OECD Economic Surveys: Ireland 2015 - FINFACTS

1 September 2015 OECD Economic SurveysIRELANDSPECIAL FEATURE: INCLUSIVE GROWTHMost recent editionsVolume 2015/18 IRELANDOECD Economic SurveysVolume 2015/18 September 2015 Australia, December 2014 Austria, July 2015 Belgium, February 2015 Brazil, October 2013 Canada, June 2014 Chile, October 2013 China, March 2015 Colombia, January 2015 Czech Republic, March 2014 Denmark, January 2014 Estonia, January 2015 Euro area, April 2014 European Union, April 2014 Finland, February 2014 France, March 2015 Germany, May 2014 Greece, November 2013 Hungary, January 2014 Iceland, September 2015 India, November 2014 Indonesia, March 2015 Ireland , September 2015 Israel, December 2013 Italy, February 2015 Japan, April 2015 Korea, June 2014 Latvia, February 2015 Luxembourg, March 2015 Mexico, January 2015 Netherlands, April 2014 New Zealand, June 2015 Norway, March 2014 Poland, March 2014 Portugal, October 2014 Russian Federation, January 2014 Slovak Republic, November 2014 Slovenia, May 2015 South Africa.

2 July 2015 Spain, September 2014 Sweden, March 2015 Switzerland, November 2013 Turkey, July 2014 United Kingdom, February 2015 United States, June 2014 Consult this publication on line at work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical for more 978-92-64-24032-210 2015 17 1 PISSN 0376-64382015 SUBSCRIPTION (18 ISSUES)9 HSTCQE*ceadcc+OECD Economic SurveysIRELANDSEPTEMBER 2015 OECD Economic Surveys: Ireland2015 This document and any map included herein are without prejudice to the status of orsovereignty over any territory, to the delimitation of international frontiers and boundariesand to the name of any territory, city or 978-92-64-24032-2 (print)ISBN 978-92-64-24033-9 (PDF)ISBN 978-92-64-24059-9 (epub)Series: OECD Economic SurveysISSN 0376-6438 (print)ISSN 1609-7513 (online)OECD Economic Surveys: IrelandISSN 1995-3267 (print)ISSN 1999-0324 (online)The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.

3 The useof such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israelisettlements in the West Bank under the terms of international credits:Cover Paul to OECD publications may be found on line OECD 2015 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases andmultimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitableacknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights shouldbe submitted Requests for permission to photocopy portions of this material for public or commercial use shall beaddressed directly to the Copyright Clearance Center (CCC) the Centre fran ais d exploitation du droit de copie cite this publication as:OECD (2015),OECD Economic Surveys: Ireland 2015, OECD Publishing, OF CONTENTSOECD Economic SURVEYS: Ireland OECD 20153 Table of contentsBasic statistics of Ireland , 7 Executive 9 Main 12 Key 12 Assessment and 15 Macroeconomic 17 Further strengthening the fiscal 21 Ensuring financial 24 Making growth more 27 Fostering 34 Improving environmental 43 Thematic chaptersChapter together: Towards a more inclusive 51 How inclusive is growth in Ireland ?

4 52 Towards more inclusive 60 Fostering inclusive growth through fairer and more efficient welfareand 65A more inclusive business 74 Recommendations for increasing the inclusiveness of 78 Chapter in Ireland : Challenges, opportunities and 81 The patterns of 82 The Economic impact of 88 Maintaining the attractiveness of Ireland as a destination for skilled workers .. 92 Integrating 97 Recommendations for getting the most out of of bilateral migration 109 Boxes1. Uncertainties about the Irish economy s investment in human Employment permits in 94 TABLE OF CONTENTSOECD Economic SURVEYS: Ireland OECD 20154 Tables1. Progress on structural 172. Macroeconomic indicators and 213. Fiscal policy 224. Climate change High shares of labour earnings are concentrated at the top and bottomof the The low-educated are more likely to be jobless than the OECD Assets are distributed unevenly across income and socio- Economic groups.

5 Tax rates and bands for PAYE taxpayers: Actual and alternative Scenarios .. The marginal effective tax rate for the low paid can be reducedby changing in-work Taxation is not neutral across different asset 71 Figures1. Strong growth is returning to 162. Regained competitiveness contributes to Irish 183. The recovery is well underway and becoming more 194. Debt and non-performing loans are 205. Balancing the budget would put debt on a downward 226. Property markets are 267. Wellbeing indicators are 288. Ireland performs well in some inclusiveness 289. Income support for the long-term unemployed is generous in 2910. Marginal effective tax rates are high for low income 3011. Long-term unemployment is 3012. Numeracy skills are 3213. The cost of childcare is 3414. Ireland s trend GDP growth rate has 3515. Investment in Knowledge Based Capital has Ireland s market income GINI is the highest in the Ireland s disposable income GINI is below the OECD The increase in market income inequality in Ireland was largely drivenby employment Internationally income is becoming more concentrated at the Share of the bottom 20% households in market income is low in Risk of poverty is high without social Skill-based wage differentials are high in Skill mismatches are A low proportion of adults have high-level Average tax wedge is low for the low paid and close to the OECD averagefor the higher Some undesirable jumps in the marginal effective tax rate are builtinto the current Lower income households with children face additional Taxes on property are low by international The standard VAT rate is high but the revenue base is 73 TABLE OF CONTENTSOECD Economic SURVEYS.

6 Ireland OECD The Irish labour market is exceptionally open to migration Destinations and origins have changed over Migration is concentrated in youngest The size of the Irish youth cohort has Salaries for recent graduates have Many emigrants were in employment prior to their One out of five Irish emigrants is employed in the healthand social work Net migration is expected to remain negative in the short The share of the foreign born population that is well-educated is Migration is large among highly educated Immigrants were particularly hit by the Over-qualification and mismatches rates are higher for Chances of having a well-matched job depend on field of 100 ThisSurveyis published on the responsibility of the Economic andDevelopment Review Committee of the OECD, which is charged with theexamination of the Economic situation of member Economic situation and policies of Ireland were reviewed by the Committeeon 9 July 2015.

7 The draft was revised in the light of the discussion and given finalapproval as the agreed report of the whole Committee on 28 July Secretariat's draft report was prepared for the Committee by David Haugh,Yosuke Jin, Alberto Gonzales Pandiella and Muge Adalet Mcgowan under thesupervision of Patrick Lenain. Damien Azzopardi, Penelope Silice and Elika Athariprovided the statistical research assistance, and Brigitte Beyeler, Mikel Inarritu andAnthony Bolton provided the administrative previousSurveyof Ireland was issued in September for the StatLinks2at the bottom of the tables or graphs in this book. To download the matching Excel spreadsheet, just type the link into your Internet browser, starting with the prefix, or click on the link from the e-book OECD Publications on:This book service that delivers Excel files from the printed page! OECDA lertsBASIC STATISTICS OF Ireland , 2014(Numbers in parentheses refer to the OECD average)*LAND, PEOPLE AND ELECTORAL CYCLEP opulation (million) density per km ( )Under 15 (%) ( )Life expectancy (years, 2013) ( )Over 65 (%) ( ) ( )Foreign-born (%, 2011) ( )Latest 5-year average growth (%) ( )Latest general electionFebruary 2011 ECONOMYG ross domestic product (GDP)Value added shares (%, 2013)In current prices (billion USD) ( )In current prices (billion EUR) including ( )Latest 5-year average real growth (%) ( ) ( )Per capita (000 USD PPP) ( )GENERAL GOVERNMENTPer cent of ( )Gross financial ( ) ( )Net financial ( )EXTERNAL ACCOUNTSE xchange rate (EUR per USD) exports (% of total merchandise exports)PPP exchange rate (USA = 1) and related products, per cent of GDPM iscellaneous manufactured of goods and ( )Machinery and transport of goods and ( )Main imports (% of total merchandise imports)

8 Current account ( )Machinery and transport international investment position (2013) and related products, manufactured MARKET, SKILLS AND INNOVATIONE mployment rate for 15-64 year-olds (%) ( )Unemployment rate, Labour Force survey (age 15 and over) (%) ( ) ( )Youth (age 15-24, %) ( ) ( )Long-term unemployed (1 year and over, %) ( )Participation rate for 15-64 year-olds (%) ( )Tertiary educational attainment 25-64 year-olds (%, 2013) ( )Average hours worked per year1 821(1 770)Gross domestic expenditure on R&D (% of GDP, 2012a) ( )ENVIRONMENTT otal primary energy supply per capita (toe, 2013) ( )CO2emissions from fuel combustion per capita (tonnes, 2012) ( )Renewables (%, 2013) ( )Municipal waste per capita (tonnes, 2012) ( )Fine particulate matter concentration (urban, PM10, g/m3, 2011) ( )SOCIETYI ncome inequality (Gini coefficient, 2012) ( )Ratio of incomes of the top 10% vs. bottom 10%, ( )Relative poverty rate (%, 2012) ( )Education outcomes (PISA score, 2012)Median disposable household income (000 USD PPP, 2012) ( )Reading523(496)Public and private spending (% of GDP)Mathematics501(494)Health care (2012a) ( )Science522(501)Pensions (2011) ( )Share of women in parliament (%, August 2015) ( )Education (primary, secondary, post sec.)

9 Non tertiary, 2011) ( )Net official development assistance (% of GNI) ( )Better life )2013 for the OECD aggregate.* Where the OECD aggregate is not provided in the source database, a simple OECD average of latest available data is calculated wheredata exist for at least 29 member :Calculations based on data extracted from the databases of the following organisations: OECD, International Energy Agency,World Bank, International Monetary Fund and Inter-Parliamentary Economic Surveys: Ireland OECD 20159 Executive summary Main findings Key recommendationsEXECUTIVE SUMMARYOECD Economic SURVEYS: Ireland OECD 201511 Strong Economic growth has returned to IrelandDetermined policy efforts have boosted confidenceand underpinned the robust, broad-based recoverynow underway in Ireland . Unemployment is fallingsteadily, the budget deficit is declining, public debthas peaked and continues to fall and internationalcredibility has been strengthened.

10 These propitiouscircumstances are the opportunity to resolve thelegacies of the crisis, including remainingunemployment and banking system is also a chance to carry out structural reformsto ensure the recovery is sustained. Real estate prices,especially in commercial and residential property inDublin, are rising rapidly once again, and pressures tonarrow the tax base and increase spending transfers have narrowed income gaps but more needs to be done to getpeople into workDuring the crisis, Ireland s comprehensive welfaresystem supported demand, underpinned socialcohesion and provided a sense of fairness that madeneeded reforms possible. However, highly targetedbenefits including housing benefit result in highreplacement rates and marginal effective tax rates forsome households at the low end of the incomedistribution, discouraging work. The solution is tointensify activation policies to get people into jobs,improve training and enforce obligations on benefitrecipients to seek a job or take growth remains modest, hindering long-term prospectsProductivity growth has been falling for some Ireland s multinational sector thrivedthrough the crisis, the domestic SME sector is stilllagging behind despite the shift away from the lowproductivity construction sector, with much lowerlevels of competitiveness, productivity and R&Dspending.