In his opinion and analysis article on September 24th, Tom McDonnell raised a viewpoint suggesting the correlation of welfare payments to the living expenses and standards of life for households grappling with poverty. While this assessment appears to be just and feasible, it doesn’t confront why living costs in Ireland are high and increasingly pushing households into poverty.
Statistical data from Eurostat indicates that in 2023, Ireland’s household final consumption was priced at 38% above the average for the euro area. Luxembourg was the only country presenting a higher level at 44%, marking Ireland and Luxembourg as the only two members with a pricing level exceeding one standard deviation above the average. In contrast, the significant economies of the euro area – Germany, France, Italy, and Spain – display a variation of 4% to -11% around the euro area average.
Similarly, Eurostat data also reveals that Ireland’s median equivalised income in 2023 was 36% higher than the average in the euro area. Thus, individuals earning at or above this median should be able to cope with the steep pricing regime in Ireland. Nevertheless, for those earning substantially less than the median, the experience ranges from varying levels of hardship.
Several rationalisations are put forth to vindicate the high prices in Ireland. It’s often cited that the small scale national market, the dispersed geography, and the resultant lack of economies of scale and scope, along with Ireland’s peripheral location contributing to increased transport expenses. Moreover, Eurostat’s use of imputed rents for computing relative price levels, capturing housing costs for homeowners, is also under scrutiny. These imputed rents, derived from real rental fees, represent 41% above the euro area average as a fraction of final consumption expenditure in Ireland. When it comes to expenditure on essentials like housing, water, electricity, gas and other fuels, it stands 8% above the euro area average expenditure.
The justifications provided, centred on self-interest, offer minimal credibility and it cannot be denied that numerous policy and regulatory shortcomings contribute to the significant inefficiencies causing high costs in Ireland. Even a minor decrease in the current prices could alleviate much of the hardship faced by families with lower incomes, potentially reducing living expenses for everyone. Despite this, an excessive number of individuals across diverse political backgrounds benefit from the existing structure, signifying that any change is highly unlikely. Best regards,
PAUL HUNT,
Haywards Heath,
West Sussex,
UK.