The latest edition of the Economic and Social Review (Volume 49, No.3) is now available, containing the following research and policy articles:
Articles
Job Insecurity and Well-being in Rich Democracies by Arne L. Kalleberg
Economic Stress and the Great Recession in Ireland: The Erosion of Social Class Advantage by Christopher T. Whelan, Brian Nolan and Bertrand Maitre
Household Formation and Tenure Choice: Did the Great Irish Housing Bust alter Consumer Behaviour? by David Byrne, David Duffy and John FitzGerald
Policy Articles
An Analysis of Taxation Supports for Private Pension Provision in Ireland by Shane Whelan and Maeve Hally
The Precarious Position of Drug Education Workers in Ireland by Clay Darcy
2 replies on “Economic and Social Review, Autumn 2018”
We certainly have some useful information (and some commentary) in this edition of the ESR, but we don’t seem to be scoring too highly here on the secular trinity of “commentary, information and intelligent discourse”. Perhaps it’s back to BAU in Ireland, but a lot has changed since the Great Recession and, as hinted in the Whelan et al article, the full implications will take time to unfold – and might discombobulate many of those complacently luxuriating in their restored enjoyment of the exercise of inadequately scrutinised power and influence and of the sustained capture of economic rents.
The aftermath of the Great Recession has played out quite differently in many of the EU15 Member States – even if there are some common themes. All, perhaps with the exceptions of Portugal and Spain (which have ended up with broadly left of centre governing arrangements) and Luxembourg, are being required to confront/accommodate various mutations of nativist, nationalist, often xenophobic, movements – with many demanding increased welfare and state provision for “natives”. Italy is probably sui generis because it has a governing majority generated by two movements outside the previous mainstream. Governing arrangements in Belgium, Austria, Denmark and Finland have accommodated the national manifestations of these movements. Sweden is probably on the verge of doing so. They have been kept at arm’s-length in France, Germany, the Netherlands, Greece and Ireland, but for how long? We have our own “national socialists” in SF, with the centre/centre-right parties concealing right-wing ugliness, but it is only a matter of time before SF enters government. The UK presents another variation with extreme laissez faire capitalists and a strange breed of English nativists and empire nostalgics securing Brexit with the unintentional support of deeply disaffected traditional, conservative Labour supporters that the Labour party had abandoned. (Ironically, it was a version of this coalition that secured public and parliamentary support for Churchill and his refusal to parley with the Nazis in May 1940.)
In Ireland, the water charges debacle gave a clear hint of what lies beneath, but those exercising (and abusing) power and influence still do not seem to have gotten the message.
A few comments on the pension policy paper.
It will be a surprise to many that no net taxation applied to pensions ‘pots’ of up to €330,000. Part of the reason is the use of an average rate of return on investment of 4.5%. This is a pie in sky rate, promulgated by the pensions industry. The true for the past 20 years is probably closer to 1%, if not below that. That would certainly lower the amount of a pension pot that benefits from a zero tax hit, a central point in the conclusion.
While it seems logical to include employers contributions to pension funds in order to arrive at a net taxation figure, no mention is made of the imputed or hidden employer contribution in the case of state employment pensions. The annual tax expenditure figure given of €2.4 billion, would need to be increased by about €2 billion per year, if the full hidden employer contribution in state schemes were included.
The removal of tax relief needs to take into account both employee and employer contributions. If, for instance, only employee relief was removed, executives and higher paid people, would be in a position to convert their employee contribution into an employer contribution, thereby evading the removal of tax relief. No such facility would be available to the majority people with occupational pensions (a minority of private sector employees, in any case).
Little light is cast on the difference treatment of employer contributions to pension funds, particularly between PRSA schemes which are subject to limit, and other schemes where the sky is the limit, standard threshold fund limit not withstanding. There is a very substantial tax giveaway involved. It was surely worth a comment, in and of itself.
Finally the new mooted scheme, supposedly to be seen in 2022.
The only thing that can be said about such insouciance and delay in implementation, is that the process would have long since been completed, if the ‘policy makers’ were in the same position as 70% of private sector employees, who have no occupational pension schemes. But ‘policy makers ‘ are not that position, as first item on the agenda I all state and state funded organizations was to look after their own pensions.
So will it happen?
Like the story of the west Clare railway, ‘it might now, Michael, so it might’!