How unequal is Ireland?

Concern over the gap between rich and poor isn't new. But ever since French economist Thomas Piketty became compulsory reading for world leaders, the rising tide of global inequality has become a hotly contested issue.

To date, there's been relatively few reliable indicators on how these issues are playing out in Ireland.

But a new report by the think-tank Tasc pulls together a range of data, both old and new, to combine what it says is the most detailed picture of inequality in this country to date.

The general picture is that, like the vast majority of countries, an increasing amount of wealth in being concentrated in fewer hands .

From the mid-1970s to the height of the boom, average gross incomes (adjusted for inflation) more than doubled; the average income of the top 10 per cent more than tripled; and the average income of the top 1 per cent increased almost five-fold.

In money terms, this meant the average income in 2006 was €35,000. For the top 10 per cent, it rose to just under €135,000. And for the top 1 per cent, it was almost €445,000.

In other words, the inflation-adjusted income of the top 1 per cent jumped from €90,500 to almost €445,000 between 1975 and 2006.

So, how does this compare with the rest of the EU?

One measure of inequality is the distribution of income - before taxation or social welfare payments are factored in. By this measure, Ireland is the most unequal country in not just the EU, but the OECD.

But this measure ignores the real world of taxes and welfare, which play a major role in reducing inequality in Ireland.

Some experts say the measure is important, though, because it indicates the amount of heavy-lifting the tax and welfare systems need to do in order to reduce inequality.

A more common measure of income inequality is the Gini coefficient. This produces a single number from 0 to 1, which represents the overall level of income inequality in a country. The higher a number is to 1, the greater the level of inequality.

Since the 1980s, Ireland’s Gini coefficient has remained fairly stable, but fell dramatically after the economic crash of 2008. This may have been linked to many medium and higher earners losing their jobs, while welfare payments remained relatively stable.

But since 2009 it is on the rise again, possibly reflecting stagnating wages for many, reductions in welfare, and increases for some on higher incomes.

By this measure, we're in the middle of the pack: ahead of southern and eastern European states which tend to be more unequal, but behind western Europe and Nordic states.

But Tasc, which describes itself as an independent and progressive think-tank, says we should be worried about these long-term trends.

It says income inequality leads to poverty and social exclusion. But it also lowers demand in the economy in a downward spiral of lost spending.

If left unchecked, it claims, we could be on the road towards US-style levels of inequality. It insists it is possible to promote equality - and grow an economy at the same time.

“Reversing inequality does not hinder economic growth. In fact, there are strong arguments that more equal societies - like the Nordic countries - have more productive, innovative and sustainable economies,” says Nat O’Connor, Tasc’s director.