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Chart authors:
TerrenceMcDonough
JasonLoughrey
Booklet authors:
TerrenceMcDonough
JasonLoughrey
Project supported by:
ICTU(IrishCongressofTradeUnions)
TASC(athinktankforactiononsocialchange)
SSRC(SocialSciencesResearchCentre,NUIGalway)
TASC2009
Hierarchy of Earnings, Attributes and Privilege Analysis
THE H.E.A.P. CHART
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Reducing the income gap
Workablepoliciesaimedatreducingthegapbetween
highandlowincomesconstituteasecondstrategy
thathasbeenusedeffectivelyinothercountriesto
promoteeconomicequality.Therearetwoapproaches
thatcanbeusedtoreduceincomedifferentials.The
rstinvolvesredistributingincomefromrichtopoor
householdsthroughprogressivetaxationofincome
andwealth,whilethesecondinvolveshavingsmaller
differencesinincomesbeforetaxesandbenets,which
meansthereislessneedforredistribution.Sweden
achievesgreaterincomeequalitythroughredistributionwhile,inJapan,incomeequalityisachievedbyhaving
smallerincomedifferentialsbeforetaxes.
Inthemediumtolongterm,advancingincomeequality
wouldinvolveavarietyofmeasures,rangingfrom
addressingtheexcessivelevelsofexecutivepayand
bonusesenjoyedbysomeofthoseatthetopofthe
H.E.A.P.,toincreasingtheincomelevelsofthoseat
thebottomoftheH.E.A.P.bysettingaminimum
incomeoor,whichensuresthatno-onehasan
incomelessthan60percentofthenationalmedian
income.Preventingexcessivelyhighincomesandconcentrationsofwealthatthetopisasimportant
aspullinguptheincomesatthebottom.
Investment in education
Athirdandcrucialpolicyareaimpactingonincome
equalityinvolveseducation.Theanalysisclearly
demonstratestherelationshipbetweeneducation
andincomelevels,wherebythosewithhigher
levelsofeducationhavetheopportunitytoearn
higherincomes,andthosewithlowereducation
levels(primaryandsecondary)havesignicantly
lowerlevelsofincomeandareatmuchgreater
riskofpoverty.
Irelandcontinuestospendproportionatelylesson
education(4.7percentofGDP)whencomparedtothe
averagespendacross30OECDcountries(5.7percent
GDP).TheOECDhasalsofoundthatIrelandspends
relativelylittleonearlychildhooddevelopmentand
educationcomparedtoothercountries,andthatthe
percentageofIrishchildrenlivinginpoorhouseholds
(16.3percent)issignicantlyabovetheOECDaverage
(12.4percent).
Investmentinearlychildhooddevelopmentand
educationintherstsixyearsoflifereduces
inequality.Inpurelyeconomicterms,spendingin
thisareaisoneofthebestinvestmentsacountry
canmake.Overall,greaterinvestmentineducation,
andespeciallyearlychildhoodeducation,isneeded
ifincomeinequalityistobeaddressed.Aswith
socialprotection,increasedinvestmentineducation
wouldrequireprogressivetaxationtogetherwitha
broadeningofthetaxbase.
Thereisnoshortageofpolicyoptionsthatcanbeused
toaddressincomeinequalityandthethreeexamplesoutlinedabovedemonstratesomepracticalstepsthat
canbetakentoaddressthesymptomsandthecauses
ofincomeinequality.
Alltheevidenceshowsthataddressingincome
inequalityisessentialifwewanttoachieveeconomic
equality,whichisofcentralimportancetoourfuture
wellbeing.Thepolicyoptionswechoosetoadvance
thisaimarelessimportantthanwhetherornotwe
ultimatelysucceedintransformingIrelandfroma
societysufferingundertheweightofinequalitytoone
characterisedby(andgainingfrom)equality.WehopetheH.E.A.P.Chartwillinformthedebateoninequality
and,inparticular,willbeusedtostimulatediscussion
onhowwecanachievegreaterequality.
TASCandICTUwouldliketothankProfessor
TerrenceMcDonoughandJasonLoughreyfromthe
SocialSciencesResearchCentreatNUIGalwayfor
undertakingthisprojectandbringingittolife.
DavidBegg(ICTU)
PaulaClancy(TASC)
November2009
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02.Foreword
05.IntroductionandPurpose
07.WhatistheH.E.A.P.Chart?
HowtousetheChart
Datasource
Occupationaldenitions
10.InequalityinIreland
Measuresofinequality
Povertyrates
Hasinequalityworsened? Wealthinequality
16.WhyInequalityMatters
TheSpiritLevel
InequalityandIrelandscurrentcrisis
20.TheH.E.A.P.Chart:InterpretationandAnalysis
Theeffectofgovernmentbenetsandtaxation
oninequality
TheroleofSocialWelfare(SW)paymentsin
addressingpoverty
Comparisonofincomesformenandwomen Theeffectofeducationoninequality
26.Conclusions
27.Appendix:SuggestionsforWorkshopUse
28.Acknowledgements
TABLE
OF
CONTENTS
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Weallliveinunequalsocietiesinanunequalworld.Whatstandsoutmost
sharplyismassiveinequalityinthelifeprospectsoftherichandthepooran
inequalitywhichimpactsonarangeofoutcomesincludinglifeexpectancy,
health,happiness,educationandincome.
Inequalitiesareembeddedintheeconomicstructuresof
societyinareassuchasownership,wealth,income,taxation,
employment,health,housingandeducation.Althoughmany
peopleareawarethateconomicinequalitiesexist,somebelieve
thatthesolutionistoimprovethewell-beingofthepoorestinsociety,withoutaddressingtheissueofequalityitself(i.e.
thegapbetweenrichandpoor).However,recentresearchby
RichardWilkinsonandKatePickett,publishedintheirbook
TheSpiritLevel,indicatesthatwhileitisimportanttoimprove
thepositionoftheleastwell-offinsociety,thelevelofequality
alsomatters.Inthewordsofthebookssubtitle:moreequal
societiesalmostalwaysdobetter.
Manypeoplendthattheyassociateintheirworkingandpersonalliveswith
othersatroughlythesamelevelofincomeandsocialstatus.Itiseasyto
assumethatthemajorityofpeopleinthecountryshareyourincomelevel.Groupsoutsideourownincomelevelbeithigh,low,ormiddlingtendtobe
lessvisible,andthereforeeasilyforgottenorignored.Inordertogetthebig
pictureofequalityorinequalityinIrishsocietyitisimportanttostepoutside
ourownpersonalexperience.WehopethattheHierarchyofEarnings,Attributes
andPrivilege(H.E.A.P.)Chartandanalysiswillhelpusallseethatbigpicture.
ThepurposeoftheH.E.A.P.Chartandthisbookletistoprovidesomeofthe
basicfactsrelatingtoincomedistributioninIreland,drawingon2006data.
Theanalysisprovidesaclearandeye-openingpictureofIrelandssocio-economic
structureintermsofincomedistribution,occupationandhouseholdtype
(e.g.female-headedhouseholds,couplesetc).
Onceweknowtheoverallsituation,we
canstartdebatingwhetherthecurrent
stateofincomedistributionishealthyor
desirable.Andifweconcludeitisnt,we
mustbeginanewdebateabouthowwe
addressincomeinequalityandhowwecanachieveajustsociety.
Foldedinsidethiscompanionbooklet,theH.E.A.P.Chartshowscolour-codedguresallowingus
tolocatehouseholdtypesandoccupationswithintheincomedistribution.Thisbookletprovides
aclearexplanationonhowtousetheH.E.A.P.Chart,andputsahumanfaceonthedrystatistics
underpinningdiscussionsoninequality.
INTRODUCTION
AND
PURPOSE
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H.E.A.P.standsfortheHierarchyofEarnings,Attributes
andPrivilege.Earningsareusedtolocatehouseholds
onthechartfromthebottomtothetop.Attributes
includeemploymentstatus,occupation,andfamilytype.
Privilegeiswherehouseholdsstandinrelationtoone
anotheraretheyatthetop,middleorbottomofthe
incomeheap?
WhiletheH.E.A.P.Chartoffersanat-a-glanceviewof
incomedistributioninIreland,italsomeritscloserstudy.
Inadditiontoinformationabouthouseholdincome,
theChartcontainsinformationaboutthestructureof
Irelandsfamiliesandtheoccupationsoftheadultsin
thefamily.
07
EachiconontheChartrepresents2,800Irish
households.Becauseofthis,somefamilieswithlesscommonoccupationsandhouseholdtypeswillnot
showupontheChart.Ifyoundthisisthecasefor
yourhousehold,youcanchoosetheclosestmatching
iconatyourincomelevel.
Thedataisdrawnfromsurveyscarriedoutin2006.
Theyear2006waschosenbecauseitrepresents
thelatestavailabledata.Itwasalsothelastyearof
theboom,somuchhaschangedsince.Theongoing
recessionhasaffectedincomesatalllevels.Thus,
whileincomesacrosstheboardarereduced,the
structureofoverallincomeinequalitystillapplies.TheChartwillbeupdatedwithnewdataasit
becomesavailable.
YoucanndyourhouseholdslevelontheChartby
addinguptheincomesofeachindividualandthen
addinggovernmentbenetsreceived.Wehave
usedpeoplesheadlineannualincometomake
thiseasier.Wecouldhavecorrectedfortaxation
andotherfactorswhichinuencetakehomepay,but
thiswouldhaveaddedcomplications.Whenadding
upyourhouseholdincome,use2006gureswhere
possibleandmakesuretoincludethefollowing:
The incomes of all adults
Theincomesofallchildrenunder16shouldbe
included.Adultchildrensincomesshouldbe
includediftheyareunder20,000.Unmarriedadults
inthehouseholdwhoearnmorethanthisamount
areconsideredindependentandarerepresented
asseparatehouseholds.Benetsinkindfromyour
employer,likeacompanycar,shouldbeincluded.
Perhapssurprisingly,thestatisticsincludeemployers
PRSIinemployeeincome.Consequently,ifyouhaveanemployerwhopaysPRSIyoumustaddthisamount
toyourincometondyourplaceonthechart.Ifyou
madelessthan18,512youmustadd8.5percent
astheemployerhasalowerPRSI.Forinstance,if
youmade10,000thiswouldbe850.Ifyoumade
18,000thiswouldbe1,530.Ifyoumademorethan
18,512youmustadd10.75percent.Thiswouldbe
1,075forevery10,000.
Pensionsshouldbeincluded.
Propertyincomelikerentorsharedividendsshouldbeincluded.
Youshouldalsoincludeanymoneyyoumadefrom
thesaleofanyassetslikepropertyorshares.
Government benefts
Theseinclude:
unemploymentbenets;
oldagebenets;
childbenets;
housingallowances;and
education,survivors,sickness,carersand
disabilitybenets.
Mostfamilies(95percent)willbeabletousethe
largechartshowinghouseholdswithincomesof
134,000orless.Householdincomesupto330,000
areincludedinthesmallerchart.Ifthischartwere
printedtothesamescaleasthebiggerchart,the
highesticonwouldbetwometresupthechart.
Incomesabovethislevelaretoodispersed,andthe
householdstoofewinnumber,tocreateanicon,
exceptforoneat600,000.Thisiconwouldbeacouplewithtwomanagerial/professionalincomes.
WHATISTHE
CHART?
H.E.A.P.
HowtousetheChart
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Example 1:
Acouplewithtwochildren.Themanisawelderearning
27,000.Thewomanisasalesclerkearning18,000.
WelderscomeunderCraftandrelatedoccupations.
SalesclerkscomeunderSalesoccupations.
Thewelderwouldhavetoadd10.75percentfor
employersPRSI.
27,000x1.1075=29,902.50
Thesalesclerkwouldhavetoadd8.5percentfor
employersPRSI.
18,000x1.085=91,530
Childbenetfortwochildren(2006rate)is3,600.
29,902.50+19,530+3,600=53,032.50
Thiscoupleshouldgotothelineoficonsbetween
52,000and54,000andlookforacoupleiconwith
acolourcodedividedbetweenCraftandrelated
andSales.
Example 2:
Asinglewomanwithonechild,workingasahairdresserearning25,000.Heroccupationwouldcomeunder
Personalandprotectiveservices.
Shewouldhavetoadd10.75percentfor
employersPRSI.
25,000x1.1075=27,687.50
Shewouldthenadd1,800childbenet(2006rate).
27,687.50+1,800=29,487.50
Sheshouldgothelineoficonsbetween28,000and
30,000andlookforasinglefemaleiconwithdependents
colourcodedforPersonalandprotectiveservices.
Example 3:
Asingleretiredmanonthecontributorygovernment
pension.Hewouldbereceivingjustover10,000in
pensionpayments.
Heshouldgotothelineoficonsbetween10,000and
12,000andlookforasinglemaleiconcolourcoded
forRetired.
SINGLE MALE SINGLE FEMALE FEMALE PLUS
DEPENDENT
COUPLES
To fnd your households position on the Chart
First,ndthelevelofyourfamilysannualhousehold
income.Thenlookalongtherowtondtheicons
whichmostcloselycorrespondtoyourhousehold
type.Wehaveincludedthefollowingfamilytypes:
Thecouplescategoryincludesbothcoupleswithandwithoutchildren.Non-retiredcoupleswithoutchildren
weretoofewinnumbertoincludeasaseparate
category.Thesameconsiderationappliedtosinglemen
withchildren.Althoughwewouldhavelikedtoexplicitly
recognisethisfamilycategory,theytendedtodisappear
intheaggregationnecessarytocreatetheicons,and
hencewerenotincludedasaseparatecategory.We
werealsounabletodistinguishbetweensame-sex
couplesandsinglepeoplesharingaccommodation.
Same-sexsingleadultssharingaccommodationare
usuallyrepresentedasseparatesingleadulthouseholds.
Finally,ndtheiconwhichmostcloselymatchesthe
occupationsoftheadultsinyourhousehold(each
iconiscolour-codedtodenoteoccupation).Wehave
distinguishedthefollowingoccupationalcategories:
Managerialandprofessional
Clericalandsecretarial
Craftandrelated
Sales
Other
Personalandprotectiveservices
Plantandmachineoperatives
Unemployed,peoplewithdisabilitiesandstudentsRetired
Farmers
Homeduties
Whereacouplehasdifferentoccupations,theiconis
splitbetweenthetwocolours.Afulldescriptionofthe
occupationsisfoundonthenextpage,includingmany
examplesofjobtitlesincludedineachcategory.
Thefollowingillustrateshowtolocatedifferent
householdsontheChart.
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ThedatafortheChartissourcedfromtheIrishSurvey
ofIncomeandLivingConditions(SILC).Thedatafrom
theIrishSILCfeedsintotheEU-SILC,whichistheEU
referencesourceforcomparativestatisticsonincome
distribution,livingconditionsandsocialexclusionat
Europeanlevel.
ThepurposeofSILCistoallowtheMemberStatesand
theEuropeanCommissiontomonitornationaland
EUprogresstowardskeyEUobjectivesintheareas
ofsocialinclusionandsocialprotection.EU-SILCisa
multi-dimensionalsurveyfocusedonincomebutalsocoveringtime,housing,materialdeprivation,labour,
health,demographyandeducation.AlltheEUcountries
andafewothersnowconductcomparableSILCsurveys.
Plant and machine operatives
Power-productionoperators;watertreatmentoperators;assembly-lineoperators;industrial-robotoperators;chemical-productsmachineoperators;printing-machineoperators;sewing-machineoperators;food-processingmachineoperators;andvehicledrivers.
Unemployed, people with disabilities and students
Thiscategoryincludespeoplewhoareunabletoparticipateintheactiveworkforceduetodisability;thosewhoarecurrentlyunemployed,butavailabletotakeupemployment,andfull-timestudents.
Retired
Thiscategorycomprisesthosewhohaveretiredonagegrounds.
Farmers
Cropgrowers;vegetablegrowers;horticulturalists;dairyandlivestockproducers;poultryproducers;farmlabourers;forestryworkers;andsheryworkers.
Home Duties
Thiscategoryincludespeoplewholookafterchildren,olderpeopleand/orpeoplewithdisabilitiesonanunpaidbasis,andthosewho,becauseofhomeduties,arenotavailabletotakeuppaidemployment.
Managerial and proessional
Managers,directorsandotherexecutives;scientistsandengineers;healthprofessionals;teachers;businessprofessionals;lawyers;writers;andtechnicians.
Clerical and secretarial
Secretaries;clerks;cashiers;banktellers;travelagents;receptionists;telephoneoperatorsandcall
centreoperators.
Crat and related
Builders;plumbers;electricians;painters;welders;motormechanics;handicraftworkers;foodprocessingworkers;textileworkers;garbagecollectors;constructionandmaintenancelabourers.
Sales
Models;shopsalespersons;shopdemonstrators;marketsalespersons;andstreetvendors.
Personal and protective services
Travelguides;waitersandbartenders;child-careworkers;personalcareworkers;hairdressers;
beauticians;undertakers;re-ghters;policeofcers;armedforces;domestichelpersandcleaners;caretakers;messengersandporters.
TheSILCsurveydividesoccupationsintonine
categories.Theseare:managersandadministrators,
professionals,associateprofessionalandtechnical,
clericalandsecretarial,craftandrelated,personal
andprotectiveservices,sales,plantandmachinery
andother.Inaddition,thosenotinworkarecounted
invecategories:unemployed,thoseonhomeduties,
students,peoplewithdisabilitiesandretired.
Toincludeallofthesecategoriesseparatelywould
createtwoproblems.Firstly,somecategoriesarenot
numerousenough,andwouldtendtodisappearwhenfamiliesareaggregatedintoicons.Secondly,including
allcategorieswouldcreatetoomanycoloursonthe
chart.Wehavecombinedthemanagerial,professional
andassociateprofessionalcategoriesintoone
managerialandprofessionalcategory.Wehavealso
combinedtheunemployed,peoplewithdisabilitiesand
studentcategories.
Examplesofthetypesofjobswithineachcategoryare
listedbelow.
Datasource Occupationaldenitions
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Denmark
Sweden
AustriaNetherlands
Finland
Germany
France
Belgium
Luxembourg
Spain
Italy
UK
Ireland
Greece
Portugal
WecanseefromthisthatIrelandisamongthecountrieswithrelativelyhighlevels
ofinequality.Irelandsinequalitymeasureis33percenthigherthanDenmarkorSweden.
Anothermeasureofinequalityistheincomequintileshareratio.Thisinvolvestaking
theshareofincomeofthetopone-fthofthepopulationanddividingitbytheshare
ofincomereceivedbythebottomone-fth.Thehigherthisnumber,thehigherthe
levelofinequality.
INEQUALITY
IN IRELAND
TherstmeasurementwewillexamineistheGiniCoefcient.Thismeasurementassesses
inequalitybycomparingasituationinwhichthereisperfectequality(everyoneina
countryhasanequalincomeshare)tooneofperfectinequality,whereonepersonhas
100percentoftheincomeandeveryoneelsehasnothing.PerfectequalitygivesaGiniCoefcientofzero.PerfectinequalitygivesaGiniCoefcientof100.TheclosertheGini
Coefcientisto100,thehigherthelevelofinequality.TheEU-SILCsurveyin2006found
thatIrelandhadaGiniof32.Wecantgetagoodsenseofwhatthismeansuntilwe
compareittotheGiniofothercountries.
ItisoftenobservedthatIrelandhasarelativelyhighlevelofincomeinequality.
WecaninvestigatethisbycomparinglevelsofinequalityinIrelandwithlevels
inothercomparablecountries.Forthispurpose,wewilllookatIrelandin
relationtotheothermembersoftheEU15(membersoftheEuropeanUnion
beforetherecentenlargements).
0 5 10 15 20 25 30 35 40
Measuresofinequality
GiniCoefcientoftheEU15
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Athirdwaytoassessinequalityistoexaminetheat-riskof-povertyrate.Thismeasure
looksatthepercentageofindividualswhoreceive60percentorlessofthemedian
income.Ifyouweretolistalltheincomesinthecountryfromthehighestdowntothelowest,medianincomewouldbetheonepreciselyinthemiddle.Exactlyhalfofthe
countrywouldbericherthanthemedianincomeandexactlyhalfpoorer.Ifyouhave
anincomebelowthree-fthsofthemedian,youarejudgedtobeatriskofpoverty.
Denmark
Sweden
Finland
Austria
Netherlands
France
Germany
Belgium
Luxembourg
Ireland
Spain
UKItaly
Greece
Portugal
0 1 2 3 4 5 6 7 8
Again,Irelandisinagroupof
relativelyunequalcountries.
Povertyrates
0 5 10 15 20
Netherlands
Sweden
Denmark
Austria
Finland
France
Luxembourg
Germany
Belgium
Portugal
Ireland
UK
Spain
Italy
Greece
Onceagain,Irelandishighup
theinequalityleaguetable.
AtriskofpovertyratefortheEU15(fromEurostat2007)
IncomequintileshareratiosfortheEU15
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Thefollowingexampleillustrateshowameasureof
inequality,liketheratioofthetopandbottomincomes,
mayfailtocaptureariseininequality.Supposea
countryhadtwocitizens.Thepoorcitizenmakes5andtherichcitizenmakes50.Theratiooftheirincomes
isonetoten.Therichcitizenis45aheadofthepoor
citizen.Supposeaftertenyearstheirincomesdoubleto
10and100.Theratiooftheirincomesisstilltenbut
therichcitizenisnow90aheadofthepoorcitizen.The
gapbetweenthemhaswidenedbuttheratiomeasure
remainsthesame.Thisiswhathashappenedover
theCelticTigerperiod.Theincomeofallgroupshas
increasedroughlyproportionately,andhencetheGini
Coefcientandthequintileshareratiodontchange
much.Ontheotherhand,thegapbetweenhighincomes
andlowincomeshaswidenedconsiderablyinIreland.
Theusualstatisticalmeasuresofinequalitydontcatch
thisdevelopment.
TherehasbeenagreatdealofdebatearoundwhetherinequalityinIrelandhasworsened
duringtheCelticTigerperiod.Manyobservershavenotedthatthestandardmeasures
ofinequality,liketheGiniCoefcientandtheincomequintileshareratio,whilerelatively
high,didnotbecomeworsebetween1987andthelatestgures.Theirconclusionisthat
inequalitydidnotincreaseinIrelandinrecentyears.
Thisconclusionisnotvalid,however.
TheproblemwiththestandardargumentisthatmeasuresliketheGini
Coefcientandthequintileshareratioaredesignedtobeindependent
oftheoveralllevelofwealthandincomeinthecountry(technicallyspeaking,thisisknownasmeaninvariance).Thisisausefulquality
forameasuretohavewhencomparingtwodifferentcountries.Ifyou
wanttocompareinequalitywithinChadtoinequalitywithinGermany,
themeasureshouldnotbealteredjustbecauseChadispoorerthan
Germanyoverall.Thesemeasuresfalldown,however,whencomparing
thesamecountryduringdifferenttimeperiods.
Onthenextpagethegraphdemonstratesthechanges
inincomedistribution,showingthedistributionofincome
in1987,1994,2001and2005.
Hasinequalityworsened?
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Wealth,ortheaccumulatedresourcesownedbyhouseholds,isas
importantafactorineconomicinequalityasincome.Althoughthere
arearangeofwealthcategories,commonformsincludebankdeposits,
stocksandbonds,commercialproperty,investmentfundsandpension
funds;thevalueofthefamilyhomeisalsosometimesincluded.
Netwealthsubtractsthelevelofdebtfromtotalwealth.
StatisticsaboutwealtharehardtocomebyinIreland.TheBank
ofIrelandpublishedastudyofwealthin2007,givingusguresfor
2006.Theyfoundthatthegrosswealthofthetoponepercentofthe
populationwasaneven100billion.Thistoponepercentowned
20percentofthewealthinIreland.Whenthevalueofresidential
propertyisexcluded,thegureownedbythetoponepercentrises
to34percentormorethanathird.
Thered1987lineshowsadistributionwiththebulkofincomesbunchedcloselytogetherand
thereforerelativelyequal.Onlyarelativelysmallnumberofhouseholdsmakesubstantially
morethanthisgroupandconsequentlythereisntafattailstretchingtotheright.Bycontrast,
thegreen2005lineshowsfewerincomesbunchedtogetherandthepopulationisspreadout
alongthehorizontalsidewithmanyatbothhighandlowincomes.The1994and2000linesshowthemovementawayfromthemoreequaldistributionof1987.
Equivalisedweeklydisposableincome1987-2005
60
50
40
30
20
10
00 50 10 0 1 50 200 25 0 3 00 35 0 4 00 450 50 0 550 600 6 50 700 7 50 8 00 850 9 00 9 50 1,000
percentageoftotal
weeklyincome
1987
1994
20002005
Wealthinequality
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Index of:
Lifeexpectancy
Math&literacy
Infantmortality
Homicides
Imprisonment
Teenagebirths
Trust
Obesity
Mentalillness
includingdrug&
alcoholaddiction
Socialmobility
WilkinsonandPicketthavefoundthat,ifyouexamine
thevariousdimensionsofhealthandarangeofsocial
problems,youdiscoverthatlessequalsocietieshave
moreproblemsandpoorerrecords.Thisistrueeven
inrichersocieties.
WilkinsonandPicketthaveconstructedanindexto
measuresocietiesperformanceintheareasofhealthandsocialproblems,goingdownfrombettertoworse.
Themeasureincludesthingslikementalillness,life
expectancy,infantmortality,educationalperformance
andmurderrates.Theyndthatincreasingthelevel
ofnationalincomeperpersonintherichercountries
doesntimprovethescoresignicantly,butincreasing
thelevelofequalitydoesimproveperformance.
Conversely,acountrysperformancedeclinesas
inequalityrises.Thefollowingpicturetellsthisstory.
Itisoftenarguedthatinequalityisnottheissue.
Proponentsofthispositioncontendthatthe
problemistheabsolutelevelofdeprivationofthe
leastwelloff.Ifwecanraisethewell-beingofthe
poorestinsociety,orsotheargumentgoes,what
differencedoesitmakethatothersarestillvery
muchbetteroff?Recentresearch,however,indicatesthat,whiletheabsolutelevelofwell-beingoftheworst-offis
certainlyimportant,thelevelofequalitymattersaswell.AsthesocialscientistsRichardWilkinsonandKatePickett
observeinthesubtitleoftheirbook,TheSpiritLevel,moreequalsocietiesalmostalwaysdobetter.
Healthandsocialproblemsareworseinmoreunequalcountries
Worse
Better
IncomeInequality
Source:Wilkinson&Pickett,TheSpiritLevel(2009)
Low High
USA
NewZealand
Australia
ItalyCanada
Spain
Sweden
Japan
Switzerland
Netherlands
Portugal
UK
Greece
Ireland
France Austria
Denmark
Finland
Norway
Germany
Belgium
www.equalitytrust.org.uk
Indexofhealthandso
cialproblems
WHY INEQUALITY
MATTERS
TheSpiritLevel
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Thischartdemonstratesthelevelsoftrustacrossarangeofcountries.Eachcountrysdoton
thelefttorightscaleshowsitsrelativeincomeinequality.Thefurthertotheright,thehigherthe
incomeinequality.Thedotsverticalpositionshowshowwellthatcountryisdoingintermsof
theleveloftrust.Thehigherthedot,thehighertheleveloftrust.Thelineslopingdownshows
thatascountriesgofromlowtohighlevelsofinequality,onaveragethelevelsoftrustgodown.
Therearethosewhoarguethatinequalityisnecessarytopromoteinvention,innovationandcreativity,
contendingthatahighlevelofinequalityisessentialtoincentiviseahighlevelofinternational
competitiveness.This,however,doesnotseemtobethecase.Onthecontrary,inequalityreduceschildrensperformanceinschools,whileWilkinsonandPicketthavefoundthatmoreequalsocieties
producemorepatentsforinventions.Moststudiesndthatmoreequalsocietiesgrowfaster.
Therearemanyreasonsforthis.Studiesshowthatinequalitycreates
highlevelsofstress,largelyasaresultofunhealthycompetition
andstatusanxiety.Importantly,overalllevelsofsocialtrustgodown
asinequalitygoesup.ThefollowinggraphshowsWilkinsonand
Pickettsndingsaboutinequalityandtrust.
Thischartdemonstratestheextentofhealthandsocialproblemsacrossanumberofcountries.Eachcountrys
dotonthelefttorightscaleshowsitsrelativeincomeinequality.Thefarthertotheright,thehighertheincome
inequality.Thedotsverticalpositionshowshowwellthatcountryisdoingintermsofhealthandsocialproblems.
Thehigherthedot,theworsetheperformance.Thelineslopingupshowsthatascountriesgofrom
lowtohighlevelsofinequality,onaveragetheirabilitytoavoidhealthandsocialproblemsgetsworse.
Levels of trust are hiher in more equal rich countries
Sweden
Norway
Portugal
Singapore
CanadaGermany
Spain IrelandItaly
UKGreece
0
Low HighIncomeInequality
Source:Wilkinson&Pickett,TheSpiritLevel(2009)
Mostpeoplecan
betrusted(%a
greeing)
20
40
60
80
Netherlands
Denmark
Finland
NewZealand
Switzerland Australia
Belgium
Japan
Austria
FranceIsrael
USA
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InequalityandIrelandscurrentcrisis
Inequalityisalsoaprimefactorintherecession.Atthetimeofwriting,Ireland
isfacingfourinterlinkedcrises.Weareinthemidstofaninternationalcrisis,
anancialorbankingcrisis,ascalorgovernmentdecitcrisis,andan
unemploymentcrisis.
Highlevelsofinequalitytendtowaste
thetalentsofalargeproportionofthe
population.
Theinternationalcrisiswascausedbymanyfactors,butprominent
amongthemwasahighlevelofinequalityintheUnitedStates,which
ledtostagnantconsumerdemandandhighlevelsofindebtedness.Facingreducedlevelsofdemand,investmentwassluggish,andthose
withmoneyturnedincreasinglytonancialspeculation.Financial
speculationwasfurtherdrivenbythedemandbylowerincomegroups
forsub-primemortgages,andbythebloatedbonusesawardedto
bankersforshort-termperformance.Thisbubbleeventuallyburst
precipitatingawidercrisis.
HereinIreland,inequalitycontributedto
highlevelsofindebtedness,becausepeople
borrowedtokeepupwithhigherincome
consumptionlevelsinhousing,carsand
othergoods.Thehighincomesofbankers
andpropertydevelopersdivertedinvestment
intopropertyratherthanmoreproductive
uses.ThisdynamichelpedcreateIrelands
ownpropertybubble.Tomaintainpersonal
consumption,allincomegroupssupported
ataxsystembasedonpropertytransactions
ratherthanincome-anunsustainable
systemwhichhasnowcollapsedcreating
abudgetcrisis.Theinternationalcrisis,
thenancialcrisis,thebudgetcrisis,
andhighlevelsofpersonaldebthaveall
contributedtoacrisisofdemandinIreland,reducingeconomicactivityandincreasing
unemployment.
WilkinsonandPickettconclude:
Ifyouwanttoknowwhyonecountrydoesbetterorworse
thananother,therstthingtolookatistheextentof
inequality.Thereisnotonepolicyforreducinginequalityin
healthortheeducationalperformanceofschoolchildren,
andanotherforraisingnationalstandardsofperformance.
Reducinginequalityisthebestwayofdoingboth.
InequalityandIrelandscurrentcrisis
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Ireland 2001 2004 2006 2007
PovertylevelsbeforeSocialWelfare(%) 35.6 39.8 40.3 41.0
TheroleofSocialWelfare(%) -13.7 -20.4 -23.3 -24.5
PovertylevelsafterSocialWelfare(%) 21.9 19.4 17.0 16.5
Thistableshowsthatpovertylevels(beforeSocialWelfare)inIrelandincreasedfrom
35.6percentto41percentfrom2001to2007.ThetablealsodemonstratesthatSocial
Welfareplayedacriticalroleinreducingpovertylevelsfrom21.9percentin2001to
16.5percentin2007(theseguresarenotadjustedforpurchasingpower).Irelandhas
alsoenteredintoarecessionsincethesegureswerepublished,andwearelikelyto
seepovertylevelsincreasedramatically,notonlyasaresultofgrowingunemployment,
butalsoduetogrowingpressureonSocialWelfarerates.
IrelandssocialprotectionratesarenotgenerousbyEuropeanstandards.In2006,
spendinginthisarearepresented18.2percentofGDP,whichcomparesbadlywith
countriessuchasFrance(31.1percent)andSweden(30.7percent)andevencountries
suchasGreece(24.2percent)andPortugal(25.4percent).ThereisadirectcorrelationbetweenspendingonSocialWelfareandincomeequality:countriesthatspendlesson
SocialWelfarehavehigherlevelsofincomeinequality.
WhilewewerenotsurprisedbytheoverallshapeoftheChart,twothingsstoodout
whenwehadlaidtheiconsout.InthehorizontaldimensionoftheChart,thelongest
lineisthatjustabovethe10,000line.Thisisbecausepensionsandsocialwelfare
paymentspreventpeoplefromfallingfurtherdowntheChart.Thisisincontrastto
placesliketheUnitedStateswherethiskindofooronincomedoesntexist.Inthe
verticaldimension,itisstrikingthatthemanagerialandprofessionaloccupation
categoryistheonlyonetoweaveitswayfromnearthebottomoftheCharttothe
verytopoftheheap.
Socialprotectionprovidesanimportantsafetynetforindividualsandhouseholdswho
areatriskofpoverty,andincludesarangeofsocialwelfarepaymentsandbenetsthat
coverareassuchasillness,disability,oldage,unemploymentandhousing.
Poverty rates
TheincomesofallgroupsinIrelandhaveincreasedoverthelastnumberofyears,
andthiscouldleadonetoassumethatifeveryonesincomehasincreasedpovertylevels
musthavefallen.However,thisisnotthecase.Thetablebelowdemonstrateshow
povertylevelsincreasedandtherolesocialwelfarepaymentsplayinaddressingpoverty.
INTERPRETATION
AND ANALYSIS
THE H.E.A.P.
CHART:
Theeffectofgovernmentbenetsandtaxationoninequality
TheroleofSocialWelfare(SW)paymentsinaddressingpoverty
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WeretheprinciplesofsocialinsuranceinIrelandtobedismantled,thiswouldhave
adetrimentaleffectnotonlyonincomeinequalitybutonindividualsalreadyplacedin
aprecarioussituation.Itwouldexposemorehouseholdstotheriskofpoverty,whichwould
haveamyriadofnegativeeffectsontheindividualandadverseconsequencesforsociety.
TheeffectsofsuchamodelcanbeseenintheUnitedStateswherecitizensarenotafforded
minimumsocialprotections,theresultsofwhichareinstarkcontrasttoourown.
ThechartbelowrelatesthelevelofinequalityasmeasuredbytheGiniCoefcientwith
thepercentageofGDPwhichisspentonsocialprotectionintheEU15countries.
Eachcountrysdotonthelefttorightscaleshowsitslevelofsocialprotectionspending.
Thefarthertotheright,thehigherthespendingasapercentageofGDP.Thedotsvertical
positionshowshowwellitisdoingregardingthelevelofinequality.Thehigherthedot,the
higherthelevelofinequality.Thelineslopingdownshowsthatascountriesgofromlowto
highlevelsofsocialprotectionspending,onaveragethelevelsofinequalitygodown.For
instance,Irelandhasalowlevelofsocialspendingat18.2percentofGDPandarelativelyhighlevelofinequalitywithaGiniCoefcientof32.Swedenhasalevelofsocialspendingat
30.7percentofGDPandacorrespondinglylowlevelofinequalitywithaGiniCoefcientof24.
40
38
36
34
32
30
28
26
24
22
200 5 10 15 20 25 30 35
Portugal
Greece
Ireland Italy
Spain
Luxembourg Belgium
Germany France
Finland
Austria
Denmark
Netherlands
Sweden
Higherlevelsofsocialspendingareassociatedwithlowerlevelsofinequality
PercentageofGDPspentonsocialprotection
GiniCoefcien
t
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Thechartshowswomendominatingthelowerincomes
whereasmenarebetterrepresentedathigherincome
levels.Allthose16oroverareincluded.
Womensincomein2006wasaroundtwo-thirdsofmensincome.Afteradjustingfordifferencesinhoursworked,
womenshourlyearningswerearound86percentofmens.
Theproportionofmenatriskofpovertyin2007,afterpensions
andsocialtransfers,was15percentcomparedto19percent
ofwomen.
Inadditiontoinequalityamongthegeneralpopulation,thereisstillinequalitybetween
menandwomen.
Thefollowinggurecomparestheincomesofmenandwomen.
18
16
14
12
10
8
6
4
2
00 100 200 300 400 500 600 700 800 900 1, 000 1,100 1,200 1, 300 1, 400 1,500 1,600 1, 700 1, 800
Male
Female
percentageoftotal
weeklydisposableincome
Comparisonofincomesformenandwomen
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Youcanseethatthelowerincomesaredominatedbythose
withoutauniversityqualicationwhiletheoppositeisthe
caseforhigherlevels.Onlythose25andoverareincluded.
Thechartdemonstratesthecentralroleplayedbyeducational
opportunitiesindeterminingsubsequentincomethe
educationpremium.
Thefollowinggraphcomparestheincomesofthosewithauniversityqualicationand
highertothosewithoutsuchaqualication.
Non-univ
Univ
20
18
16
14
12
10
8
6
4
2
01 00 2 00 3 00 4 00 5 00 6 00 7 00 8 00 9 00 1 ,0 00 1, 10 0 1 ,2 00 1, 30 0 1 ,4 00 1, 50 0 1 ,6 00 1, 70 0 1 ,8 00 1, 90 0 2 ,0 00
percentageoftotal
weeklydisposableincome
Theeffectofeducationoninequality
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Thetableontheleftgivesthemedian
grossincomebyeducationlevelachieved.
Themedianisthemiddleincomeifall
incomesinthecategorywerelisted
fromtoptobottom.Equivalisedmeansa
correctionhasbeenmadeforthesizeof
thehousehold.
Thetableontheleftshowshowhigher
educationallevelsreducetheriskof
poverty.Disposableincomerefersto
incomeleftforspendingafterdeductions
suchastaxes.
Highest Percentage of Equivalised
education level household gross income
achieved heads median ()
Primary/noformal 30 13,489
Lowersecondary 18 19,742
Uppersecondary 17 24,933
PostLeavingCert 9 26,433
Thirdlevelnon-degree 9 31,812
Thirdleveldegreeorabove 17 45,707
Highesteducationlevelachievedbyhouseholdhead
At risk (%)
Primary/noformal 33.6
Lowersecondary 23.3
Uppersecondary 15.1
PostLeavingCert 11.6
Thirdlevelnon-degree 8.7
Thirdleveldegreeorabove 3.2
Atriskofpovertyi.e.percentageofhouseholdsbelow60percentofequivalisedmediandisposableincome
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Thisinsightisparticularlydisturbingforusin
Ireland.Irelandhasformanyyearsbeenamong
themostunequalofthedevelopedsocieties.Our
boom,nowapparentlyover,raisedtheoveralllevel
ofincomeinIrishsociety.Unfortunately,however,
studiesshowthatwedidnotusethebenetsof
theboomtoreducethelevelofinequality.Onthe
contrary,thedistancebetweenthoseatthetopand
thoseatthebottomhaswidened.Thiswideninginequalityhasplayedaroleinourcurrentcrisis
byencouragingtheexpansionofunsustainable
consumptionlevelsanddebt,whiletaxrateshave
beencutbelowthosewhichcouldsustaindecent
publicservices.
Wemustnotaskanimaginaryinternationalbond
marketwhatkindofsocietyweshouldhave.We
shouldinsteadsetaboutbuildingthesocietywe
want.Agoodsocietywillhaveamuchhigherlevelof
incomeequality,andthesocialsolidaritythatgoes
withit,asoneofitsessentialfoundationstones.
WehopethattheH.E.A.P.Charthashelpedto
illuminateanimportantaspectoflifeinIreland
today.Sinceweeachoccupyonlyoneplaceinthe
heap,itisdifculttoknowabouttheconditionsfaced
bythosebothaboveandbelowus.Further,studies
likethosecarriedoutbyWilkinsonandPickettin
TheSpiritLevelhaveestablishedthattheshapeof
theheapisimportantaswellasthelevelofincomeit
represents.Moreequalsocietiesdobetter.
CONCLUSIONS
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Exercise 1
Placetheposterontheooroftheclassroom
inacorneroftheroomoppositethewindows.
Haveoneparticipantstand3.6metresfromthe
bottomofthepostertorepresentthetopiconat
anincomeof600,000.Haveanotherstudent
standoutsidethewindowonapremarkedspot
6.3metresawaytorepresentaCEOincomeof
1,000,000.Youmightalsowanttorepresent
4,000,000at25metresifyouhavespace.Call
everyonebackintheroomandengageindiscussion.DidtheythinkincomesinIrelandwerethisunequal?
Isthislevelofinequalityacceptable?Canitbe
justied?Isthislevelofinequalitygoodorbad
forsociety?
Exercise 3
Asktheparticipantswhatlevelofincomeitwould
taketolivecomfortablyforafamilyoffourinIreland
today.Youmayhavetospecifyaparticularplace,
likeDublinorTullamore,dependingonwhereyour
participantslive.Thiscouldbedoneopenlyand
youcouldattempttoarriveatanagreedlevelofincome.Oryoucouldhaveparticipantswritedown
alevelanonymouslyandyoucouldtakeanaverage.
HoldapointerorstickatthislevelontheChartand
examinehowmanyhouseholdsfallbelowthislevel.
Asktheparticipantsiftheyweresurprisedbythe
numberbelowthecomfortlevel.
Theat-risk-of-povertylevelofincomeforafamily
offourcorrespondsroughlyto28,000onourChart.
TheVincentianPartnershipforjusticeundertook
astudywhichcalculatedaMinimumEssential
Budgetforafamilyoffourwhichstoodatjustunder34,000for2006onourChart.Showtheselevelson
theChart.Discuss.
Exercise 5
Brainstormpolicieswhichcouldbeadoptedby
governmentwhichwouldreduceinequality.
Exercise 4
Asktheparticipantstoindentifyotherdimensionsof
inequalitybesidesincome.Examplesmightinclude
placeofresidence,workingconditions,accessto
education,settledvs.traveller,etc.Discusshow
theseotherdimensionsofinequalitydoordonot
relatetoincomeinequality.
Exercise 2
Haveeachparticipantaddupandwritedowntheir
familyincome.(Thisworksbetterwithadultsor
perhapsolderteenagers.)Thenhavethemidentifytheirhouseholdcomposition.Thentheyshould
identifytheoccupationsoftheadultmembersof
thehousehold.Answeranyquestionsaboutwhere
anoccupationmighttinthecategoriesonthe
poster.Thenallowthestudentstoexaminethe
H.E.A.P.Chartclosely(perhapsinsmallgroups)
toidentifyforthemselveswheretheirhousehold
appearsontheChart.
Asktheparticipantstovolunteeranysurprises
theymayhavegot.Wasanyonesurprisedathow
hightheirincomewasontheChartcomparedto
thegeneralpopulation?Wasanyonesurprisedat
howlowtheirhouseholdwas?Didanyoneturnup
inthemiddlewhentheydidntexpectto?
Collectthedescriptionsoftheparticipants
households.Makesuretheyarenotidentied
byname.Shufethedescriptions.Locatethe
householdsonthechartandmarkthem(usesticky
notestoavoidpermanentlymarkingtheposter).
Discussthepositionoftheworkshopinrelationto
therestofthepopulation.Didtheyformapattern
orweretheybunchedupatacertainlevel.Asktheparticipantstoexplainwhythisisthecase.
APPENDIx:SUggESTIONS FOR WORkSHOP USE
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Therearemanypeoplewhohavebeenagreathelp
inbringingthisprojecttofruition.
StephenRose,theauthoroftheoriginalAmerican
ProlePoster,wasnotonlyasourceofinspiration,
buthasalsobeengenerouswithhishelpand
encouragementalongtheway.
PaulSweeneysinitialandcontinuingenthusiasmforthisprojecthasbeenessentialinpressingitforward.
AtTASC,PaulaClancy,AlexKlemmandSinadPentony
havebeencentraltogettingthisdone.
SallyAnnKinahansactivesupportforthisprojectwithin
ICTUhasbeencrucial,whileFionaDunnehadthetough
jobofholdingthisprojecttogether.
RiccaEdmondsonandOliverFeeneyattheSocial
SciencesResearchCentreatNUIGalwayhavebeen
unfailinglysupportive.Wealsoreceivedindispensible
assistancefromCathalODonoghueintheSchoolof
BusinessandEconomicsatNUIGalway.
OneIrishhouseholdhasprovidedinvaluablesupportto
TerryMcDonough.ItisbestknowninMoycullenand
beyondasMarianBradyshouse.
OurcolleaguesfromWhitenoiseStudiosinBelfast,AlixBritton
andPaulAllen,havebeenenthusiasticfromthebeginningand
deservespecialmentionfortheirgraphicinterpretationand
presentationofthistopic.
ACkNOWLEDgEMENTS