Have we ever had it so good despite boom and bust?

Irish households enjoy one of the biggest jumps in income across industrialised world

Despite the recession, Ireland’s economy has been transformed since the 1980s, a period defined by fiscal mismanagement and economic stagnation. File photograph: Getty Images

Despite the recession, Ireland’s economy has been transformed since the 1980s, a period defined by fiscal mismanagement and economic stagnation. File photograph: Getty Images

 

Despite the carnage of the 2008 crash and ensuing austerity, Irish households have enjoyed one of the biggest income jumps seen in any industrialised country over the past 30 years.

Not only this, but the State has also avoided the rise in income equality seen in other countries, a trend that is now linked to populist anti-establishment movements in Europe and the United States.

If anything the Economic and Social Research Institute’s (ESRI) study of income and income distribution in the Republic since 1987 puts the boom and bust of recent times in context. It shows that despite the hardship, we’ve also had a measurable uplift in living standards.

It also shows that Ireland’s economy has been transformed since the 1980s, a period defined by fiscal mismanagement, economic stagnation and mass emigration.

Depending on the metric, real incomes have risen by 120 per cent or 150 per cent since then and would have risen by more if we hadn’t had such a reversal in 2008. This far exceeds growth seen in most other industrialised countries and reflects the huge level of foreign direct investment here, mainly from the US, since the early 1990s.

The study indicates that income inequality has not increased during this period either, bringing us more into line with the Organisation for Economic Co-operation and Development average – in the past we have been something of an outlier – in contrast with trends elsewhere.

While income differences here are similar to other western countries, the tax and welfare system appears to be offsetting the level of inequality seen in other countries , keeping the gap between rich and poor on a relatively stable footing. The ESRI study shows there was a rise in income equality directly after the crash, but this has subsequently unwound.

While income is an incomplete measure of economic wellbeing, the research shows that on that metric alone we have fared better than most. Mind you, those still suffering the after effects of the recession here might beg to differ on that point.