Wednesday, December 19, 2018

SILC confirms the boom in labour income

A previous post looked at the increase in labour versus non-labour income in the CSO’s national accounts statistics.  This week the CSO published the 2017 update for the Survey on Income and Living Conditions and, perhaps unsurprisingly, the income patterns in this granular micro-data reflect what has already been reported in the aggregate macro-data.

Here is a table of weekly average household income since 2012.

CSO SILC Weekly Household Income by Item 2012-2017

The bottom line is that, in nominal terms, weekly net disposable household income is up €136 or 17 per cent since 2012.  And we have to go all the way up to the top to find the item contributing most to this: employee income.  Over the same period, average weekly employee income is up €148 or 27 per cent. 

The figures in the table are averaged across all households so will include households who have no employee income (such as retirees) who will bring the average down.  This can also be seen for “unemployment benefits” under social transfers. 

The average weekly amount here has fallen from €61 in 2012 to €39 in 2017. This is not because payment levels have been reduced but because the number of recipients has fallen.  Many households have moved to have zero in this category and this brings the average down.

But it is not the average, per se, that we are interested in, but the changes in them and we can see that employee income accounts for most of the improvement in household disposable income.

Proportionately, the largest increase has been for gains from self-employment which are up 83 per cent over the period.  The direct income item with the smallest proportionate increase for the period shown is “other”.  From the background notes the CSO tell us that this is:

Other direct income:

    • Value of goods produced for own consumption
    • Pension from individual private plans
    • Income from rental of property or land
    • Regular inter-household cash transfers received
    • Interests, dividends, profit from capital investments in unincorporated business
    • Income received by people aged under 16

This is where the non-labour income that was the focus of the previous post would show up.  The series in the SILC is a bit erratic.  Although it is up 20 per cent compared to 2012, it is actually down slightly compared to 2014 (and going back one year to 2011 would show a 50 per cent increase by 2017). 

Still there is little evidence of non-labour income such as interest, dividends, and most notably, rents outstripping labour income.  At an individual household level, there will be some who are seeing their housing costs rising faster than their income but in aggregate terms employee income is rising by a much greater amount than housing costs.

This table tries to scale up the average weekly amounts shown in the SILC to annual and national terms.  It is very crude.  The weekly amounts are annualised and then multiplied by an estimate of the number of households for each year (based off the 1.7 million figure from Census 2016).

CSO SILC Weekly Household Income by Item 2012-2017 Scaled

In rough terms, it corresponds to what would expect given what is in the aggregate data. A key difference is that the SILC does not include the imputed rent of owner-occupiers as income.  Here is some work from Eurostat on the distributional impact of imputed rents in the SILC.

The scaled-up figures gave an increase in employee income of €15 billion over the period which is in line with what we have seen elsewhere (though maybe levels could be higher).  The amounts for “other” direct income scales up to between €2.0 billion and €2.5 billion each year. 

The boom is in labour income.

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