Caught in the middle - ease the squeeze on middle-income families
Hard-working middle-income families are supposed to be enjoying a recovery as the economy picks up. But blighted by negative equity, soaring rents and insecure jobs, many complain that there is no feel-good factor.
They have been told until they are blue in the face that the recession is over. The headlines say Ireland has the best economic growth in Europe, unemployment is dropping and tax receipts are surging.
So how come the supposed recovery is not being felt across vast swathes of middle Ireland, and there are few champagne corks flying in the leafy lanes of suburbia?
The figures may point to a mini-boom, but there is little sign of a feel-good factor, as Enda Kenny found to his cost when he went to the country at the election with the slogan "Keep the recovery going". It is clear that many voters thought the slogan was at best a joke, and at worst a downright insult.
For tens of thousands of workers in what were once considered steady, lucrative jobs, there is a lingering feeling of insecurity and angst.
The wounds of the recession were so deep that they have not fully healed, and for many the good times have not come back.
Teacher Sean O'Neill is among those who feels he belongs to an "indebted generation".
They bought when prices were high in the Celtic Tiger, and their heavy borrowings leave them with little room for manoeuvre.
Sean bought his house in Finglas North Dublin in the confident belief that he was in a steady job, and that his income would keep rising.
Then came the crash, and teachers were among those who saw their salaries targeted by the government. Sean, who is married to another teacher and has a two-year-old son, estimates that his income dropped by 20pc, between the pension levy, wage cuts, and cuts to allowances.
Any hope of recovery is dampened by the high cost of living in the capital. At times during his long commute across Dublin from Finglas to Loughlinstown, he has spent €80 per month just on tolls.
Like other parents, Sean O'Neill and his wife discovered how childcare is treated like a luxury service in Ireland. The couple pay €1,000 every month in crèche fees.
"Childcare is like a second mortgage," says Sean. "What we are left with is very little and I am just trying to keep my head above water."
It is easy to see how typical dual-earner families with children are still feeling the pinch even if they have had modest pay rises.
The OECD estimates that childcare costs in Ireland soak up 29pc of net family income, more than double the OECD average of 13pc.
While homeowners of the Celtic Tiger era struggle to pay their mortgages, the younger generation is fighting a losing battle to pay soaring rents. To them, the sound of the swish of gravel on Acacia avenue and the aspiration to own a home with a little garden is little more than a nostalgic pipe dream.
"We are now looking at the first generation of people whose standard of living and quality of life is going to be worse than that of their parents," says Sean.
"Nobody is going to enjoy the same standard of living as the baby boomers and the post-baby boomers (the generations born from the mid-1940s to the 1960s)."
If teachers thought they were hard hit, their plight has not been as bad as that of many white collar workers, particularly those who work, or used to work, in banks.
In Ireland at the start of the millennium, there were few jobs as solidly middle-class as being a bank manager. They were pillars of the local community, like the parish priest and the solicitor.
The bank manager was likely to be a stalwart of the local golf club, a figure of respect who made important decisions about business loans.
But now this cosy middle-class world has been turned upside down and inside out. They have been hit by the double whammy of the bank collapse and radical changes to the industry.
Bank branches in country towns and suburbs across the country have closed, managers have been stripped of their authority and their wages have been slashed. According to industry estimates, a bank manager could have been earning up to €80,000 a decade ago, but this has been cut back to €50,000.
Overall, over 10,000 bank employees have been laid off since the start of the recession, and their plight is similar to many others in white collar jobs.
"A lot of these employees were made redundant and have since found work," says Larry Broderick, general secretary of the Financial Services Union. "However, many have not picked up permanent employment. They are often on short term contracts on less pay, and they would not have benefits such as pension rights."
One source working in finance said: "Some of the wages for graduates coming into financial services jobs are very low at not much over €20,000 a year, and the jobs are very precarious."
Not long ago, financial services staff could hope to get one of the mortgages that they try to sell to customers. But now their low wages, and the high deposits needed, often make them ineligible.
Employers are increasingly reluctant to make a long-term commitment to staff, offering short-term work for lower pay, and this has heightened the sense of insecurity.
Peter Cosgrove, director of CPL recruitment and founder of the Future of Work Institute, says: "We are now in the era of the gig economy.
"Companies are willing to pay to have the job done, but they don't want to pay for the ancillaries."
A growing number of middle-class workers now find themselves as self-employed contractors without pensions, sick pay and paid holidays.
"It has been predicted that by 2020, 25pc of the workers in the United States will work like this and be freelance. That is a trend that we are also likely to see here," adds Cosgrove.
While the water charges attracted mass protests, the real smash and grab raid on middle Ireland has been through hikes in income tax and the USC (Universal Social Charge).
In stark contrast to its hands-off approach to Apple, the Government has set about ransacking the coffers of the average worker on the average wage with all the enthusiasm of a cutpurse highway robber.
The raid on Ireland's middle income earners has been so comprehensive that they have even won sympathy from the stony-faced financiers of the International Monetary Fund.
The IMF suggested earlier this summer that our tax system places too high a burden on middle income earners.
Single-income earners only have to hit €33,800 before they start paying the top rate of tax of 40pc, and when you add in USC and PRSI, it is hardly surprising that the squeezed middle is broke.
Goodbody stockbrokers' economist Dermot O'Leary says: "We have not yet seen the eradication of emergency taxes that were brought in when the crisis struck.
"The high tax burden means the full rewards of recovery are not being felt by those who are in work."
Income tax and universal social charge (USC) receipts are now about €5bn higher than at their lowest point in 2010. That amounts to an average extra €3,500 paid by each worker who falls within the tax net.
Combined with property taxes, water charges, stealth taxes on pensions, soaring bills for private health insurance and unmanageable accommodation costs, the rise in income tax would be enough to drive many to drink.
But the Government has added insult to injury by hiking the duty on a bottle of wine by 62pc. The recession and changes to consumer habits left gaps on high streets in towns and cities as shops were boarded up and left empty. Retailing may have enjoyed a modest recovery, but many shops will never return, and the once healthy incomes of their owners have gone with them.
"Retailers face the situation where customers may be coming into a shop to check out the goods, and then buying them online," says Peter Cosgrove.
Joan Egan, manager of the Singer shop in Athlone, says retailing has hardly seen an upturn in the town.
"There has been a lot of talk of a recovery, but I think it's mainly happening in Dublin," says the mother-of-two.
"Wages went down in the recession and in many cases they haven't come back up. And the shops are still hit with astronomical rates."
Stephen Kinsella, lecturer in economics at the University of Limerick, recently warned: "If you look at a lot of jobs, it is the middle people that are being cut out of it. Other people are taking their place, but it isn't the little guy who is benefiting. It is usually a huge multi-national like Google, Amazon or Apple that steps in."
The travel agent's share of the flight booking now goes to the vast airline. Ads for houses that might have once appeared in the local estate agent's window at considerable cost are now on the internet.
Tourism may have recovered, but the bed and breakfast owner has seen their margin squeezed by online booking sites, who demand a huge cut, or they are facing competition from Airbnb.
Of course, if many in the "squeezed middle" feel that they are in an ever-tightening vice grip of increased costs and diminishing incomes, the pressure on further down the income scale is even greater.
Industrial factory workers across the Western world have felt the effects of globalisation for well over a decade. Twelve years ago, hundreds of clothing workers at Fruit of the Loom plants in Donegal lost their jobs as the company relocated its operations to Morocco.
Shop workers on low wages have become used to zero-hours contracts of employment where they are always available but do not have specified hours of work.
Increasingly though, it will be those in middle-class jobs who have joined this less secure work culture, known by the economist Professor Guy Standing as "the precariat".
A recent survey found that one in six pilots in Europe are "atypical employees". This means they may work through a temporary work agency, are self-employed, or on a zero-hours contract with no minimum pay guaranteed.
The economist and Irish Independent columnist David McWilliams has analysed where wealth is becoming concentrated.
He has outlined how the most affluent 20pc in Ireland actually own three-quarters of the country's wealth and the poorest 20pc own just 0.2pc. As for the top 5pc, their combined wealth is nearly double that of the entire "squeezed middle".
The rich can always find ways of stashing away their wealth, by emulating Apple and avoiding onerous tax. The poor struggle on paltry incomes, but at least those on very low wages are outside the tax net.
With the "squeezed middle'' left to shoulder so much of the burden, it is hardly surprising that there is little feel-good factor.
What the middle classes took for granted
A steady job
Permanent pensionable employment was expected with a healthy income often guaranteed for decades. A growing number of employees are now on precarious contracts or in freelance arrangements on reduced pay
A home of their own
The middle classes aspired to a semi-detached house in the suburbs by the time they were married, but now they may be struggling to pay exorbitant rent
A comfortable old age
Previous generations could retire early and live on generous defined benefit pensions in many jobs.
Fat pensions have been eviscerated in the private sector, and the retirement age is being pushed out to 68.
For some middle-income earners the two foreign holidays are a cherished memory of the Celtic Tiger years. Now they struggle to afford a staycation.
In the prosperous years, couples bought "starter homes" before trading up to something more spacious. Now they dream of owning a shoebox.
It seems a quaint notion now. In the good old days, families had nest eggs. Now they rarely have the financial leeway. Some put their savings into bank shares back in the Celtic Tiger years and the rest is history.
- Kim Bielenberg