The last two years have been turbulent times for Irish society. The onset of Covid-19 constituted a shock to the economy: Social Policy Essay, UCC, Ireland

The last two years have been turbulent times for Irish society. The onset of Covid-19 constituted a shock to the economy and society that has been unprecedented. It affected the whole of Irish society, but as is often the case with economic downturns, it affected those with the fewest means the most. The lockdown devastated the service sector, where so many low-income workers earn a living. With Covid now behind us, there is potential to rebuild society, or at least remold it. This is happening in the sphere of work, with workers increasingly demanding that working from home should be here to stay.

But just as society has emerged from Covid, so it has happened that another shock has beset Ireland. This time, it has been more economic in nature as opposed to a health crisis. Inflation has re-emerged as a global phenomenon. Prices are increasing at a rate not seen in over 50 years. As with Covid and the
lockdown, it affects all in society, though not all equally. Moreover, it is ongoing and may be here to stay for some time.

It is therefore important to take stock and look at how these events have affected the distribution of resources in the economy. A recurrent theme in Irish political, social and economic debate has been the nature of our state. It is recognized that the state does much to redistribute income – a success story in that respect. It is also recognized that our welfare state has deficiencies, especially regarding the provision of public services. It is also believed that there are deficiencies in not just the level but in the delivery of those services. These issues emerge in this report.

This report looks at inequality since Covid and the distributional aspects of the cost of living crisis. It finds that inequality has fallen since Covid. The state has done much to buffer the fall in income during the pandemic. The fall in income inequality is part of a broader trend of declining inequality in Ireland. Over the long term, it has been the welfare state that has been central to narrowing the distribution of market income in Ireland, which remains very high. Going forward, it would be best to tackle high market income inequality through social investment and a fairer distribution of wage and labor income.

As to the cost of living crisis, lower-income home households have been affected more because they spend more of their income on energy. The recent measures introduced to alleviate the cost of living crisis have moderated the impact, but they should be better targeted at those in need. Aside from this immediate impact, longer-term problems have aggravated the cost of living. This includes import dependency on energy, very energy-inefficient housing historically, and poor land use planning. These factors elevate the need to use energy, and also the cost of doing so.

This report is divided into two parts. The first part deals with trends in income inequality and the effect of the pandemic. Section 2 looks at global trends in inequality. Section 3 looks at Irish trends, documenting the fall in inequality. Section 4 looks at inequality and the Irish pandemic, demonstrating that the Covid measures introduced by the government did much to buffer the loss in income during this period.

The second part of the report looks at the cost of living crisis and its distributional implications. Section 5 looks at inequality and the cost of living crisis, examining distributional aspects of recent inflation and energy poverty. Section 6 explores some long-term components of Ireland’s cost of living, implicating building energy inefficiency, and land use planning, among other factors. Section 7, the penultimate section, reviews some recent measures to address the cost of living crisis. The final section, Section 8, offers some discussion and policy recommendations.