Total Disposable Income (B.6g+D.8) of households and non-profits grew by 9.3% (€15.2bn) in 2024. However, the implied deflator for personal consumption was 4.1%, meaning that part of this extra income was required to pay for the same volume of consumer goods and services in 2024.
Here we look at the changes in composition of disposable income at current prices. Figure 1.1 shows the components (columns) and the change in Disposable Income itself (line). The graph illustrates the difference compared to the previous year, rather than the absolute amount of each item. In most years, the biggest contributor to the change is wages and salaries paid to employees and in 2024 this accounted for €10.6bn of the €14.7bn increase. There was a 6.7% increase in the taxes paid on this income (D.5) which reduces the Gross Disposable Income. Social contributions (such as Pay Related Social Insurance (PRSI) also increased faster (7.4%) than social benefits (such as pension payments) which rose by 6.9%. Net investment income and other transfers (D.4, D.7) have contributed more to household incomes in recent years, through higher interest rates and household deposits built up during and after the COVID-19 restrictions.
Figure 1.2 shows the Compensation of Employees (CoE) in more detail. The Figure illustrates the proportion of total labour costs borne by each sector in each year. As well as wages, CoE encompasses benefit-in-kind and other labour costs.
The biggest share of CoE comes from Domestic Non-Financial Corporations (NFCs, S11b), who paid 38% of the total, a similar proportion to ten years ago. The past decade has seen growth in the proportion paid by foreign-owned NFCs. This has gone from 23% in 2015 to 29% in 2024. The growth in household income from foreign NFC has been countered by a declining share paid by General Government and by domestic Financial Corporations over the last ten years. As we saw in Figure 1.1, CoE overall has been increasing, so while the share of the total paid by some sectors has declined, its total paid in euro has increased.
If we add in foreign-controlled Financial Corporations (S.12a) to the foreign-controlled NFCs, in the latest year 33% of pay to workers came from branches and subsidiaries of overseas corporations. Clearly household income, as well as tax receipts by government, are very significantly affected by foreign multi-nationals' activities in Ireland.
Both income (9.3%) and expenditure (7.3%) rose in 2024. The difference between the two is gross saving (B.8g) which, due to the bigger increase in income, rose to €24bn. The household saving rate is the saving divided by the income. The unadjusted saving rate was 13.5% in 2024, up from 11.8% in 2023.
Figure 1.3 below shows a time-series of the Irish saving rate alongside the saving rate for the Euro-area. Ireland's saving rate was similar to that of the wider Euro-area until the outbreak of the COVID-19 pandemic. Then in 2020 and 2021, while the saving rate increased both in Ireland and the Euro-area, Ireland's rate was above the overall Euro-areas. Since 2022 it has fallen back to around the same level as its pre-COVID-19 level whereas the Euro-area level is now higher than it was before the pandemic.
Figure 1.4 charts the movement in income and debt for the period 2001 to 2024. The debt-to-income ratio is a key indicator of the sustainability of household debt. A lower debt-to-income ratio means that if interest rates increase, households are more likely to be able to manage the additional burden: the loan liabilities are less and so the interest is lower, or the disposable income is higher and so there is more money available to make mortgage payments.
The balance sheet position in relation to household and NPISH debt (Liabilities - (AF.4) Loans) was stable in 2024 at €134bn. At the same time Total Disposable Income increased from €163bn to €178bn. This caused a fall in the debt-to-income ratio from 82% to 75%.
Figure 1.4 also shows the debt-to-income ratio for the Euro-area as a whole. We can see that the ratio for Ireland was higher than that of the Euro-area until 2023 and was around double the Euro-area rate in the period 2006-2011. In 2024 it is lower than the 83% ratio in the Euro-area. There can be large variations among Euro-area countries, for example the 2024 ratio was 181% in the Netherlands and 20% in Romania.
Gross household and NPISH saving (B.8g) was €24bn in 2024, as illustrated in the line in Figure 1.5 below. The columns in Figure 1.5 illustrate how that saving was used. Saving adds to wealth in the form of real assets, such as houses, and financial assets such as deposits. Saving is also used to reduce liabilities, such as loans. Figure 1.5 shows the transactions in loans, i.e. increases (+) or decreases (-) in each year (excluding price changes). It is important to make the distinction between balance sheet measures and transactions: Figure 1.4 above illustrated the balance sheet position of the outstanding stock of loans to households.
For much of the time-series, loan liabilities have been reduced (lime-green bars are above the axis), but in three of the last four years, households have been borrowing more than they have been paying back (lime-green bars are below the axis). In 2024, loans to households increased by €2.4bn. At the same time, deposits also increased by €7.5bn, so while some households were taking on extra debt, others were putting money aside at the same rate. Deposits were already increasing between 2016 and 2019, and the arrival of COVID-19 restrictions accelerated that trend in 2020. Since then they have slowed and are accumulating at a similar rate as before the pandemic. Pension saving and insurance products (including life insurance) also accounted for around €7bn in saving in the year.
The biggest single use of saving in 2024 was capital formation, which for households is mainly in the form of homes. In 2024, this accounted for €13.7bn, similar to the €14.3bn in 2023. Improvements such as house extensions were €7.8bn in the year, and 30,168 new dwellings were completed in 2024, many of which were bought by households (some improvements and new dwellings were investment by Government or Non-Financial Corporations). The €28bn invested in these assets in 2023 and 2024 exceeds the €27.3bn total for all six years 2012-2017 (not adjusting for inflation).
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