Income Inequality

Measuring Inequality in Ireland and the EU

In Ireland data on income and poverty and inequality for different household types is produced by the Central Statistics Office in the Survey on Income and Living Conditions (SILC). To be able to compare the data with that of other countries the data produced for national purposes is slightly adapted by the CSO for the EU’s data agency Eurostat. For comparison reasons the data shown on this page for Ireland is that adapted for Eurostat.

Gini Co-efficient

One measurement which is produced on equality  is the Gini coefficient. This is the most commonly used measure of income inequality. The coefficient varies between 0, which reflects complete equality and 100, which indicates complete inequality (one person has all the income or consumption, all others have none). In 2015 the Gini coefficient for Ireland in Eurostat’s report was 29.8 up from 28.8 in 2009 but down from 30.9 in 2014. The Gini Coefficient in the EU in 2015 was 31.0. Across the EU is ranges from 23.7 in Slovenia to 37.9 in Lithuania. Norway has a Gini coefficient of 22.7.

S80/S20

Another helpful indicator which also shows the levels of inequality in a country is the ‘inequality of income distribution – income quintile share ratio’. The S80/S20 ratio is the ratio of the total income received by the 20% of the country’s population with the highest income to that received by the 20% of the country’s population with the lowest income. The higher the ratio, the greater the inequality. The S80/S20 2010 ratio for Ireland in Eurostat’s report was 4.5 in 2015, up from 4.2 in 2009 but down from 4.8 in 2014. The average for EU in 2013 was 5.2. The highest rate being 7.5 in Lithuania and the lowest was 3.5 in Slovakia and the Czech Republic followed closely by Finland and Slovenia on 3.6 and Sweden, the Netherlands and Belgium on 3.8. Iceland has an S80/S20 ratio of 3.4 and Norway 3.5.

At Risk of Poverty Rate

People or households are considered to be at risk of poverty when their income is less than a particular threshold. In the EU, the threshold has been set at 60% of the median income (mid-point in the scale of the highest to the lowest of all incomes). The latest Eurostat statistics for 2015 shows that 17.3 of the EU population was  at risk of poverty, with 16.3% at-risk in Ireland according to their measurement. The highest levels are to be found in Romania at 25.4% and the lowest in the Czech republic where 9.7% were at-risk of poverty. Serbia has a level of 25.4% and Iceland of 9.6%

The HEAP (Hierarchy of Earnings, Attributes and Privilege Analysis) Chart

In 2009, the H.E.A.P. Chart was published by ICTU (Irish Congress of Trade Unions), TASC (a think tank for action on social change) and SSRC (Social Sciences Research Centre, NUI Galway). The purpose of this chart is to provide some of the basic facts relating to income distribution in Ireland, together with an analysis of Ireland’s socio-economic structure. The Chart transforms the statistics into graphic images which enable the reader to easily locate household types and occupations within the income distribution. The information from the chart sheds light on various inequalities in Ireland.  The data for the Chart comes from the Irish version of the EU Survey of Income and Living Conditions (EU-SILC).  The conclusions drawn from the chart show that Ireland did not use the benefits of our economic boom to reduce levels of inequality. On the contrary, the distance between those at the top and those at the bottom actually widened. The report concludes that we should set about building the type of society we want. This society will have a much higher level of income equality, and the social solidarity that goes with it, as one of its essential foundation stones.

Wealth and Inequality

Wealth, and the distribution of wealth, are topics which have been the subject of very little discussion over time, but the available figures show that gathering statistics on the distribution of wealth is extremely helpful in highlighting how equal or unequal a society is.  Even during the “Celtic Tiger” years, the number of people experiencing poverty remained persistent.  At the same time, the number of millionaires increased steadily and was only momentarily halted due to the current financial crisis and is now on the increase again.

EAPN has produced a series of documents looking at the issue of wealth and income inequality.

  • Inequality in the EU (2014) focuses primarily on the nature and extent of poverty, its causes and its links to inequality. It explains how poverty is understood and measured currently in the EU, and highlights some of the shortcomings of these approaches.
  • Explainer on Wealth, Inequalities and Social Polarisation in the EU (2011) explains what wealth is and how social polarization is currently growing in the EU and worldwide, providing a whole range of statistics on these issues.
Household Finance and Consumption Survey 2013

The Central Statistics Office (CSO) in Ireland published the Household Finance and Consumption Survey 2013 which shows how wealth is distributed across different family types and different income levels. It shows that after excluding debt those with the top 20% of incomes have almost 40% of the wealth while the bottom 20% have 11.4%. Among the other findings the survey highlights is the particularly difficult situation for one parent families in Ireland who have very low levels of savings, high levels of debt and that while one parent families make up 4.4% of all families in the country (covered in the survey) they only account for 0.7% of the total net wealth. This reinforces the information on high poverty levels for one-parent families as highlighted in the Survey on Income and Living Conditions (SILC).