Tuesday 16 July 2019

Revealed: Housing costs are eroding all 'boom' pay gains

  • Unemployment is now at a 14-year low

  • Record tax take - but workers squeezed

‘Depressing’: ICTU president Sheila Nunan said house prices have risen 80pc since low point of the recession. Photo: Gareth Chaney, Collins
‘Depressing’: ICTU president Sheila Nunan said house prices have risen 80pc since low point of the recession. Photo: Gareth Chaney, Collins

Anne Marie Walsh

Soaring rents are hampering workers from reaping the benefits of wage growth as the booming economy reaches full employment.

There are more people at work than ever before but the cost of housing is growing at over twice the rate of average earnings across the country.

Rent has soared 8pc in the last year, dwarfing modest wage hikes of just more than 3pc for many workers.

CSO figures yesterday confirmed the unemployment rate at 4.5pc, but this masks hidden problems like youth joblessness, skills shortages and low levels of women at work.

Some economists questioned whether modest official inflation figures are really reflecting what is happening as fresh demands for higher pay point to mounting pressure on workers.

There are calls today for the "living wage" to be hiked 40c to €12.30 an hour because rent now makes up more than half of minimum living costs in Dublin. This is €2.50 an hour higher than the €9.80 national minimum wage.

"If rents had remained stable in the last year, the living wage would not be increasing in 2019," says the Living Wage Technical Group.

The living wage is the average hourly salary a single full time worker needs to afford a minimum basket of goods and services, but has only been adopted by a few employers.

Meanwhile a major conference was told a new "locked out generation" has emerged as house prices are up to 14 times the average salary.

Addressing the Irish Congress of Trade Unions biennial delegate conference in Dublin yesterday, its president Sheila Nunan said the figures make for depressing reading. "Prices nationally have increased 80pc since the low point of the recession," she said.

She said homes in half the State's counties are unaffordable for first-time buyers on average incomes while the share of households in private rented accommodation has doubled in the last 20 years, and is set to double again.

"Young workers tell us they have lost confidence in ever being able to buy a home of their own," she said.

And economists predicted rents will continue to rise despite new measures to give teeth to a housing watchdog to penalise landlords who breach the rules in rent control zones.

Labour housing spokesperson Jan O'Sullivan called for the whole country to become a rent pressure zone as another 19 locations became subject to the 4pc cap on increases.

Economist Alan McQuaid said it is time to relax the strict mortgage lending rules that are forcing many workers to rent and tax "cuckoo" fund investors who buy up housing complexes, squeezing out middle-income earners.

"No doubt there are more at work and that helps, but you have to ask about the quality of job they have and whether it is sufficiently paid to offset rises in the cost of living," he said.

Although rent is included in the consumer price index, he said "very few believe" the low inflation figures fully reflect it.

"I expect there will be slower growth next year in the housing market but I don't see an improvement in rental costs.

"The only consolation is that more people are at work, but that doesn't necessarily mean they have income to meet the cost of day to day living."

Irish Independent

Also in Business