Fintan O’Toole: What is at the root of inequality?

If you want to understand why inequality is so deeply rooted here, you have to get your head round a paradox: Ireland is outstandingly good at punishing bad education.

In every developed society you are likely to get a better job and to earn more money if you get more education. Conversely, if you leave school early, you are much more likely to end up in a bad job or with no job at all. These are general truths. And of course they are true here as well.

But the twist is that they are more true here than they are in any other developed economy.

Bad education contributes more to inequality in the State than it does in any other country in the Organisation for Economic Co-operation and Development. Or to put it another way, if you fail early in life here, you fail bigger than in any comparable country.

Putting young people on the scrapheap is an Irish speciality.

Living abroad

One of the remarkable things about the State is that vast numbers of people are simply not able to earn a decent living. Even if we leave aside the startling statistic in last week’s OECD report that one in six of all those over the age of 15 who were born here are living abroad, there’s a huge slice of the population for whom the market economy does not really function.

It seems a rather neat rhetorical trick to call Ireland a 50/50 society, but it is.

If there were no welfare system and people had to live on what they could earn in wages, an astonishing 50 per cent of people in the State would live below the poverty line.

One in every two of us depends on the State to keep us out of poverty.

Why is this? Because the distribution of “market income” (essentially wages, salaries and private pensions) is the most unequal in the developed world.

We tend to think of the United States, for example, as being an especially tough society in which the rewards for "success" are really high and the punishment for "failure" is particularly harsh.

And we’re not wrong about that. But in Ireland, the gap is actually a good deal higher than it is in the US. There is simply no comparable country in which the differences in earnings before tax and welfare kick in are so stark. This is largely because the share of pre-tax and pre-welfare income that goes to the bottom 20 per cent of people is the lowest in the OECD.

The key to this extreme inequality, even by the miserable standards of the contemporary world, is education. People with inadequate education suffer in pretty much every economy. But they suffer much, much worse in the State.

In the OECD as a whole, 27 per cent of those who leave school before the equivalent of a Leaving Certificate go on to earn less than half the median income. Here 40 per cent of those who do so go on to earn less than half the median income.

In the OECD, 17 per cent of those who have the equivalent of a Leaving Cert but don’t go to university end up with less than half the median income. Here, the figure is twice as high at 34 per cent.

And of course the opposite is also true: those who do have third-level education are much more likely than in other developed countries to have more than twice the median income.

This is built into the nature of our economy, or perhaps we should say our economies. We have one economy of high-tech companies (mostly multinationals) paying good wages to highly educated workers and another low-tech economy in which people with inadequate education occupy poorly-paid and insecure jobs or drop out of the workforce altogether.

These are, increasingly, not just different worlds, but disparate worlds. And the point is that people are allocated their respective places while they are still children. Bad luck, bad health and redundancy can pitch an older person from the 50 per cent who can earn a living wage into the 50 per cent who can’t. But most of those decisions are made much, much earlier. This is Ireland’s shame and Ireland’s opportunity.

Childhood poverty

The undereducation that keeps half of us out of the decent part of the economy is a product of one overwhelming cause: childhood poverty. Kids who start to fall behind even before primary school will struggle to get to the levels of education they will need in order to be able to get a decent job and lead an independent life. Everybody knows this.

But it doesn’t have to be this way. Just as poverty and inequality are locked in early, they can also be tackled early.

We can, as we try to imagine a republic again, start at the beginning, with children born in equal dignity and with the same chance to make a decent living when they grow up. We can make good education from birth onwards the priority of all public policy, or else resign ourselves to a 50/50 economy and half a republic.