Tag Archives: Inequality

From top: Minister for Finance and Public Expenditure & Reform Paschal Donohoe TD at a Budget 2018 press briefing; Michael Taft

The Revenue Commissioners have produced some interesting data relating to incomes over the period of the recession and the beginning of the recovery. What’s noteworthy is the reversal of fortunes between low/average and top income earners in these two periods. There are some caveats in the data.

First, Revenue income data includes those with occupational incomes which are taxable. So the following data includes more than just those at work

Second, incomes do not include contributions to pension schemes; therefore, this is likely to understate incomes at the higher end.

Third, this counts cases, not individuals. This is important when it comes to ‘married’ cases where there are two earners but only counted as one tax case.

Keeping these caveats in mind let’s see what stories the data may be telling us.

Over the period of recession and stagnation, median incomes (the point at which 50 percent earn above and below) increased while the incomes at the top declined – for the top 0.1 percent, quite substantially.

We should note that the rise in median incomes doesn’t mean that all or most received income increases. This could include the compositional effect whereby people lost their jobs, changing the make-up of the group we are measuring.

For those at the higher incomes, the decline was due primarily to the self-employed (property-related?). The EU Survey of Income and Living Conditions shows that employee (PAYE) income rose between 2007 and 2012; however, self-employed income fell by nearly two-thirds.

The story changes, however, when the recovery set in. Between 2012 and 2015, median income fell marginally by 1 percent. However, the top 10 percent saw incomes rise by 2.1 percent while the top 1 percent and top 0.1 percent experienced income increases of 3.6 and 6.8 percent respectively.

Other Revenue data confirms this trend.

Prior to the crash, the top 20 percent earned 4.9 times that of the bottom 20 percent. This fell during the recession but started rising with the recovery. This is consistent with the data above.

While Revenue shows rising inequality among income tax payers, there is other data that shows inequality falling.

This Gini coefficient measurement refers to market incomes (before social transfers) and covers the entire population, not just those in work; the higher the number, the higher the inequality. We see Ireland returning to pre-crash levels; and in contrast to Revenue, inequality has fallen since 2013.

We should note, though, that Irish market inequality remains substantially higher than our peer group. Indeed, it is the highest in the entire EU, not just our peer group.

Returning to pre-crash levels is not enough from an equality perspective. And if the trends identified in the Revenue data persist, Ireland’s Gini coefficient could start to turn north.

Three policy responses (among many) are needed to address in-work in equality:

First, collective bargaining: there are indications that sectors with high levels of collective bargaining rise to the average of our peer group (along with those sectors where there is high labour demand such as the ICT sector). However, those sectors with low bargaining coverage and union density fall well behind. Collective bargaining – especially in the large domestic sectors such as retail and hospitality – would boost wages and working conditions and make a substantial contribution to closing the inequality gap.

Second, increase the social wage – that is, employers’ social insurance and introduce new in-work innovations such as pay-related sick pay and pay-related maternity benefit. We are an outlier by not linking social benefits with income. This, again, would boost low/average incomes especially as many high-income earners already benefit from workplace schemes designed to protect incomes.

Thirdly, limit precarious contracts by not only facilitating collective bargaining across sectors, but introducing minimum requirements regarding certainty of working hours, temporary contracts and, specifically, public sector and public agencies’ outsourcing.

We shouldn’t always think that inequality is about taxation and social transfers (though there is that). The inequality that flows from the workplace must be addressed in the workplace. And we can do this without resorting to fiscal space gymnastics.

But the benefits – in terms of increased tax revenue (though higher wages) and higher consumer demand (through social benefits and certain working hours) – shows that reducing inequality can be a win-win win situation; for the workers, the Exchequer and domestic businesses reliant on the spending power of workers.

Michael Taft is a researcher for SIPTU and author of the political economy blog, Notes on the Front. His column appears here every Tuesday

labour anne-marie-291x300

From top: Screenshot from a new Labour social media ad campaign; Anne-Marie McNally

Rejoice.

We have introduced marriage equality into a desperately unequal society.

Anne Marie McNally writes:

At the moment the Labour party have a Facebook ad campaign running through people’s newsfeeds called ‘Standing Up For Equality.’

The ad shows a young same-sex female couple and their young children happily facing into an Ireland where they are treated as equals.

Could the Labour party run the same tagline ‘Standing Up For Equality’ with the same couple, or any couple, walking out their front door and facing into the Ireland that is now the most unequal country in the EU in terms of how income is distributed in the economy?

The most recent budget simply served to consolidate that income inequality and entrench the ‘them and us’ mind-set that is so pervasive in Irish society. There can be no doubt that income inequality and social deprivation leads to a disenfranchising of large cohorts of the population with the resulting social ills manifesting in a variety of ways.

Eric Uslaner, a prominent political scientist said, “Trust cannot thrive in an unequal world” and ultimately income equality is the prime mover of trust. Indeed Emile Durkheim, commonly considered as the father of sociology, identified that suicide rates were impacted by how well people felt integrated into society.

Here in Ireland, we presently have one of the highest rates of suicide for both youths and adults across the EU.

Almost all academic findings point to the fact that in societies where wealth is more evenly distributed, the health of that society is simply better overall. The sense of social cohesion and a feeling of ‘being in this together’ promotes integration and shared experiences and thus, reduces everything from health problems to crime levels.

In an unequal society the emphasis tends to be on domination and the attainment of power as opposed to those more equal societies where the common good and shared experiences are valued. Japan and the Scandinavian countries for example have a situation where the richest 20% in society are less than four times richer than the poorest 20%. Keep those figures in mind then look at the social indicators in those countries.

The educational outcomes, their mental well-being indicators and even their life expectancy rates are higher. Their crime rates and prison populations are lower. To cut a long story short – they’ve gotten it right.

In an Ireland of ever increasing inequality it seems somewhat hollow to pat ourselves so firmly on the back for delivering marriage equality whilst ignoring those struggling at the bottom end of an ever-increasing wealth divide.

There are ways to address this inequality in the same way we bravely addressed marriage equality – look the inequality square in the eye and say ‘enough’.

If we reduce the cost of living then we automatically increase the disposable income in a person’s pocket. But how do we decrease the cost of living in a dynamic capitalist model?

A country where the powerful top 20% of earners have the lobbying power to insist on tax-cutting measures that benefit their sheltered and comfortable existence whilst those of us on the other end of the spectrum bear the brunt of those same tax cuts in terms of public spending.

The answer is simple – you reduce the cost of living by funding and investing in the services that people need to live a healthy dignified life – healthcare, education, social protection, childcare, older care. The security that comes from knowing the State has your back in times of trouble in and of itself creates social harmony and mental well-being.

Public Services should not be reduced to bare commodities that are the preserve of those who can afford them but should rather be acknowledged as a social good for the benefit of all, equally.

The founder of the NHS in the UK, Aneurin Bevan famously said “no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means.” The same premise applies for all fundamental public services.

So it’s my bet that the lovely couple in the Labour ad favour equality in all its forms and realise that they’d do far better if Labour, and every other party, really would ‘Stand Up For Equality.’

Anne-Marie McNally is a political and media strategist working with Catherine Murphy TD and will be a candidate for the Social Democrats in the forthcoming General Election. Follow Anne-Marie on Twitter: @amomcnally

poor

 

Ferret McGruber writes:

“The gap between rich and poor has expanded nearly everywhere in the last few years, but nowhere more than here in Ireland (see graph). Yesterday the UN voted to introduce a protective framework against ‘vulture funds’ for insolvent nations.
The resolution was carried with 124 in favour and only eleven nations against. One of the 11 nations to vote against the resolution: Ireland. I’m lying down lads. Put your boots on me neck…”

The Vultures Come Home To Roost (I.Doubt.It)

originalA graph mapping the income gains of the top 1 percent in several countries, including Ireland, against the tax breaks most of them have gotten since 1960.

 

The higher the dot, the more income inequality has grown in that country.
…One thing you’ll notice in this chart is that, typically, the bigger the tax cuts given to the 1 percent (the horizontal scale on the chart), the bigger the income inequality.

This is consistent with other studies that have shown the tax code has a big effect on income distribution.

 

The U.S. Has The Worst Income Inequality In The Developed World, Thanks To Wall Street: Study (Huffington Post)

Thanks Blueswannabe