Ireland has performed better than Germany, France and the UK in an index that ranks employment opportunities, pay, living standards and social inclusion. However, the index also finds that Ireland has joined a host of countries, including Brazil, Japan and the US, where GDP growth has not translated as well into social inclusion, while it also shows that average Irish incomes are falling.
According to a new report from the World Economic Forum, ‘WEF Inclusive Growth and Development’, Ireland places 12th out of 30 advanced economies for inclusive development, ahead of Germany (13); France (18); and the UK (21).
The report ranks countries based on 12 key performance indicators of “inclusive development”, which, it says, provides a more complete measure of economic development than GDP growth alone.
The index has three pillars: growth and development, including GDP growth, labour force participation and productivity, and healthy life expectancy; inclusion, including median household income, poverty and two inequality measures; and intergenerational equity and sustainability, including adjusted net saving, demographic dependency ratio, public debt and carbon intensity.
Outshines
Ireland outshines most other advanced economies when it comes to GDP per capita of $56,054, placing in fifth overall, thanks to the hefty contribution from multinationals. However, when it comes to “median income”, which is the middle income earned out of the working population, the study shows that incomes actually fell in Ireland over the year, down by almost 5 per cent to $34.7 a day. This places Ireland in 18th out of 30 countries overall.
On taxes or “fiscal transfers” Ireland also performs strongly, and is second only to Belgium. When it comes to wealth inequality, however, Ireland is the fourth worst out of the 30 economies, and it also performed particularly poorly for “basic services and infrastructure”, ranking 25th out of 30, ahead of Greece and Italy, but behind most other European countries.
As the survey notes, Ireland is one of the strongest countries for GDP growth (5th), but falls down in other growth and development areas such as employment, placing in 22nd position, given the sharp rise in unemployment post-crash which has subsequently decreased to 7.2 per cent in December.
With a healthy life expectancy of just 71.5 years, Ireland is also bottom of the league table.
Number one
Norway ranked number one in the index, with living standards growing by 10.6 per cent over that same time period, even though the economy grew only 0.5 per cent.
“There is a high degree of social mobility, low unemployment and a large share of women participating in the labour force, helped by sound parental leave policies and affordable childcare,” the WEF said.
Luxembourg was in second place, and Switzerland third, followed by Iceland (4th) and Denmark (5th). The UK was deemed to be one of the worst advanced economies, ranking in 21st place, and performing poorly for labour productivity (20th); healthy life expectancy (20th) and intergenerational equity (23rd).
Overall, the report concludes that most countries are missing important opportunities to raise economic growth and reduce inequality at the same time because the growth model and measurement tools that have guided policymakers for decades require significant readjustment.
The report finds that annual median incomes declined by 2.4 per cent or $284 per capita across 26 advanced economies between 2008 and 2013 (or most recent period available).
Developing countries fared much better, with median incomes rising by an average of 10.7 per cent or $165. However, 23 per cent of them experienced a decline in median per capita income of 9 per cent, as compared to 54 per cent of advanced countries experiencing a decline of an average 8 per cent or $1,044 per person equivalent to $2,505 per average household.
