With the property sector starting to boom again and more jobs on-stream, wages are rising and bankers are popping champagne. Kyran FitzGerald is experiencing a bout of deja vu.
In the capital city, plenty of cash is being flashed. Traffic is returning to levels last seen six years ago. There are dark rumours that people are getting ruder again.
Animal spirits are up. I overheard an estate agent gabbling excitedly in numbers with a friend, eyes bulging with delight. Some are turning up late for appointments as diary entries bulge. Vacant shop premises have become a lot scarcer in the past year or so. Cranes are starting to appear close to St Stephen’s Green. There are reports of growing shortages of skilled construction staff.
Architects are back designing while fretting about regulatory changes that leave them much more exposed to legal actions. The developer class has returned. Johnny Ronan of Treasury Holdings fame is back developing a large office block on Burlington Road close to the renamed Burlington Hotel — now known as DoubleTree by Hilton. Bernard McNamara is on site less than 1km away. He is back home just 12 months after being discharged from bankruptcy, having shed €1.2bn worth of debts.
Profiles are kept lower these days. No more helicopter rides to race meets and hugging and petting of politicians in the Fianna Fáil tent.
In the City of London, financiers are enjoying a boost in their bonuses: A survey of 1,500 people by recruitment firm Astbury Marsden reveals a 21% jump in bonuses for senior staff to nearly £125,000 (€160,000). In the case of people working in private equity, the bonus will amount on average to £145,000, or 115% of basic salary. The champagne is no longer on ice.
The boss of Irish-Swiss plc Aryzta, Owen Killian, has had a pay rise of around 40%: He is taking home €5m when bonuses, incentives, and pension contributions are included. Killian will soon be moving to a building formerly occupied by the Belgian embassy in fashionable Ballsbridge — and he’s planning a large expansion of the Victorian mansion, most of it taking place underground.
However, some of Ireland’s newest occasional residents put Killian rather in the hapenny place when it comes to net worth.
John Malone, founder of Liberty Global, has apparently just acquired the Castlemartin residence of Tony O’Reilly. Mr Malone has a net worth estimated at $7.5bn (€6.2bn). According to Bloomberg, he has saved $200m in taxes through adroit tax avoidance activity, Recovery, both global and domestic, has greatly benefited the asset rich.
A combination of quantitative easing and excess demand has rapidly pushed up property prices in the major cities, particularly London and New York. Recovery has spread to Dublin and gradually beyond the capital.
This asset price bounce may benefit landlords, but it is hitting low earners hard in the pocket. According to Daft.ie, rental prices rose in November by 14.5% a year. Rents in the city are now up by 30% on their low point in 2012 and are less than 10% behind the peak levels of 2007.
Availability for many has dried up, with just 27,000 properties to rent compared with 47,000 on average in 2011.
Nationwide, renters pay over 30% of their income to their landlord. In Dublin, renters spend 35% of their average income on accommodation, with 42% being faced with an increase in the past 18 months (compared with 18% in the rest of Ireland.)
According to housing group Nabco, one quarter of tenants express concern about losing the roof over their heads. Eurostat, meanwhile, reports that Ireland has one of the largest gaps between high- and low-income earners in Europe, with just over one in five workers earning less than two-thirds the median hourly wage, compared with an EU average of 17% in this position.
Graduates have borne the brunt of the recession along with the low- skilled. According to the Higher Education Authority, average pay for college leavers fell almost 12% between 2007 and 2012 to around €23,800, cancelling out gains achieved after 2004. The pay of arts graduates fell by 19% to below €20,000 whereas business graduates earned almost €24,000.
There are few signs yet of a rebound, though the Society of Chartered surveyors is reporting skills shortages in the sector. The use of internships has grown, with the UK Sutton Trust estimating that one in three interns are working for nothing.
Globalisation’s effects have not been confined to workers in old-style manufacturing. Increasingly, the middle classes too are feeling its impact. According to Payscale.com, 30% of ‘millennials’ — people born after 1981 — are underemployed (or involuntary working part time), while almost one quarter have had to move back home at one point or other, being saddled with college fees.
A much higher proportion than in previous generations state that they want to own their own businesses.
In retailing, many employees still do not have the luxury of knowing how much they will earn or when they will work in a given week. The Mandate trade union is engaged in a confrontation with Dunnes Stores over the store’s treatment of zero-hours workers.
Underemployment in retail has risen from 92,000 in 2008 to 147,000, according to CSO figures reported in Industrial Relations News. In other words, employers have been handed much greater bargaining power, though many are struggling in an environment of cut-throat competition.
IT workers have bucked the recession trend and have had pay increases in recent years. A senior software engineer can expect to earn around €55,000, with software developers and engineers taking home €37,000 to €39,000. This compares with around €31,000 for graphic designers and office managers, and almost €33,000 for civil engineers.
In the private sector, pay increases in well-established private sector companies have been running at around 2% a year. However, the effects of the Haddington Road agreement mean total earnings per hour continued to fall into 2004, according to the Nevin Institute.
The total public pay bill has fallen from €17.2bn to €14.2bn, with a 32,000 drop in numbers since 2008 (following a rise of 73,000 between 2000 and 2007).
“Pay restoration” is now the mantra of the public sector unions: In 2015, they will be setting about gaining their share of the action.
There could be a few fireworks over the horizon, though pragmatists such as Impact leader Shay Cody will be seeking a return to a form of social partnership lite that recognises both budgetary realities and the need to boost the living standards of ordinary workers.
Ireland’s business recovery is young and a bit less robust than estate agents, union militants, or government PR meisters would have you believe.
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