Times Change

Quarterly Political & Cultural Magazine

Social polarisation in Ireland's tiger economy

Proinnsias Breathnach

The astonishing growth of the Irish economy in the 1990s has produced widespread economic benefits. Employment expansion has sucked in large numbers of unemployed people, women who were previously outside the paid labour force, and both Irish and non-Irish nationals from abroad. Most of those in employment have also experienced real increases in their living standards, as have many who remain dependent on social welfare.

However, these welcome trends should not be allowed mask the fact that the benefits of economic growth have been very unevenly spread. Most waged and salaried employees have received pay increases which fall well short of the overall growth in Gross National Product, which is a measure of the amount of disposable income in the economy. Others, by contrast, have been much more fortunate. These include business owners, whose profits have been gobbling up a rapidly rising share of national income (up from 25% in 1986 to 35% in 1996). They also include the growing army of self-employed professional people in such key areas as financial and technical services (accountants, currency dealers, computer programmers, etc.). A lot of salaried workers in possession of high-demand skills have also been securing increases in remuneration well ahead of general trends. These are the people driving a housing market which has seen average prices in the Dublin area relative to average disposable income jump from among the lowest to the second highest in Europe in just ten years.

The growing earnings gap between the well-off and the rest is not a peculiarly Irish feature. In fact, it has been typical of western advanced economies since the 1970s, in contrast with the decades immediately after World War II when the redistributional impact and employment structures of the welfare state had the effect of tempering extremes of wealth and poverty. The cessation, in the early 1970s, of the prolonged period of postwar economic growth led to the simultaneous growth of unemployment and erosion of the income tax base, causing cutbacks in state welfare expenditure.

These conditions also provided the political basis for the growth of pro-business, anti-trade union ideologies. They also led to a process of economic restructuring which has seen a general decline in overall manufacturing employment and internal changes in that employment, involving the contraction of the semi-skilled but well-paid 'blue-collar' workforce which operated the Fordist assembly plants which lay at the heart of the postwar prolonged economic boom. These have largely been replaced by a combination of automated machines supervised and maintained by a new stratum of functionally flexible technical workers and a parallel 'peripheral' workforce of unskilled workers with impermanent or otherwise inferior employment conditions which render them numericall flexible.

However, the main feature of the economic restucturing of the last 25 years has been the rapid growth of service employment at both ends of the employment scale. At one end there are those, mainly in business services, with the skills to secure high incomes. Predominantly young and well-educated, these are the 'yuppies' whose high-consumption lifestyles have become the badge of the postmodern age. The consumer demands generated by these groups have, in turn, been a mainstay of employment growth at the other end of the earnings spectrum - in areas such as catering, accommodation, leisure and entertainment, retailing, cleaning and security. Low wage rates in these areas of work are further exacerbated by their temporary, seasonal and part-time nature. Much of the employment growth in these areas has been accounted for by women, students and ethnic (and frequently immigrant) minorities.

These contrasting employment trends have provided the basis for the 'social polarisation' hypothesis which has become fashionable in modern social science. According to this hypothesis, the middle-income groups which dominated the employment structure of the welfare state in its heyday have been disappearing, while there has been alternative growth of both high- and low-income occupations, leading to a growing gap between the relatively rich and the relatively poor.

This trend has been particularly pronounced in the USA where the real earnings of lower-income workers have fallen substantially since the 1970s. This has not occurred in other advanced economies, due partly to the continuing strength of trade unions and the survival of vestiges of the corporatist welfare state. In these countries, some analysts have argued that, contrary to the cruder versions of the social polarisation thesis, the growth of low-income employment has not matched that of high-income jobs. This is leading to an overall 'professionalisation' of the labour force. While the gap between rich and poor is growing, from a social point of view this is tempered by the fact that, numerically, the ranks of the former are growing more rapidly than the latter.

Many commentators have argued that a key factor underlying growing occupational disparities is access to, and ability to use, computer technology and information technology in general. In a world where there is a general shortage of IT-related skills, those in possession of such skills not only have no problem in securing employment, but generally can command an earnings premium for such skills. This leads to what Friedmann (1995) has termed a process of 'techno-apartheid', creating an advantaged social group - termed the “cyberproletariat” by Ingersoll (1993) and the 'technoliterati' by Golding (1996) - and a disadvantaged group called alternatively the 'lumpentrash' by Ingersoll and the 'techno-poor' by Golding. While those possessing IT skills occupy a wide earnings spectrum (compare the financial dealer with the typical office secretary), for the most part they have privileged access to secure forms of employment due to the demand for these skills in what Castells (1996) has termed the post-Fordist 'informational economy'.

The social implications of growing earnings disparities are modified somewhat by the effects of redistribution through the taxation system and the growing incidence of multiple-income households (including welfare income). However, these effects are very variable internationally. While dual-earner households are now the most common type everywhere, in some countries (the UK being a case in point) these are dominated by low-income households where, frequently, the female partner is prompted to take up paid employment due to the low earnings of the male earner. In other countries, dual earning is mainly found among the professional statum, thereby producing even more pronounced household income disparities.

In the case of Ireland, analysis of the occupational structure for 1991 and 1996 (taken from the Census of Population) provides substantial evidence in support of the professionalisation thesis, in that there has been rapid growth in professional and business occupations, but slower than average growth in the main low-skill occupations which are usually cited in the social polarisation literature, such as sales assistants, clerical workers, waitresses and cleaners. Nor has there been any spectacular growth in part-time employment (up from 9% of total employment in 1992 to 12% in 1997) - supposedly another classic indicator of occupational polarisation. Indeed, while the bulk (three quarters) of part-time employment is accounted for by women, in fact, most (60%) of the new jobs taken by women between 1992-97 were full-time jobs. Furthermore, the most vigorous growth in female employment (with the exception of carers) has been occurring in the business and scientific areas, rather than the low-skill areas highlighted by the social polarisation literature.

Despite these considerations, and despite a strongly-entrenched national collective bargaining system and a rapid growth in the supply of highly-educated workers, there was rapid growth in inequality of earnings in Ireland in the late 1980s and early 1990s (Barrett et al., 1997). Even though Ireland already had one of the most unequal earnings dispersions (measured as the ratio between the top and bottom earnings deciles) among OECD countries in 1987, this dispersion increased more quickly than that of any other country in the period 1987-94. At the end of the period, Ireland’s earning dispersion was surpassed only by the USA and Canada (of 14 comparator countries for which data were available) and was much greater than those of the more developed West European economies. Barrett et al. found that this widening earnings inequality arose mainly from strong earnings and employment growth among university graduates at the top end of the earnings spectrum. Strong demand for such workers was seen as having overridden both their increasing availability and national pay bargaining arrangements.

The growing gap between the top and bottom earnings deciles has not been reflected in household incomes, where the ratio between the two has changed little since 1980. This may be attributed mainly to the redistributive effect of the taxation and welfare systems. While the taxation system became less progressive in the 1990s, this was compensated for by the reduction of unemployment and the targetting of welfare increases on those in receipt of the lowest payment levels (Callan and Nolan, 1998). As a result, the relative position of the poorest households has actually been improving. At the same time, the proportion of persons in households whose income falls below 60 per cent of the average has been steadily increasing in the 1990s, indicating growing polarisation of the household income distribution. It should also be noted that the overall level of household income dispersion in Ireland is quite high by OECD standards.

Social polarisation has been exerting a major influence on the urban landscape. The yuppie class spawned by post-Fordist restructuring has displayed a marked preference for inner-city residences in order to be close not only to their workplaces, but especially to consumer-intensive spectacular districts of nightclubs, restaurants, boutiques, theatres, art galleries, etc. This, in turn, has induced a process of 'gentrification' of formerly working-class neighbourhoods. In most large American cities, substantial marginalised communities continue to be found in the inner city. The resulting juxtaposition of affluent and poor residential areas (termed 'cyburbs' and 'cyberia' by Knox [1995]) creates conditions for potential conflict which have been responded to by the well-to-do in the form of fortified 'gated' communities, complete with security guards, dogs and electronic security equipment.

In Dublin, some 10,000 new apartments have been installed in the inner city in the 1990s. The small size and high cost of most of these apartments and the lack of associated social facilities virtually assure that they are confined to young, childless, but well-paid singles and couples. The proliferation of such a homogeneous social group in the inner city is a monument to the inadequacies of the Irish planning system. The success of Temple Bar (originally envisaged mainly as a tourist attraction) as a consumer mecca has been strongly dependent on the proximity of this yuppie/dinky residential community. Meanwhile, although some localised marginal communities have survived in the inner city, most socially-excluded people now reside in sprawling public housing ghettoes in the suburban fringe, thereby tempering (but by no means eliminating) the potential friction between haves and have-nots. Thus, Dublin also has its share of security-intensive gated communities, whose apotheosis surely must be the high wall separating the residential complex in the International Financial Services Centre from what remains of the Sheriff Street community on the other side.

Traditionally, and perhaps ironically, leftwing politics prosper in times of strong economic growth, due partly to the strong bargaining position of the working class in times of low unemployment, and partly to the availability of public funds to tackle problems of exclusion and poverty. There has, however, been no such efflorescence of the left in Ireland in the 1990s. Indeed, the demise of Democratic Left would indicate the opposite. The evidence of the postwar period may suggest that the first generation to experience affluence becomes preoccupied with enjoying the material benefits thereof, and that it is among their offspring that a reaction to material wellbeing develops. It is also possible that the new post-Fordist employment structures are not conducive to the kinds of working-class consciousness and political action upon which the traditional left based itself.

While problems of relative and absolute poverty and social exclusion remain substantial in Irish society, it is likely that the next generation of social protest will be built around issues relating to the environment and empowerment. The potential poltical tensions arising from economic polarisation are likely to be moderated by the fact that the absolute economic position of those at the lower end of the spectrum has, in most cases, been improving significantly and seems likely to continue to do so, given expectations that the economy, employment and public revenues will continue their upward trend for the immediate future.

REFERENCES
Barrett A, Callan T and Nolan B (1997) The earnings distribution and returns to education in Ireland, 1987-1994. Economic and Social Research Institute Working Paper 85.

Callan Tim and Nolan Brian (1998) Income inequality in Ireland in the 1980s and 1990s (Unpublished paper)

Castells M (1996) The rise of the network society. Oxford: Blackwell Publishers.

Friedmann J (1995) Where we stand: a decade of world city research. In Knox PL and Taylor PJ (eds.), World cities in a world-system. Cambridge: Cambridge University Press, 21-47.

Golding P (1996) World wide wedge: division and contradiction in the global info infrastructure. Monthly Review 48 (3) 70-85.

Ingersoll R (1993) Computers 'R' us. Design Book Review, 27 (5).

Knox PL (1995) World cities in a world-system. In Knox PL and Taylor PJ (eds.), World cities in a world-system. Cambridge: Cambridge University Press, 3-20.

Proinnsias Breathnach is Senior Lecturer in Geography, NUI Maynooth

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