value for money, or bang for our buck, we get.
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We will likely always need to spend more and get less due to our relatively low levels of urbanisation.

There is a very real cost of how we choose to live that we all must pay financially and in service level.
 
faketales said:
We will likely always need to spend more and get less due to our relatively low levels of urbanisation.
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How does that work?

Our state bureaucracy has expanded massively in recent decades just as the country has become more and more urbanised.

Is the lack of return on the cost of all that not more to do with the lack of productivity of much of that bureaucracy and the fact that we lack relative economies of scale due to our lower population?
 
That's what i suspect is at the core of it, we are spending large amounts on bureaucracy which we didn't have even 20 years ago. Whatever you say about the celtic tiger at least alot of the money was being spent on building things, yes we employed slot of builders etc but they still built stuff .
 
The public service grew from 325000 FTE to 400000 FTE between 2008 (just before the crash) and today. That's 23% growth.

Over the same period, the population grew by 17%. So we have a public service increasing somewhat faster than the population, but not massively faster.

The real growth in the public service occurred during the Celtic tiger years. From 1990 to 2008 the population grew by 26% but the public service workforce grew massively faster, by 65% - from 196000 FTE to 325000 FTE.
 

But the side of the State sector, as in the amount of money the government collects and spends and the services the State provides, increased by far more than that. In 2008 it was €70 billion, in 2025 it'll be over €100 billion.

I'm not arguing that we don't have enough Public Servants, I'm arguing that we don't have enough Civil servants. We've around 50,000 of those. In 2015 there were only 35,000. Both figures includes around 3,500 people in the Prison Service.
 
Theres no cost of living crisis.. when you are surrounded by people who are doing well in life... and you are not exposed to the realities of daily budgeting and economic hardship.
 
fistophobia said:
Theres no cost of living crisis.. when you are surrounded by people who are doing well in life... and you are not exposed to the realities of daily budgeting and economic hardship.
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Took a trip into Dublin city centre for a rare city centre pint last night (on foot from Northside to Southside and back again at closing time) and there was certainly little evidence of any cost of living crisis that I could see...
 
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