Rising income inequality in parts of the UK has been widely blamed for the British vote to leave the EU, but it is “very hard” to pin down a direct connection between the two, a conference in Dublin was told yesterday.
Professor Brian Nolan, from the University of Oxford, said the same was true for Donald Trump's victory in the US presidential election and the rising popularity of populist parties across Europe.
“Inequality is implicated but it’s hard to see it as the driving force,” he said.
The conference, held to mark 50 years of research on social issues by the Economic and Social Research Institute (ESRI), heard that inequality is now “centre-stage” as an issue with politicians of all political hues, with a widespread belief that it was driving the concentration of wealth into fewer hands.
“There is now an emerging grand narrative that sees inequality rising inexorably across the rich countries, driving a lot of things that we would be uncomfortable with,” said Prof Nolan.
“This includes the economic stagnation we see, the stalling of social mobility, eroding social solidarity, driving alienation from normal democratic parties and fuelling the rise of populism.”
Since 1990, there had been an absolute decline in all measures of global poverty, he pointed out.
“A billion people have been lifted out of extreme poverty. Global inequality has also decreased and the income gap between countries has narrowed. But inequality within those countries has increased markedly.”
Inequality in rich countries had risen between 1980 and 2007, but the scale of the increase varied greatly from country to country.
It had been very high in the UK and, perhaps surprisingly, in Sweden.
But the country which had seen the sharpest rise in inequality was the US.
“If you unpick the grand narrative of the consequences of inequality, that has some resonance in the US, but there are very significant differences across other countries,” said Prof Nolan, who pointed to factors including a decline in trade union power, rising pay for chief executives, new systems of remuneration and the growth of the financial services sector.
In theory, social mobility should be higher in lower-inequality countries, but Prof Nolan said there was limited evidence of this, as yet.
“It is significant that while inequality has been identified as a problem, and the idea of inclusive growth has become important, we have to understand how this might be achieved and be aware that not all countries work the same way.”
Tim Callan, of the ESRI, told the conference income growth in Ireland had been flat during the 1970s and 1980s but had seen a steep rise up until the financial crash of 2008.
Since then, measures of income based on GNP had almost recovered to pre-crash levels, but other measures were not showing the same recovery.
Ireland had been one of the more unequal countries in the OECD but it now ranked in the middle range, he said – reflecting the fact that distribution of income across the population had remained relatively stable over the years.
Other conference speakers, including former and current researchers, discussed the ESRI’s contribution to research and policymaking over the past 50 years in areas such as health policy, gender equality and education, along with the role of social research in meeting the new and different challenges of 21st century Ireland.