Trends: Ireland’s Disposable Income Rises, But So Does Money Being Saved

The gross disposable income of households was nearly €22bn in Q1 2012 – an increase of €771m or 3.6% compared with the same quarter of 2011, latest figures from the CSO show.

Higher wages (+€170m) and profits of the self employed (+€365m) along with lower interest payments (-€272m) were the main factors which contributed to the increase in household disposable income over this period, it said.

But there was little change in household expenditure between the first quarter of 2012 and the corresponding quarter of 2011 (€19.4bn compared with €19.37bn).
As a result, gross household savings increased from €2.4bn in Q1 2011 to €3.2bn in Q1 2012.
The derived gross savings ratio, which expresses savings as a percentage of gross disposable income, increased from 11.2% in Q1 2011 to 14.2% in Q1 2012.

This will come as bad news for the retail sector. While it seems there is more disposable income out there, more and more people are choosing to save that money instead of spending. Those figures may rise as the budget looms at the tail end of this year.

TRENDS: Rich And Poor Gap Widens – Social Justice Ireland

The rich are getting richer and the poor are getting poorer, that’s according to figures released today by Social Justice Ireland are calculated on the latest CSO data and relate to 2010.

Ireland’s poorest families experienced an income drop of almost 20% in one year while income of the richest increased by 4%.

There was a drop of more than 18% in the disposable income bracket (calculated after taxes are paid and social welfare received) for the poorest households during the year.

Social Justice Ireland has put the blame on the governments policies of continuing to increase the income of the richest 10% of households and widening the gap between the wealthy and the rest of society.

It says the top 10% of the population receive almost 14 times more disposable income than the poorest 10% — it was eight times more in 1980.

Social Justice Ireland director Sean Healy said the current strategy by the Government was making the situation worse.

“There is something profoundly wrong with government decisions that produce this lop-sided distribution of income favouring the richest when Ireland’s poor and middle income people struggle to make ends meet in these extremely difficult times.”


ESRI Savings Index Shows People Saving More

An ESRI Savings Index has, for the second month in a row, recorded growing optimism among savers and the impact of the economic environment on personal savings.

It found that just 16% expect to be saving less in six months time compared with 45% who expected to be saving less in six months in February 2011.

The survey also found that 72% expect to maintain their current level of saving while 12% expect to be saving more. In February 2012, 51% believe that they are saving the right amount at present which compares favourably with just 38% for the same period a year ago.

Consumers also appear to be more positive about the impact of the wider economic environment on their ability to save with 33% believing that now is a good time to save compared to 31% twelve months ago. Only 7% of people think that government policy encourages saving which is 3% lower than the level recorded in February 2011.

Some 51% of consumers stated that they would use surplus cash to pay off debts including their mortgages while 35% would put it into savings and 10% would spend surplus cash.

In terms of how much people are saving each month, 11% are saving up to E25, 13% are saving between E26 and E50, 31% are saving between E51 and E100 a month, 27% are saving between E101 and E200 and 18% are saving more than E200.

The positive for small business is that if people are saving more then it means that perhaps there are opportunities there for them to spend it. A challenge that faces a lot of small businesses in this current economic environment.