Income of poorest households fell by more than 18% in one year while the income of richest households rose by 4%

The disposable income of Ireland’s poorest households fell by 18.6% in a single year while the income of the richest rose by 4.1%. (Disposable income is the income one has after taxes paid and social welfare received.)

Today the top 10 per cent of the population receives almost 14 times more disposable income than the poorest 10 per cent receive (28.5% compared to 2.06%). It was 8 times more in 1980.

Government policy is continuing to increase the income of the richest ten per cent of households and widening the gap between these and the rest of society.

The income of Ireland’s poorest households fell by more than 18% in a single year while the income of the richest rose by more than 4%.  There is something profoundly wrong with Government decisions that produce this lop-sided distribution of income favouring the richest when Ireland’s poor and middle-income people struggle to make ends meet in these extremely difficult times.

These are some of the key finding contained in Social Justice Ireland’s Policy Briefing published on July 16, 2012 which analyses the related issues of Poverty and Income Distribution and shows how Ireland’s income distribution has changed over the past 30 years. 

Rich/Poor gap widening

Today the top 10 per cent of the population receives almost 14 times more disposable income than the poorest 10 per cent receive (28.5% compared to 2.06%). In this context disposable income is the income one has after taxes have been paid and social welfare has been received but before any bills have been paid.  

The situation has become much worse over the past thirty years.  In 1980 the richest ten per cent of the population received 8 times more than the poorest 10 per cent, now it receives 14 times more.

Government strategy

The current strategy being pursued by Government is making the situation worse.  Its approach to fiscal adjustment (i.e. emphasising cuts rather than broadening the tax base) is both unjust and unnecessary in a country with one of the lowest total tax-takes in the developed world. Decisions have been taken that have seriously damaged Ireland’s most vulnerable people, that place a disproportionate burden on their shoulders and seriously damage the social infrastructure on which they depend.

Serious damage

The Policy Briefing goes on to point out that:

• Economic growth is sluggish at best with projections for the coming years consistently being revised downwards;
• Unemployment is rising;
• 187,400 people are long-term unemployed;
• Employment fell in the first quarter of 2012;
• Even though the poverty line fell by over 10% from €12,064 to €10,831 the numbers in poverty increased;
• Over 700,000 people are at risk of poverty (with an income equivalent less than €207.94 a week for a single person (10,842 a year) or €482.41 a week for a household of four (€25,154 a year).
• Over 200,000 children in Ireland are living in poverty - up 35,000 in three years;
• Almost 120,000 people with a job in Ireland are at risk of poverty – these are the working poor.

Action required

Social Justice Ireland believes that in the period ahead Government and policy-makers generally should:

• Acknowledge that Ireland has an on-going poverty problem.
• Assess the impact on society’s most vulnerable people of any proposed policy initiatives aimed at achieving the fiscal adjustments required by the EU/IMF bailout and the Government’s multi-year budgetary plan.
• Change the ratio of expenditure cuts to tax increases in forthcoming budgets. Tax increases should account for two thirds of the required fiscal adjustment.
• Examine and support viable, alternative policy options aimed at giving priority to protecting vulnerable sectors of society.
• Provide substantial new measures to address long-term unemployment. This should include programmes aimed at re-training and re-skilling those at highest risk.
• Recognise the problem of the ‘working poor’. Make tax credits refundable so as to address the situation of the 29.1% of all households in poverty which are headed by a person with a job.
• Introduce a cost of disability allowance to address poverty and social exclusion of people with a disability.
• Poverty-proof all public policy initiatives and provision.
• Recognise the problems of poverty among migrants and adopt policies to assist this group. In addressing this issue also reform and increase the ‘direct provision’ allowances paid to asylum seekers.
• Accept that persistent poverty should be used as the primary indicator of poverty measurement once this data becomes available.
• Move towards introducing a basic income system. No other approach has the capacity to ensure all members of society have sufficient income to live life with dignity.

The most important requirement in tackling poverty is the provision of sufficient income to enable people to live life with dignity. No anti-poverty strategy can be effective without a policy addressing low incomes.

The Policy Briefing on Poverty and Income Distribution may be accessed here.