September 19, 2006

Facts on growing wealth could get in the way of a good story

Posted 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.”

  1. Cohen

    As much as I have time for many of your articles, there are
    lot of dubious statistics and generalisations that are as
    equally questionable as the position you are trying to

    1) Your definition of “middle class” is highly
    questionable. In fact, it goes directly against many of the
    arguements you have made in previous articles. The fact
    that families have the ability to amass crippling levels of
    debt via a credit card does not make them affluent. There
    are families in Ireland that fall below the official
    poverty line, whose children are malnourished and bordering
    on illiterate; yet these very same families insist upon
    buying Sky digi-boxes, the latest mobile phone, etc. So,
    traditional models of class are arguably outmoded.

    2)Statistics seem to suggest that access to education
    amongst working class families is falling, not rising. The
    fact that the number of “inner city Dubs achieving PHDs has
    risen by 110%” is entirely spurious: it probably means that
    two people, rather than one, graduated with a PHD last year.

    3) “In greater Dublin, where the population is growing the
    quickest…” I thought you recently argued that population
    in Ireland’s urban centres was in rapid decline?

    4) The fact that “you are going to college” does not
    mean “you are climbing up the ladder”. There are far
    complex factors than that; the nature of the course, the
    drop-out rates, the relationship between course completion
    and finding a relevant job.

    5) The entire basis of your article is based around census
    figures. Some 20+% of the adult Irish population are
    considered “functionally illiterate”, which would make them
    incapable of filling out the census form in the first
    place. The “underclass”, for the want of the better word,
    is on the the rise in Ireland, not in decline. The fact
    that the census does not fully represent the growing
    marginalisation of the poor in Irish society is hardly

  2. Cohen

    From the Irish Independent, Oct 6:

    FEE-PAYING and grind schools have dominated entry to UCD
    this year.

    The figures show that 40pc of students paid anything up to
    €5,500 to study for their Leaving Cert last year.

    The so-called ‘league table’ of feeder schools confirms the
    growing divide in Irish education.

    It shows that of more than 4,000 first years in UCD:

    * Almost 1,300 had attended fee-paying schools such as
    Blackrock, Belvedere and King’s Hospital.

    * Nearly 400 had attended ‘grind’ schools such as the
    Institute of Education.

    The table confirms that the fee-charging sector is squeezing
    out schools in the free education scheme from the top 20 slots.

    Fee-paying and grind schools made up 39pc of UCD’s intake
    this year between them, although they account for less than
    10pc of total second-level enrolments.

  3. b.barry

    a rehash of old articles … poor …

  4. Edward Dalton

    Well I’m glad I moved to London 2 years ago. I am well paid
    and I own a house in London which didn’t cost a fortune!
    Food and public transport does not cost a fortune. I’m
    always on time to work in Canary warf and the tube always
    runs on time.

    Life is good in London and after moving over here my stress
    levels went down a good bit.

    Enjoy Ireland and the Poles and Muslims can keep it.

  5. Garry

    More compassion and tax individualization.
    Rooting out corruption and accepting donations to pay legal

    Sure you wouldnt want to take anything thats Bertie says
    said too seriously. Somehow the country muddles along, and
    no doubt we are all a lot better off than 20 years ago. And
    probably just as equal, the new poor are the people getting
    up at 6 to hit the M50 before the rush instead of sleeping
    till 1 cos there was no jobs.

    On a materialistic note, property and stamp dury.

    Could McDowell’s first act as PD leader be to finally kill
    the property boom and bring about the fabled ‘soft landing’
    or cause the crash…

    Thankfully Im not trying to buy or sell but I know if I was
    buying, I’d hold off till the dust settles on whats going
    to happen on stamp duty. Prices are certainly not
    increasing right now, and with more sellers than buyers, if
    the remaining buyers back off till after the budget,
    there’ll be a lot of nervous people out there between now
    and the end of the year…

    But sure maybe people wont take what Mick says too
    seriously either?

  6. SpinstaSista

    In years gone by those with a college education left
    Ireland to get work elsewhere. Those who remained in
    Ireland were often overqualified for their jobs. During
    the boom years there was plenty of work for graduates, but
    it’s not so easy for graduates to find work in Ireland
    these days. A fair few Irish graduates are now
    overqualified for their work, but when we take into
    account the Eastern European graduates who are working in
    delis and on building sites we’re not so badly off.

    Having said that I think that Irish graduates are starting
    to emigrate again, but it wouldn’t do Bertie & co any good
    to bring that fact to public attention.

    Edward Dalton, there are Poles and Muslims in London too,
    along with other ethnic groups such as the Irish!

  7. cathal

    thankfully david there are people out there like yourself that are willing to go against the lazy journalism that is prevalent in ireland at the moment.
    if you were to believe most irish media,you’d swear we ireland was a mix somewhere between iran and somalia.with poverty and inequality everywhere.
    the fact is that everyone has gotten wealthier in the past 15 years.the numbers going to college have quadrupled since 1980,yet still some people complain the the universities of ireland are populated by an elite

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