Institutional Sector Accounts Non-Financial and Financial 2020

Household Income and Saving

Total Gross Disposable Income (B.6g) of households grew by €9.3bn (8%) in 2020, but this was unevenly distributed. Households had unprecedented restrictions on travel and other activities owing to the COVID-19 pandemic. Bars were shut, restaurants were restricted to take-away only, and many hotels and shops were closed or had their activities curtailed. Government provided support for those workers in hospitality, retail and other sectors particularly affected by the pandemic. These supports consisted of the Pandemic Unemployment Payment (PUP, part of D.62) which was €5.0bn, and the Employment Wage Subsidy Scheme (EWSS, part of D.3) paid to employers who maintained a link with their workers, which was €3.8bn in the year. The EWSS is included in the total employee pay (D.1). Analysis of administrative data suggests that those in receipt of these government supports had lower median incomes than they did before the pandemic.

At the same time, workers continued in employment in sectors such as manufacturing, information technology, finance and healthcare. Some did the same work from home instead of in the office, and some were in their usual workplace. The median incomes of these workers not receiving the PUP or EWSS rose in 2020. 

Figure 1.1 shows the components of Gross Disposable Income.

The largest contributor to households' incomes is Compensation of Employees (CoE). This includes wages, salaries, benefit-in-kind and other labour costs. In 2020 as mentioned, this included around €3.8bn in Employment Wage Subsidy Scheme which was paid to employers and then to the workers affected by the pandemic. In 2020, Irish-owned private-sector employers (corporations or households) paid around 42% of total CoE, while foreign-owned corporations account for around 34% and government for 24% (mainly to workers in health and education). 

By economic activity, the group that includes healthcare workers and teachers is by far the largest source of compensation of employees for Irish households. This is followed by Distribution, Transport, Hotels and Restaurants, which is a large employer, and the sector most affected by pandemic-related restrictions.

Self-employed income is made up of the earnings of sole traders and small partnerships and rent on housing. In fact, the largest part of this item is income for 'dwelling services'. This includes €11bn in imputed rent for the 70% of households that are owner-occupied and theoretically paying themselves rent. As rents have been going up, the value of these dwelling services have also increased. Outside dwelling services, the largest economic activities of households-as-producers are the professions (like law, medicine and accounting) and agriculture, which were able to continue operations during 2020. However, the next largest economic sectors for the self-employed are construction and wholesale and retail trade, which were seriously affected by the pandemic. See the PxStat table for further information.

Household Gross Disposable Income increased by €9.3bn in 2020 and at the same time household Final Expenditure on goods and services (P.3) decreased by €11.0bn. As a result the Gross Saving of households (B.8g) saw unprecedented growth from €11.5bn in 2019 to €31.1bn in 2020. Expressed as a percentage of Total Disposable Income (that is, Gross Disposable Income and the Adjustment for the Change in the Pension Entitlement) the corresponding gross saving ratio was 10.2% in 2019 and 25.2% in 2020. Figure 1.4 shows Total Disposable Income, Final Expenditure on goods and services and the saving ratio for the household sector for the period 2011 – 2020. Also included in Figure 1.4 is the EU saving ratio. While Ireland's saving ratio has been below the ratio for the EU as a whole for most of the last decade, in 2020, Ireland's ratio rose above the EU's 19%: this was because incomes in Ireland rose faster in 2020, and because spending was curbed more than in the EU overall.

Household and NPISH Debt

The balance sheet position in relation to household and NPISH debt (Table 2.4 Liabilities – AF.4 Loans) continued to decrease from a peak of €203bn in 2008 to €134bn in 2020. The resulting debt to income ratio for this sector, which measures the sustainability of household debt, decreased to 107% in 2020. While this is well below its peak during the housing bubble, it is still significantly above the 96% ratio for the Euro area as a whole.

Figure 1.5 charts the movement in income and debt for the period 2001 to 2020 together with the ratio for Ireland and the Euro area.