Thursday 23 January 2020

Colette Browne: 'The rich get richer and the poor and middle-class stagnate because the system is designed that way'

St Vincent de Paul Society released a report which revealed that in Ireland, which has the fastest growing economy in Europe, 140,000 children are living in homes that are cold and damp. (Stock Image)
St Vincent de Paul Society released a report which revealed that in Ireland, which has the fastest growing economy in Europe, 140,000 children are living in homes that are cold and damp. (Stock Image)
Colette Browne

Colette Browne

Ireland has the fastest growing economy in the EU and the third highest quality of life in the world. So why are so many of us barely keeping our heads above water?

Yesterday, a UN report, the annual Human Development Index (HDI) rankings, found Ireland has the third highest quality of life in the world. Leo Varadkar was thrilled. After a couple of weeks of various Murphy-induced miseries for the Government, he was desperately in need of some good news.

Having pounced on the positive headline, Mr Varadkar tweeted an article which detailed Ireland's impressive ranking, adding the report was "worth reading" and "no country is without its problems but overall we're doing pretty well".

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Regrettably, the article, other than recording Ireland's position, didn't include much to explain why Ireland had done so well. For that, it was necessary to open the report and dive in.

According to the UN, HDI is a "summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living". Crucially though, "the HDI simplifies and captures only part of what human development entails. It does not reflect on inequalities, poverty, human security and empowerment".

So if you saw the headline about life in Ireland being utterly fantastic and wondered if you were losing your mind, I am happy to confirm that you have not. It would be churlish to rain all over Mr Varadkar's parade, but the HDI index is not a comprehensive appraisal of quality of life on this island.

Even in the report there were some worrying statistics about grossly high levels of income inequality in Ireland. Between 1970 and 2017, average income growth was 182pc but income growth for the bottom 40pc of the population was just 141.3pc, a difference of 40.7 percentage points, the highest disparity in western and northern Europe.

Meanwhile, the top 1pc in the country saw their incomes grow by a staggering 323.3pc during this period, multiples of the figure recorded for Switzerland (58.4pc), France (71pc), Germany (97.9pc) and even the UK (136.8pc).

Noting that the super-rich have been the primary beneficiaries of income growth in Europe since the 1980s, the report notes "the European middle-class benefited only slightly more from growth than the poorer groups".

Damningly, the study concludes "the divergence in trajectories cannot be accounted for by either trade or technology, which are often invoked to explain the evolution in inequality in developed countries… instead, the inequality dynamics appears to be more the outcome of policy choices and institutional arrangements".

In short, the rich get richer and the poor and middle-class stagnate because the system is designed that way. The house always wins.

A separate report published earlier this year, one that Mr Varadkar is unlikely to have tweeted a link to, expanded on the theme of income inequality in Ireland.

'The State We are In: Inequality in Ireland Today', published by think tank Tasc, found "Ireland's labour market structure predisposes it to high levels of inequality" and "an unusually high incidence of low pay".

Some 23pc of the workforce in Ireland are classified as low paid, with only Romania and Latvia recording a higher figure. Due to the inordinate number of people employed in low-paid jobs, the government has to use State subsidies, such as family income and child support and jobseekers' allowance for part-time workers, to help keep the poorest segments of society afloat.

"The State, in effect, subsidises a low-pay economy and enables employers to pay low wages," the report concludes. Policy choices, check. Institutional arrangements, check.

While the Government tries to redistribute income via the taxation system, which explains why those on relatively modest incomes incur a marginal tax rate of 52pc, these efforts are not enough.

Ireland is the most expensive country of the EU 28 to run a house in, and the cost of living here - paying for house costs, rent, gas, electricity and maintenance - is almost 57pc higher than the EU average.

Even when buying food, Ireland is the fourth-most expensive country in the EU with food baskets costing 20pc more than the EU average.

Confirming all of our worst suspicions, Dublin was named the most expensive city in the eurozone in which to live this year while it has also been voted the worst place in the world to move to for housing.

When it comes to the collision of low pay and high costs, something has to give. Yesterday, the St Vincent de Paul Society released a report which revealed that in Ireland, which has the fastest growing economy in Europe, 140,000 children are living in homes that are cold and damp.

SVP found Ireland again tops the charts in Europe - this time in relation to energy poverty. Irish households with children had the highest rate of utility arrears among EU peer countries, 11pc compared an EU average of 6.3pc, while children in the private rented sector were 2.2 times more likely to experience energy poverty than those in owner occupied homes.

The cranes that can be seen all over Dublin, and the mass influx of American tech companies to the docklands, belie the reality that a significant proportion of the Irish population is at risk of poverty and has difficulty providing the basics to get by.

According to a study by Social Justice Ireland published in April, one in six people in the country, or 760,000 people, lives with an income below the poverty line. This number includes 230,000 children, who account for nearly 25pc of those living in poverty.

These are children who sometimes leave their homes hungry in the morning, whose parents can't afford warm clothes for them and who shiver in their homes at night because there is no money for heating.

When Fr Peter McVerry wrote a letter last week juxtaposing the divergent treatment meted out to a homeless boy charged with the theft of a €1 drink and a TD fobbing into Leinster House to collect the €51,600 expenses he was entitled to, he described an Ireland of the haves and the have nots.

For some, the boom is back. Sky-high rents and high living costs don't pose a problem if you have a bumper salary and great perks. But a significant proportion of the population, low- and middle- income earners, are under immense pressure and struggling to get by.

Mr Varadkar, by all means, can engage in a victory lap in response to a UN report deciding Ireland has the third highest quality of life. But perhaps, before he gets too excited, he could read a few other reports, some of which are not as complimentary.

Irish Independent

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