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300,000 are 'wiped out' by the recession

THE average Irish person is now about 30 per cent worse off than they were before the recession, a startling new report has found.

The report, by economist consultants at Indecon, also found that almost 300,000 people had been wiped out financially over the last four years.

These 300,000 people have seen their incomes plummet by about 50 per cent because most of them were in well-paid full-time jobs in 2007 but are now relying on the dole after the recession forced them out of their jobs.

The report, which was given exclusively to the Sunday Independent, is the first to examine the toll of the recession on the everyday finances of ordinary people.

Its findings come in the wake of Environment Minister Phil Hogan's decision to hit most homeowners with a €100 household charge and a new Government plan to slash the pay rates of tens of thousands of future workers in areas such as catering, hotels, retail and hairdressing.

At the heart of the Indecon report is its finding that the national income per person -- also known as the GDP per capita and a key indicator of a country's standard of living -- has dived from €38,606 in 2007 to just €27,569 today.

Those who lost full-time jobs aren't the only ones to have taken a massive hit financially over the last four years. To survive the recession, many employers have cut back the working weeks of staff -- which has pushed the numbers in part-time jobs up by about a fifth over the last four years. In early 2007, 361,400 people were in part-time jobs and this has since swelled to 426,700, according to the report.

Indecon believes that it is largely staff in the private sector who have been forced into part-time positions and that most public sector staff have been able to hold on to their full-time jobs. This is one of the main reasons why private sector workers have seen their weekly earnings fall over the last four years while public sector workers have seen their earnings rise.

Private sector workers who are fortunate enough to still hold on to their jobs have seen their weekly earnings before tax fall from €639.05 in 2007 to €602.85 earlier this year, while the weekly earnings of public sector workers increased from €847.17 to €871.09, according to the report.

Tax, however, is eating up a much bigger chunk of weekly earnings than it did in 2007, with the tax bills of low-paid individuals almost doubling over the last four years.

A single person earning €20,000 is now paying €1,960 a year in tax, compared to €1,020 in 2007, according to Indecon. A single person earning €25,000 is paying almost 30 per cent more tax than they did in 2007, while a single person earning €100,000 has seen their tax bill increase by about a fifth.

"Individuals and families who previously had full-time, reasonably paid jobs and who are now dependent exclusively on social welfare face the biggest challenge from the downturn," said Alan Gray, managing partner of Indecon.

"These people have been obliterated, especially where there has been a loss in jobs and where individuals had high mortgages."

Mr Gray said that the collapse in the financial wellbeing of Irish people over the last four years had had a direct impact on confidence.

"Individuals and businesses have been afraid to spend or invest," said Mr Gray. "This is reflected in the escalation in the level of savings. Unless confidence returns, consumer demand and employment will remain depressed."

Sunday Indo Business