Ireland failing on health and underperforming on housing – OECD

Agency’s latest report on State notes strength of recovery but highlights challenges

OECD  predicted the Irish economy would continue expanding over the next two years, albeit at a “more sustainable pace”, forecasting growth of 2.9%  this year and 2.4%  next year. Photograph: Getty Images

OECD predicted the Irish economy would continue expanding over the next two years, albeit at a “more sustainable pace”, forecasting growth of 2.9% this year and 2.4% next year. Photograph: Getty Images

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The Republic has recovered strongly from the crash, but is “failing” when it comes to healthcare and “underperforming” in other key areas such as housing, the Organisation for Economic Co-operation and Development (OECD) has said.

In its latest biannual report on Ireland, the Paris-based agency said Ireland had enjoyed the strongest post-crisis recovery of any state in the OECD, and that average wages here were now comparable with most other top-tier economies.

However, it warned that business needed to revive productivity “to ensure Ireland’s future economic dynamism” and to maintain high living standards.

The report noted that indigenous companies compared poorly on productivity with foreign-owned multinationals active in the Republic, with productivity gaps between them widening.

The report said Ireland still faced significant challenges in addressing access to healthcare, housing affordability and getting marginalised groups into work.

The Irish health system, it said, was failing in terms of cost, patient satisfaction and waiting times. And it noted that demand pressures were likely to increase, with the population expected to age markedly over the coming 15 years.

“Ireland does not have universal coverage for primary healthcare, contributing to poor access and high health costs for some households that cannot afford private insurance,” the OECD said.

Lack of supply

On housing, the organisation said affordability in Irish cities had been eroded by the lack of supply. While recent policy initiatives had sought to address this, they were mostly focused on demand-side measures when supply needed to be prioritised.

It also said there were “well-located swathes of land” that were under-utilised and should be rezoned for residential use. To promote a more efficient use of such land, it advocated introducing a land tax.

The agency also noted that employment rates here were particularly low for young, less educated individuals, and cautioned that some aspects of the social welfare system acted as a disincentive to labour market participation.

In its assessment, the OECD said Ireland’s robust recovery had now broadened to domestic demand, while the State’s export performance had displayed a sustained improvement.

It predicted the Irish economy would continue expanding over the next two years, albeit at a “more sustainable pace”, forecasting growth of 2.9 per cent this year, significantly lower than other forecasters, and 2.4 per cent next year.

However, it warned Ireland’s prospects were “clouded with uncertainty” because of Brexit, which it said could reduce exports by 20 per cent in some sectors.

Tax competition

It also highlighted rising international tax competition as an additional risk to the outlook. While noting the strength of recovery, it said vulnerabilities in Ireland’s financial sector also needed to be “further addressed”.

Non-performing loans (NPLs) on bank balance sheets have declined by around 60 per cent from their peak, the OECD said, but added that the stock of such loans remained high.

“This reflects judicial inefficiencies relating to the repossession of collateral and limited progress in improving the regulatory framework for writing-off NPLs,” it said.

Speaking at the launch of the OECD’s survey, Minister for Finance Paschal Donohoe welcomed the report, describing it as “comprehensive, balanced and constructive”.

He said the report pointed “to the robust economic recovery and associated improvements in well-being since the last survey in 2015, and identifies areas for further improvement”.

“I have also noted that the survey emphasises the challenges and heightened uncertainties, including from Brexit, that Ireland faces over the medium-term,” Mr Donohoe said.

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