The self-employed sector of the economy is feeling the benefit of a big jump in earnings as recovery intensifies, new figures suggest. The savings rate is also rising sharply.
Although incomes are rising generally, data indicates that self-employed income is advancing at a faster rate than employees’ pay.
This points to increased profitability in self-employed enterprises as growth picks up, itself a barometer of economic activity.
The data comes as increased employment and a gradual rise in average earnings deliver a boost to the public finances by way of higher income tax receipts and lower welfare expenditure.
Quarterly “institutional sector accounts”, released in recent days by the Central Statistics Office (CSO), point to a steady rise throughout 2014 and 2015 in disposable income, consumption expenditure and household savings.
Gross disposable income rose to €24.47 billion in the third quarter of 2015, from €21.54 billion in the first quarter of 2014, a rise of almost €3 billion on a seasonally adjusted basis.
The underlying quarterly data, previously unreported, is not seasonally adjusted, but it points to a much stronger advance in self-employed income than employees’ income.
Self-employed income rose to €7.08 billion in the third quarter of 2015, from €4.85 billion in the first quarter of 2014, reflecting an increase of €2.23 billion in the period.
At the same time the compensation of employees rose to €18.25 billion in the third quarter of 2015, from €17.51 billion in the first quarter of 2014, an increase of €730 million.
Year on year, the data shows that self-employed income rose by €1.1 billion between the third quarter of 2014 and the same period in 2015.
The same comparison shows compensation of employees rose by €855 million between the third quarter of 2014 and the same three months of 2015.
The CSO figures also show that the savings rate continues to rise.
While gross disposable income of households rose by €700 million to €24.47 billion in the third quarter of 2015 from the previous quarter, household expenditure rose by €299 million to €21.95 billion in the same period. As a result, gross housing rose by €402 million in the quarter.
Thi s resulted in a 10.3 per cent savings rate in the third quarter of 2015, up from 5.2 per cent one year previously and up from 4.1 per cent in the first quarter of 2014.
In a report yesterday which took issue with the Government’s decision to increase year-end spending in 2015, the European Commission noted that Ireland’s labour market recovery is reaching more economic sectors and regions and is mainly in full-time jobs.
“Average hourly earnings increased by 2.1 per cent year on year in the third quarter of 2015, though they were down by 1.7 per cent quarter on quarter, with large differences across sectors, as salary pressures remain moderate,” the commission said.
“The fall in nominal unit labour costs moderated in the first half of 2015 to 3 per cent year on year, while real labour productivity increased by 3.6 per cent.”
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