Income inequality unchanged but rise in poverty risk

Recently released data from the Survey on Income and Living Conditions show that levels of income inequality between 2004 and 2011 were stable and appear to have been largely unaffected by the onset of the economic crisis in 2008. Disposable income levels rose up until 2008 but have since receded, while the deprivation rate has climbed year on year since 2007. The numbers of those at risk of poverty and the consistent poverty rate have also risen since 2008, but not to the same extent.

Income inequality

According to a recently published report (457KB PDF) from the Central Statistics Office (CSO), income inequality in Ireland – as measured by through the Survey on Income and Living Conditions (SILC) – was largely unchanged from the pre-recession years to 2011 (the most recent year for which SILC data are available).

The level of inequality is measured using the Gini coefficient – a value of zero represents perfect equality whereas one (100%) represents maximum inequality. The table below shows the trend between 2004 and 2011:

Income inequality in Ireland, 2004–2011
 

Gini coefficient (%)

2004

31.8

2005

32.4

2006

32.4

2007

31.7

2008

30.7

2009

29.3

2010

31.6

2011

31.1

Source: CSO (2013)

Difference between high and low earners

The quintile share ratio measures the difference in income between those in the highest income quintile and the lowest income quintile. In 2011 it was at 4.9. This was the same as for the previous year, but an increase from 4.6 in 2008 and 4.3 in 2009. Between 2004 and 2007 the ratio remained within a range of between 4.9 and 5.1.

Annual disposable income

The level of annual equivalised disposable income dropped 3% between 2010 and 2011, continuing the trend of decline from a peak of €24,380 in 2008 to €21,440 in 2011. The disposable income figure had been increasing in pre-recession years from a value of €18,773 in 2004 to €24,380 in 2008. This measurement is the calculated on mean value per individual surveyed.

Further analysis of the disposable income figures shows that individuals with a higher level of educational attainment (third level degree or higher) continued to have the highest average income (€33,244 in 2011) of the nine categories analysed. Individuals living in rented accommodation valued at below the market rate (or rent-free) had the lowest average income in 2011 at €13,831.

Weekly gross income

The average weekly equivalised gross income for 2011 was down 2.2% from 2010 (from €534.66 to €522.87). The 2011 figure was 5.1% less than the 2009 figure of €551.39.

Poverty and deprivation

At risk of poverty rate

The at risk of poverty rate in Ireland increased from 14.7% in 2010 to 16.0% for 2011 – the first time it had reached 16% since 2007. Those most at risk of poverty are people living in rented accommodation valued at below the market rate or rent-free. In 2011 this category was 36.4%, a 10.3% increase from 2010)

The at risk of poverty rate for men increased from 14.3% to 16.3% between 2010 and 2011; the increase for women was much smaller (15.1% to 15.6%) and was considered not statistically significant. For students it increased from 22.7% to 31.4% in the same period. For people living in households where three or more people were at work, the 2010 figure of 1.8% had flattened out to 0.0% in 2011.

When social transfers (unemployment benefits, old age payments, family/children related allowances, sickness and disability benefits) are excluded from the at-risk of poverty measurement, the rate rises to 50.7%. This is a marked increase from 39.8% in 2004. The steady rise in this rate since 2004 indicates the increasing reliance of individuals on social transfers to remain above the at-risk poverty threshold.

Deprivation rate

The deprivation rate (that is, those who experience two or more types of deprivation from a list of 11 criteria, including having two pairs of strong shoes, the ability to buy new clothes and being able to keep their home adequately warm) also increased to 24.5%. This rate had declined to a low of 11.8% in 2007 but since then has increased year-on-year, including a 5.5% rise between 2009 and 2010. Those who experience the highest level of deprivation are people living in households with one adult and one or more children (56%). The deprivation rate for women increased from 23.5% to 26.0% between 2010 and 2011; the measured rate for men also rose (from 21.7% to 23.0%) but was not considered statistically significant (CSO, 2013).

Consistent poverty rate

The consistent poverty rate increased from 6.3% in 2010 to 6.9% in 2011, a figure close to the average of 6.7% for the 2004–2006 period. This rate, like the at risk of poverty rate, has risen since the onset of the recession, but not to the same extent as the rise in the deprivation rate.

Reference

CSO (Central Statistical Office) (2013), Survey on Income and Living Conditions (SILC): 2011 & revised 2010 results (457KB PDF), CSO, Dublin.

Brian Sheehan, IRN Publishing

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