Pay inequality narrowed by tax and benefits
by Diarmaid Mac a Bhaird

Income inequality has been stable in Ireland over the past 30 years, but we have moved closer to the international average because inequality has worsened elsewhere, according to a new report.


The Economic and Social Research Institute (ESRI) says Ireland is now close to the OECD average after being at the top end of the inequality spectrum 30 years ago.


Professor Tim Callan, one of the report’s authors, said redistribution through tax and welfare payments had been crucial to income growth for lower earners, offsetting continuing wage inequality in Ireland.


This analysis was echoed by Tom Healy of the union-backed Nevin Economic Research Institute (NERI), who said the report highlighted the disproportionate ‘heavy lifting’ done by the tax and welfare system.


“There is a need to acknowledge that inequality in gross market income is too wide and that a more socially sustainable approach is to boost wages and narrow income inequalities before taxes and benefits are applied,” he said.


Fórsa’s senior general secretary Shay Cody said public service trade union emphasis on lower paid workers had played a role in addressing income inequality.


“Unions pursued a strategy to include flat-rate pay adjustments, which give most benefit to the lowest paid workers, with two such adjustments in the Lansdowne Road Agreement,” he said.


Shay added the negotiation of average adjustments of over 7% under the current Public Service Stability Agreement built on those flat-rate adjustments and ensured lower-paid workers incomes rose in line with broader income growth.

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