Economic changes leaving majority behind, Begg says

Ireland must retain the current level of spending on welfare while also increasing wages if it is to tackle economic inequality, Dr David Begg director of the think

tank Tasc, has said.

The former general secretary of the Irish Congress of Trade Unions was speaking at a session of the MacGill Summer School yesterday titled Inequality: Is there any answer? .

Dr Begg said that the problem was not just that the rich are getting richer, but also that we were failing to tackle poverty and that a changing economy was leaving the majority behind.

“We can see this problem in the growth in precarious work – like zero-hour contracts, for example – and the hollowing out of the labour market in a way that destroys formerly good middle-level jobs,” he said.

"This is a long-term trend made worse by a change in the balance in power between capital and labour, which can be traced to the entry of China to the global marketplace and the collapse of the Soviet Union."

These events, Mr Begg said, added 1.5 billion new workers to a pre-existing industrial workforce of 900 million.”

The issue of low pay was particularly relevant in Ireland, he said, where the inadequacy of universal public services and high charges for services such as GP visits, childcare and eldercare – along with a cost of living that was 20 per cent higher than the EU average – meant cash income was even more important.

“Low pay is a feature of rising inequality.” he said. “While average incomes in Ireland in real terms have more than doubled since the 1970s, the average for the top 10 per cent has tripled and for the top 1 per cent it has gone up five fold.”

Top 10

per cent

Mr Begg said the top 10 per cent now take 34 per cent of all income in Ireland, up from 27 per cent in the 1970s. The bottom 90 per cent take 66 per cent of all income, down from 73 per cent in the 1970s.

Ireland is now the most unequal country in the OECD in market income, he said.

“As a result of our social protection or welfare system, Ireland moves from being the most unequal to around the average in terms of economic inequality,” he said. “However, as economic inequality rises it is going to become unsustainable for our welfare system on its own to tackle this problem. This is why it is so important that we increase wages while retaining the level of welfare expenditure.”

Dr Begg commended the Government’s work in establishing the Low Pay Commission and in introducing legislation to underpin the collective bargaining system.

He said the dominance of the European Central Bank and the narrowness of its remit was "a catastrophic flaw in the institutional architecture of European Monetary Union".

Undermining labour

Dr Begg said that the broader remit of the

Federal Reserve

had not prevented US inequality being the worst in the world.

The issue in Europe, he said, "was that the ECB's policies were "actively undermining labour market institutions, which in other circumstances might give better outcomes.

“To be specific, labour market ‘reforms’ and ‘flexibility’ are euphemisms for undermining collective bargaining systems and destroying working conditions built up over decades, and they should be called out for what they are.”

The research and policy body Tasc is funded by philanthropic funding from Atlantic Philanthropies and the Joseph Rowntree Charitable Trust.