Observación directa y entrevista con los operarios:

Annual rate of growth in equivalised disposable income in real terms %

(a) Mid-1980s to mid-1990s (b) Mid-1990s to 2000

Bottom Top 2 Bottom Top 2

All 2 deciles Middle deciles All 2 deciles Middle deciles

households only 6 deciles only households only 6 deciles only

Denmark 0.7 1.0 0.7 0.4 1.1 0.6 1.0 1.6

Sweden 0.8 0.4 0.7 0.9 3.2 1.3 2.7 4.5

Finland 1.1 0.8 0.8 1.6 4.0 2.3 3.6 5.4

Austria n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Germany 1.3 0.6 1.3 1.4 0.6 0.4 0.7 0.6

Netherlands 1.5 0.5 1.5 1.7 2.3 2.6 2.3 2.1

Belgium 0.7 1.1 0.5 1.0 n.a. n.a. n.a. n.a.

France 0.9 1.2 0.8 1.1 0.0 0.0 0.1 -0.2

United Kingdom 1.6 0.8 1.5 1.9 3.0 2.3 2.6 3.6

Ireland 2.5 3.1 2.5 2.4 6.6 5.2 7.7 5.4

Italy 0.5 -1.5 0.3 1.0 2.0 2.8 1.8 2.2

Greece 0.1 0.3 0.1 0.1 3.3 3.0 2.9 3.8

Spain 2.3 3.1 2.4 1.9 n.a. n.a. n.a. n.a.

Portugal n.a. n.a. n.a. n.a. 4.3 5.0 4.1 4.4

mid-1990s to 2000 period, the growth in incomes was not as redistributive as in the earlier period: the 60 per cent of households in the middle of the income distribution experienced the most rapid increase while the two tails (bottom and top two deciles respectively) had smaller increases of a similar magnitude. Ireland’s pattern of income distribution in the second half of the 1990s, therefore, favoured neither of its two tails but the large middle. Table 4.13, in fact, shows no country maintaining a clear redistributive pattern throughout the two periods, and a clear deterioration becoming particularly marked in the Nordic countries during the second half of the 1990s.

The evaluation of Ireland’s social welfare transfers on the basis of such figures is not a straightforward exercise. This is because the prevalence, intensity and persistence of low incomes at any point in time is the net outcome of market incomes (principally labour market earnings) and of the tax and transfer activities of the State. Lower at-risk-of-poverty rates in one country than in another do not necessarily imply more generous social welfare transfers in the former. For example, Ireland’s social transfers of ‘last resort’ (i.e., assuming no means from any other sources) to a lone parent with 2 children are at a higher level relative to median disposable household income than in Sweden (OECD, 2004: 83) yet Swedish lone parents face much lower at-risk-of-poverty rates. The reason is that many more Swedish lone parents have employment. In fact, across the different ‘families’ of welfare states, the net incomes provided by social assistance of last resort in the absence of any employment or other market incomes are generally insufficient to ensure incomes above the 60 per cent ‘poverty line’ (OECD, 2004: 81- 86). Low at-risk-of-poverty rates tend to result from a combination of factors: the extent to which transfer income is combined with market income, the distribution of employment across households, the net wage to be had in low productivity jobs, the rates of social welfare payments and short rather than long durations in receipt of social welfare.

It is possible to identify how well Ireland’s system of social welfare payments contributes to improving on the primary (or ‘market’) distribution of income compared to the welfare states of other countries. This can be done because the ECHP data34

and Laeken indicators allow household income to be distinguished before and after social transfers. Chart 4.2 shows the position for the EU 15 Member States35

ranked by order of their post-transfer at-risk-of-poverty rates. For illustrative purposes, it shows the final position being arrived at in two steps — the reduction in the percentage of the population below the 60 per cent threshold achieved by pensions (e.g., from 34% to 17% in Sweden) and then by other social welfare transfers (e.g., from 17% to 9% in Sweden). While Ireland’s ‘opening position’, meaning the at-risk-of-poverty rate when market income alone is considered prior to any social transfers, is reasonably good by EU standards (only Finland and Sweden start with lower rates), it is — along with Denmark — the country in which pensions make the least impact on the at-risk-of-poverty rate.

ireland’s social protection in a comparative context 127

34. And the data provided by the successor to the ECHP, viz., EU SILC.

Pensions contribute to reducing the at-risk-of-poverty rate by 17 per cent in Ireland (from 36% to 30%) whereas, in the EU 15 on average, pensions reduce the ‘opening’ at-risk-of-poverty rate by 38% (as high as 50% in Sweden). On the other hand, when it comes to reducing poverty among the non-pensioner population, Ireland’s social transfers reduce the at-risk-of-poverty rate by 30 per cent (from 30% to 21%), which is significantly better than in the Southern European ‘family’ but less than elsewhere, including the UK.

Pensioners’ incomes in an international context

The relatively poor achievement — by EU 15 standards — of pensions in reducing the at-risk-of-poverty rate in Ireland cannot be attributed wholly to the country’s favourable demographics and the relatively small proportion of its overall popula- tion aged 65 or over. A more detailed EU study of the incomes of pensioners for the year 1998 points to features of Ireland’s pension arrangements which are also contributing factors.

Table 4.14 first confirms the highly individual nature of pension arrangements within each country. This is evidenced by the considerable diversity of outcomes to be found within each ‘welfare family’ and not just across them. Ireland was not alone in having people aged 65 or older face an at-risk-of-poverty rate much

Chart 4.2

At-Risk-of-Poverty Rate Before any Social Transfers (top),

After Pensions (middle) and After All Social Transfers (bottom),