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Middle Ireland: bruised, battered and with nothing more left to give

Can't give any more: Marie Hanna Curran and her husband Donal O'Connor are tired of being squeezed by the relentless cuts and simultaneous hikes in taxes and cuts. Photo: Andrew Downes. Expand
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Can't give any more: Marie Hanna Curran and her husband Donal O'Connor are tired of being squeezed by the relentless cuts and simultaneous hikes in taxes and cuts. Photo: Andrew Downes.

Can't give any more: Marie Hanna Curran and her husband Donal O'Connor are tired of being squeezed by the relentless cuts and simultaneous hikes in taxes and cuts. Photo: Andrew Downes.

Bob Quinn

Bob Quinn

/

Can't give any more: Marie Hanna Curran and her husband Donal O'Connor are tired of being squeezed by the relentless cuts and simultaneous hikes in taxes and cuts. Photo: Andrew Downes.

John Meagher Twitter Email

Bob Quinn has seen his fair share of the phenomenon: nominally middle-class people who are left with virtually no disposable income once all the bills have been paid. In most scenarios, they have an excellent education and good jobs - or what passed as such previously - and, on paper, one might imagine they have a perfectly fine standard of living.

But Quinn (pictured below) - who runs the Money Advisers consultancy service - says the truth is very different.

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Bob Quinn

Bob Quinn

Bob Quinn

 

"Once they've paid the 52pc in tax and USC, and once the childcare and health insurance and motor tax and property tax and water charges have been looked after, they're left with very little. They are people who work hard and pay their bills and their taxes, and they've been hit by all sides."

It's a bracket he feels he falls into himself. His wife was made redundant last year after the company she worked for relocated overseas and with a four-month child to think of, difficult questions will soon have to be asked.

"Should Steph find another job and we pay €950 a month in crèche costs... and face a two-a-half hour round trip to Dublin every day [the couple live in Naas, Co Kildare]?" he says.

They are the sort of tough choices that dog Ireland's squeezed middle - a large cohort of the population that Finance Minister Michael Noonan defined in 2014 as people who earned between €32,800 and €70,000 a head.

These are the very people, too, who have reacted with anger and incredulity at the fumbling and bungling by Fine Gael and Fianna Fáil over what happens next to water charges.

Having obeyed the law and paid the tax, it was an insult too far to discover, in the post-election postering, that they might not get a refund if the tax was axed, or that those who hadn't paid would get away scot-free. It was a bridge too far for many.

Karl Deeter of Irish Mortgage Brokers argues that today's middle-class lack the conventional trappings of previous generations.

"Many have been badly hit with negative equity property, others are unable to save the 20pc deposit that the Central Bank demands. Their cost of living is very high, their wages haven't improved in real terms. They're facing huge rent hikes. They pay an awful lot of tax.

"And yet the Government thinks they will have somehow been able to save for a 20pc deposit [to buy a home]. Where do they think the money is coming from? They're the group that have been hit hardest. They can't rely on State help like those below them can, and they can't avail of the sort of tax arrangements that the elites can. They've borne the brunt of the recession and they're bearing the brunt of this so-called recovery."

For many middle-class people, Fine Gael's pre-election motto, 'Let's Keep the Recovery Going', rang hollow.

Joe, a 34-year-old financial services employee with two children, believes it contributed to the party's poor showing at the polls.

"I actually believe Enda Kenny when he talks about the recovery because there are definite signs that the country is in a better place than it was, but it's been a recovery that has benefited businesses, wealthy people, tycoons. But ask ordinary, hard-working people if they've seen much recovery, and I'd be surprised if they had. My wages haven't gone up, but my costs have," says Joe.

He believes his family situation is fairly typical.

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"My wife bought a one-bedroom flat eight or nine years ago that's at least €70,000 in negative equity. She thought she was doing the right thing - not throwing so-called 'dead money' into renting. But we're renting now, and paying through the nose for it - €1,500 a month for a very small, run-down house in a far from salubrious part of Dublin. And, this being Ireland, we've no security at all - the landlord could decide his third cousin from Timbuktu needs a place in Dublin, and we'd be on the hunt for somewhere else."

Housing stock for sale today is roughly half of what it was in 2010, while the rental market propped up by the middle-classes is struggling with demand, especially in Dublin.

This week, economic think thank the ESRI said it was likely that some Dublin, Cork and Galway workers would be forced to move out of those cities and face the sort of long commutes that were a hallmark of the Celtic Tiger years.

"The [ESRI] data shows purchasing patterns similar to those seen during the boom years may re-emerge if affordable housing is more readily available outside Dublin and the other areas of high demand, resulting in unsustainable long-distance commutes for house buyers," says the ESRI's Prof Edgar Morgenroth.

Sinead, 37, who works in middle management for a medium-sized company, owns her own home in Dublin, but often finds the payments difficult.

"And interest rates are really low at the moment," she says. "What happens when they start to go up? I'm part of that cursed generation that bought at the wrong time and, in hindsight, I was lent more money than my salary warranted. Between 2009 and 2011, there were pay cuts after pay cuts and the salary hasn't gone back to 2007 levels and I don't know if it will.

"It's hard not to feel trapped, but then I think it could be so much worse - one of my friends is earning half of what she was before after being made redundant last year; she's had to go into a completely different field. And another lost a staff job and is now working from contract to contract. There's no security whatsoever.

"Sometimes, I envy my parents - they could raise a family on one salary, there were no exorbitant childcare demands, they could comfortably afford the home repayments. We're told we have it all today, but do we? You've people working 50 and 60-hour weeks and have very little to show for it at the end. While I've a better education than my parents and have seen much more of the world, I genuinely believe I have a poorer quality of life and I don't think that's going to change any time soon."

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It's a view likely shared by many middle-class Millennials - people born between 1980 and 1998. With poor wages, short-term contracts and no pensions a fact of life for many, it's little wonder they see themselves as far worse off than their parents. And its a trend common throughout the western world, according to the Guardian's extensive research on Millennials this week: they're likely to be the first generation to be worse off than their parents for their entire lives.

Seamus Coffey, a University College Cork economics lecturer, has studied Ireland's squeezed middle and how the demographic shapes up to its Swedish counterpart. It makes for sobering reading. Excluding the poorest and wealthiest in society, the wealth is spread much more evenly among the middle-class there than here.

Irish middle -lass families, he says, are typically €5,000 poorer per annum than Swedes - and that figure accounts for disposable income.

"The squeeze in this country is far worse, but there can be a large number of reasons for that, including differences in earnings and in taxes."

Michael Taft, an analyst with the Unite trade union, says Coffey's findings are indicative of Ireland's poor record for collective bargaining, when compared to the rest of the EU.

"Workers there have a right to collective bargaining, which employers are required by law to respect," he points out.

"This is not the case in Ireland. Trade union density and collective bargaining have been shown to increase workers' wages.

"Frank Walsh of UCD has found that workers in trade unions engaged in collective bargaining are 8 to 10pc better off than their non-union counter-parts in a like-for-like comparison."

Another significant reason why our 'coping classes' feel the pain, Taft insists, is the lack of a strong social-protection system that's commonplace across the EU.

"I'm talking about one that protects people both in work and out of work, helps maintains income during periods of illness and injury, temporary unemployment, maternity and paternity leave and retirement. We don't have that here."

Consequently, many middle-class people feel they have no option but to take out expensive private health-insurance schemes, costly income protection packages and so on.

"All of that cuts into disposable income," he says.

"There isn't opposition to high taxes abroad if that means a strong healthcare system and subsidised childcare, but when you've got a high taxation and poor social protection, it's little wonder that people sometimes feel they can barely keep their heads above water."

And, sometimes the coping classes simply buckle under the strain.

Home repossessions have risen dramatically: 2015 saw a 20pc increase compared to 2014. And our debt burden, per capita, is among the highest in the EU: Ireland was third in this grim league table in 2013.

Amid all the talk of increased consumer spend and record new car sales, substantial numbers are still quitting private health insurance. It's estimated that since 2008, more than 100,000 have dropped their subscriptions.

"Our family health insurance costs 200-and-something euro a month," says Bob Quinn. "Stretch that out over the course of a year, and you have to earn the best part of €6,000 [in gross wages] to pay for it. That's an awful lot of money.

"And there are so many ways our pockets are being hit," he adds.

"Look at all the people out there driving older cars who are having to pay more than double in motor tax than they'd be charged for a newer model with exactly the same emissions. Factor in a couple who need two cars for work, and the difference could be €700 or €800 per annum. Where's the fairness in that?"

It's a sentiment echoed by Joe, the financial services employee.

"If I felt my tax was being put to the best possible use, it would be an easier pill to swallow, but it's hard to see where the money goes," he says. "We don't have a world-class health service, or anything like it, and our early childcare services are an expensive joke. And then, they have the gall to ask my wife for property tax on her apartment, when she paid through the nose for stamp duty when she bought it... Enough is enough."

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