Widening rich-poor gap shown by study

IRELAND spends far less on the care of some of its most vulnerable citizens than any other EU country.

Social welfare expenditure is also lower than that of most western democracies, according to a study conducted on behalf of the Combat Poverty Agency.

The report, to be published today, appears to bear out the popular conception that Ireland’s rich are getting richer and the poor poorer. It also highlights our inability to make serious inroads in areas such as child poverty and income inequality.

Spending on pensions and unemployment benefit are particularly at variance with the norm in other developed nations, the study by social policy expert Virpi Timonen concludes.

Only in the care of the elderly and in health provision do we bear comparison with other developed nations, according to the study.

The report paints a picture of Ireland as a low-tax, low-spending welfare state that is heavily focused on means-tested benefits.

Commenting on the report, the director of the Combat Poverty Agency, Helen Johnson, said yesterday: “We need to improve access to services. We still have a relatively poor level of social infrastructure with the result that the gap between rich and poor tends to get wider rather than narrower. For instance, although there have been significant improvements, we still have a very high level of child poverty in this country.”

She advocates a complete rethink of the welfare state and suggests moving closer to the Danish model of a flexible labour market coupled with high social expenditure.

“The Government must give greater priority to social investment in order to reduce poverty,” she said. “The welfare system must work harder to achieve greater equality.”

The report compares social expenditure in Ireland with that of other European and OECD countries. Even accounting for differences in pensions and the age structure of the population, it finds that social spending in Ireland is low compared to that of many other countries. Expenditure on social benefits as a percentage of GDP is less than half that of Sweden and way below the European average.

Dr Timonen, a lecturer at Trinity College, argues that there is a need for the Irish welfare state to evolve so that it is appropriate to the level of economic development.

“It is sometimes suggested that Ireland does not need a higher level of social expenditure because it has a relatively low share of older people in its population and enjoys comparatively low unemployment. However, the high income inequality that has emerged in Ireland calls for higher social expenditure.”

Ms Timonen argues that only through redistribution through the benefit and tax system can income inequality be addressed. She also attacks the system whereby the better-off are encouraged to take out private health insurance that is subsided through tax relief.