September 19, 2006
Facts on growing wealth could get in the way of a good storyPosted in Celtic Tiger · 7 comments ·
When the Taoiseach starts talking like the leader of the Opposition, we know that the election campaign has begun.
Last week, he made an impassioned plea for more compassion, declaring that Ireland had become more materialistic – albeit while forgetting to mention he has been the leader of the country for over nine years.
The inference is that the New Ireland is in some way a degenerate place where the rich do well and the vast majority of us are just keeping our heads above water.
For those persuaded, the next logical step is to contend that the economic growth of recent years is an impediment to a just, tolerant and equal society. This thinking is wrong and more egregiously, false.
Firstly, Ireland is not an unequal country when measured against our European partners, let alone America. Secondly, history proves there is no greater catalyst to advancement than strong economic growth. Nobody would suggest Ireland is a nirvana, but it is much closer to that than it was when we were broke.
Rather than working on hunches, the way to explore whether Ireland is now more unequal and selfish than it was before is to look at the hard numbers.
The best place to do this is in the census, the most definitive statistical snapshot of a country at a given point. Every five years it asks people how they earn cash, and breaks the jobs down into seven classes.
The first six are a traditional top to bottom list, from highest paying jobs to lowest. The seventh category is a catch-all which collates all non-traditional jobs, like web-designing. The latest figures published last year show that the middle and upper middle classes have grown dramatically, while the lower, working or small farmer class has shrunk considerably. So times are good, not just for a few at the top, but for the vast majority.
The census shows the middle and upper middle classes are the fastest growing.
Close to half the nation is in the top three social classes. When you add the 18pc in new jobs, not defined by the traditional census question, that middle class figure rises to nearly 65pc. More importantly, the middle class has grown by 25pc since 1996.
This type of social mobility is unheard of in most developed countries.
In contrast, since 1996, every poor class has shrunk and the poorest class has shrunk most, by a huge 29pc. The next poorest class contracted by 8pc, and the lower middle class by 9pc. All of them have moved up. In the past 10 years, 200,000 people have moved from the poorest classes into the middle class. Think about the extremes: the number of people in the very top social class has increased by 22.34pc in the five years to 2002, while the number at the very bottom, as noted, fell by 29pc. The number of people in the second richest social class – now the biggest class with over one million – rose by a staggering 25.6pc or just over 200,000 people, while the number of people in the second lowest fell by 8pc.
The figure reveals very strong upward social mobility. There are now more people in the second richest class than in the four poorer strata below.
In the greater Dublin area where the population is growing quickest, the blurring of the classes is even more definitive.
Here the numbers in the top two classes have increased by 44pc while the amount of people in the lowest two classes has fallen by 51pc. Between the canals, the trend is more dramatic. We have also seen extraordinary changes in access to education. Traditionally, educational achievement equates to upward social mobility. If you are going to college, you are climbing up the ladder.
In this case, the new generation is clambering up. The number of Irish people with third level qualifications rose by 39.9pc in the period from 1996 to 2002. This is unprecedented.
During the same period, those of us with only basic education fell by 5.6pc. At the extremes, not only did the amount of poorly educated people fall, but the numbers of very educated rose dramatically. The last census reveals that the number of PhDs awarded in Ireland rose by 65.8pc.
Dublin between the canals reveals an extreme transformation. There has been an enormous 80pc jump in those people in inner city Dublin with university degrees and a 115pc increase in inner city Dubs with PhDs.
This reflects rapid gentrification of the inner city as suburban-born students, young workers and immigrants move in. But that said, most of them are children of people who did not do the Leaving Cert. It is not uncommon to hear commentators and politicians blithely claim Ireland is one of the most unequal countries in the world. This is not true. Ireland is smack in the middle of the European average on income distribution. The latest comparative figures on this are from the EU in its excellent Eurostat publication, ‘The Social Situation in Europe’. According to this definitive account, which divides the income of the richest 20pc by the poorest 20pc in each country, the European average is 4.4 times.
So the richest 20pc earns 4.4 times the poorest 20pc across the EU. And what is the figure for the so-called bastion of inequality, Ireland? It must surely be away above this – six times, eight times or even 10 times. Wrong: the actual figure is 4.5 times. We are just above the EU average and considerably more equal than Italy, Spain, Portugal, the UK, Estonia, Latvia or Greece. The international standard used in economics to measure inequality is the Gini co-efficient, which Eurostat uses. It is a measurement which runs from zero to 100. Perfect equality is zero, perfect inequality is 100. Here, Ireland lies, again, in the middle.
Hyper-equal Denmark has a score of 22; we get 29. France is at 27, while Britain at 31 is less equal. Spain is yet more unequal at 35 and Portugal more unequal again with a figure of 39. The US has 40. This implies that far from being the most unequal in Europe, we are closer to nice Denmark than to the nasty US in terms of spreading wealth.
Figures tell a different story than the rhetoric suggests. On average, we are all better off and society more equal than it was. But as the election campaign kicks off, the watchwords for all of us should be: “Never let the facts get in the way of a good story.”