John McManus: Only one in five is living the Irish dream

The cost of the Irish dream is now €50,000 a year. And that is just for the entry-level version.

What we are talking about here is having a house, a partner, two kids and a car. Not included is private schooling, skiing holidays and all the other aspirations of the urban middle classes.

The price of such a modest and reassuringly humdrum life was revealed by the AA this week.

Presumably they did so in the belief that somehow it will make you more likely to buy home insurance from them.

Figuring out why that might be the case is quite difficult, but what is relatively easy is calculating just how many Irish families can afford the entry-level dream.

Micheál Collins of the Nevin Economic Research Institute has done quite a lot of work in this area using data from the Central Statistics Office.

The data is quite old – from 2011 – but things have not changed that much in the interim, which in itself is part of the story.

The key point from his research is that the average disposable income of an Irish family is about €40,000 a year, which is quite some way off the price of the basic Irish dream.

In fact, only the top 20 per cent of households have a disposable income in excess of €60,000 and can thus be said to be truly “living the dream”. In numbers terms, we are are talking about only 320,000 out of 1.6 million households.

A country where the modest aspirations of only one in five households are being met is not exactly what you would describe as a nation at ease with itself.

Depending on which side of the €50,000-a-year line your household falls, it is a recipe for dangerous political instability or the harbinger of much-needed social change.

FF’s rehabilitation

In effect, Ireland is not working for 80 per cent of families. This makes it a fertile breeding ground for those offering populist solutions á la Donald Trump and the Brexiteers.

We have already had a taste of it in the amazing rehabilitation of Fianna Fáil at the last election on the back of nebulous promises about fairness.

Right now, the key political battleground must be the 400,000 or so families who are in with a shout of the economy-class Irish dream.

They are the families whose disposable income is somewhere between €35,000 and €50,000. They don’t “have it all” but they still have a good chunk of it.

They have a car, but probably need to replace it. They have a house but can’t afford to extend it. They are also the sort of people who vote.

As long as they believe the rest of the Irish dream is attainable in the near-future, they will support the status quo.

But once they as a group start to believe it has slipped beyond their grasp, they will become the Irish equivalent of Donald Trump’s angry white men.

This demographic has been dubbed the Jams – people who are Just About Managing – by British prime minister Theresa May, and played a starring role in this week's autumn statement by her chancellor, Philip Hammond.

It is estimated that six million households in the UK fall into this category and they are believed to have made up a decisive element of the pro-Brexit vote.

No doubt someone will come up with a witty Irish variant of Jams, but “public sector employee” will do for now.

Average weekly earnings in the public sector are about €900 or €48,000 a year – tantalisingly close to the entry-level Irish dream. There are currently 389,000 people on the Government payroll.

Costly reverie

It makes some sort of concessions on public sector pay inevitable, but there is no great surprise in that. It would, of course, be far more sensible to try to bring down the cost of the dream - and by far the biggest element of that is the price of housing.

The AA reckons the annual cost of owning and maintaining a family home is now €16,600.

Paradoxically, every action taken by the Government seems to be having the opposite effect.

Increased rent allowances push up rents for everyone.

The Central Bank has finally caved in to pressure and relaxed the rules on mortgage lending.

Many people will now buy thinking they are finally living the Irish dream.

When the payments on their overly large mortgage go out of the account at the start of the month and they do the sums, they will see it remains as elusive as ever. Dream on.