Irish standard of living per inhabitant at 23rd of 34 richest nations
Irish standard of living per inhabitant is at 23rd of 34 rich nations according to the most comprehensive analysis of global material well-being covering 179 countries.
Last June we published Eurostat data for 2014 which showed that Irish actual individual consumption per capita (AIC) — a proxy for standard of living - was below the Euro Area average in 2014 and close to the levels of Spain and Cyprus.
AIC refers to all goods and services actually consumed by households. It encompasses consumer goods and services purchased directly by households, as well as services provided by non-profit institutions and the government for individual consumption (e.g., health and education services). For global comparisons, the World Bank uses a purchasing power parity (PPP) conversion factor, which is the number of units of a country's currency required to buy the same amount of goods and services in the domestic market as a US dollar would buy in the United States. The idea is to enable for example a relative comparison between the price of a bowl of rice or noodles in China in the household budget, with a plate of pasta in Italy.
Last year the World Bank's International Comparison Program (ICP) released new data showing that the world economy produced goods and services worth over $90tn in 2011, and that almost half of the world’s total output came from low and middle income countries.
The data cover 199 countries with full data on 179 countries. Data on 47 European and additional OECD countries was provided jointly by Eurostat and the Organisation for Economic Cooperation and Development.
Our 34 rich nations excludes Caribbean tax havens plus Bermuda and Macao. Our minimum threshold is $18,000 — this means Saudi Arabia and South Korea are excluded. The Gulf oil producers have rich people and low paid foreign workers.
The six largest middle income economies — China, India, Russia, Brazil, Indonesia and Mexico – account for 32.3% of world GDP; whereas the 6 largest high income economies — United States, Japan, Germany, France, United Kingdom, and Italy — account for 32.9%. Low income economies, as a share of world GDP were more than two times larger based on PPPs than respective exchange rate shares in 2011. Yet, these economies accounted for only 1.5% of the global economy, but nearly 11% of the world population.
The world average actual individual consumption per capita was approximately $8,647. Latin America (ex-Chile which is a OECD member ) was at $8,561; Western Asia (more commonly known as Middle East in former colonising countries) was at $8,574; Africa was at $2,786 and Asia Pacific (ex-Japan, South Korea and Australia) was at $4,083; OECD/Europe was at $23,930 (including Russia), and the Commonwealth of Independent States was at $12,286 (also including Russia).
Ireland had an AIC of $23,043 and the pattern was similar to 2004 - below Italy at $23,875, while close to Cyprus at $22,349 and Spain at $21,484.
There is a cluster of European countries in the $26,000 to $29,000 range: Iceland at $25,839, UK $26,146, Germany $28,478 and Switzerland at $29,465.
Japan is at $24,447, US at $37,390 and China at $4,331 — inequality in the US in particular skews consumption towards the upper steps of the economic pyramid: American Plutonomy: Richest 5% account for almost 40% of consumer spending.
The OECD said this year that the latest data from In It Together report makes for stark reading. The richest 10% of the population now earn 9.6 times the income of the poorest 10%; this ratio is up from 7:1 in the 1980s, 8:1 in the 1990s and 9:1 in the 2000s.
The OECD says that in most countries, the gap between rich and poor is at its highest level in 30 years. In several emerging economies, particularly in Latin America, income inequality has narrowed, but income gaps remain generally higher than in OECD countries. During the crisis, income inequality continued to increase, mainly due to the fall in employment; redistribution through taxes and transfer partly offset inequality. However, at the lower end of the income distribution, real household incomes fell substantially in countries hit hardest by the crisis. Much of the recent debate surrounding inequality has focused on top earners, especially the “top 1%.”Less well understood is the relative decline of low earners and low-income households — not just the bottom 10% but the lowest 40%.
The rise of income inequality between 1985 and 2005, for example, is estimated to have knocked 4.7 percentage points off cumulative growth between 1990 and 2010, on average across OECD countries for which long time series are available. The key driver is the growing gap between lower-income households — the bottom 40% of the distribution — and the rest of the population.
Temporary and part-time work and self-employment now account for about a third of total employment in OECD countries. Since the mid-1990s, more than half of all job creation was in the form of non-standard work. Many non-standard workers are worse off in many aspects of job quality, such as earnings, job security or access to training.
In particular, the OECD says low-skilled temporary workers face substantial wage penalties, earnings instability and slower wage growth. Households that are heavily dependent on earnings from non-standard work have much higher income poverty rates (22% on average), and the increase in the number of such households in OECD countries has contributed to higher overall inequality. Non-standard work can be a “stepping stone” to more stable employment — but it depends on the type of work and the characteristics of workers and labour market institutions. In many countries, younger workers, especially those with only temporary work contracts have a lower chance of moving on to a more stable, career job.
Women in paid work earn about 15% less than men. If the proportion of households with working women had remained at levels of 20 to 25 years ago, income inequality would have increased by almost 1 Gini point more on average. The impact of a higher share of women working full-time and higher relative wages for women added another brake of 1 point.
The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality) >>>>>
The OECD says wealth is much more concentrated than income: on average, the 10% of wealthiest households hold half of total wealth, the next 50% hold almost the other half, while the 40% least wealthy own little over 3%. At the same time, high levels of indebtedness and/or low asset holdings affect the ability of the lower middle class to undertake investments in human capital or others. High wealth concentration can weaken potential growth.
In 2007 Bank of Ireland in its 'Wealth of the Nation' report ranked Ireland as the second wealthiest nation on earth after Japan with net wealth per head at €196,000. It was at €130,000 in Q1 according to the Central Bank.
While property prices have fallen, the number of owner-occupier houses without a mortgage at over 40% is high for Western Europe according to Eurostat data. This creates inter generational inequality as the goal of owning a home grows increasingly elusive for young people - i.e. the ones who have stayed in the country.
Table R2 via this link to Microsoft Excel tables will show the data for AIC of 34 rich countries — we use a threshold of $18,000.
Pic above: Residents of Louisville, Kentucky, waiting for food and clothing from a relief station during the Great Ohio River Flood of 1937. Beside them is a billboard with the slogan "World's Highest Standard of Living." It first appeared in Life magazine.
"In 1931, when writer James Truslow Adams coined the term “the American Dream,” it had more to do with idealism than material prosperity..." More
Actual individual consumption per capita in US$, based on purchasing power parities, by country ranking
in PPP $
|United States (1)||37,390|
|Hong Kong, China (2)||32,690|
|United Arab Emirates (6)||29,463|
|United Kingdom (16)||26,146|
|New Zealand (25)||22,502|
|International Comparison Program via Finfacts.ie||