Poverty, income inequality and living standards in Ireland: Sixth annual report

Executive summary

Key findings

This report is the sixth from an Economic and Social Research Institute (ESRI) research programme in partnership with Community Foundation Ireland and Trinity College Dublin which seeks to address gaps in our knowledge and understanding of poverty, income inequality and living standards in Ireland.

The key findings of this year’s report are as follows:

Income growth and inequality

• The latest Survey on Income and Living Conditions (SILC) data indicate that 2024 saw the resumption of real growth in household incomes after several years of stagnation. Average disposable (after tax and transfer) household income – adjusted for household size and composition – rose by 4 per cent between 2023 and 2024, surpassing its 2021 level for the first time since the sharp rise in prices following the 2022 invasion of Ukraine.
• However, this growth has been uneven, with incomes rising faster at the top of the distribution than the middle or bottom. Incomes grew by more than 7 per cent for the top tenth of households compared to 3 per cent for the bottom half. This contrasts with the experience between 1987–2007 and 2014–2020, when income growth was highly progressive: stronger at the bottom than the top of the distribution.
• This recent pattern of growth has translated into a rise in income inequality. The Gini coefficient – which summarises the level of income inequality as a number between 0 (where everyone has the same income) and 1 (where one person has all income) – rose from 0.257 to 0.265 between 2023 and 2024. While this should be seen in the context of a sustained decline in income inequality over the longer run, the economic growth experienced since the COVID-19 pandemic has failed to deliver the same benefits for the bottom of the distribution as seen during the Celtic Tiger period and the 2014–2019 recovery.

Poverty and material deprivation 

• Income poverty rates rose from 12.2 to 12.9 per cent before housing costs, and from 14.6 to 15.6 per cent after housing costs between 2023 and 2024. This amounts to increases of 52,000 and 69,000 people respectively, concentrated among those in households with children. Poverty rates have risen sharply and consistently since 2018 for those whose youngest child is aged 0–5, from 10.7 to 20.3 per cent on a before housing costs basis and from 17 to 27 per cent on an after housing costs basis.
• The Government is very far from meeting its target for reducing child poverty to 3 per cent by 2030. This is defined in terms of the share of children both experiencing material deprivation and who are below the poverty line before housing costs are accounted for, which currently stands at 8 per cent. This measure fails to capture a large number of children who experience material deprivation but have incomes just above the poverty line, meaning it fails to capture many of those facing high housing costs. The Government should consider instead using an after housing costs income measure for its child poverty target.
• However it is defined, new policy measures will be needed for the Government to meet its official child poverty target. A means-tested second tier of Child Benefit would reduce child poverty more effectively, per euro spent, than increasing existing supports. This is because many low-income families with children are not eligible for – or do not take up – existing means-tested supports and so do not benefit from increases to these supports. 

Child-specific deprivation

• The measure of material deprivation developed for monitoring poverty in Ireland captures the lack of items by the household or the adults within it. However, the distribution of resources can differ within households and children may experience deprivation in a different way to their parents. Measures of child-specific deprivation aim to address this by focusing on child-related items such as access to sports equipment, children’s books, etc.
• Drawing on special SILC module data from 2009, 2014, 2021 and 2024, we find that there is a clear recession and recovery pattern in child-specific deprivation reflecting the economic downturn and subsequent recovery on family living standards.
• There is a clear pattern of families shielding their children from poverty evidenced by low rates of child-specific deprivation even amongst those experiencing household deprivation or living below the poverty line. However, not all families have the resources to provide this protection to their children. Children living in lone-parent families, in supported rental accommodation, households with weak labour attachment or headed by an individual born outside the EU, have the highest rates of child-specific deprivation. 
• In measurement terms, very few children who experience child-specific deprivation are found in non-deprived households, suggesting that the current deprivation measure encompasses most of this group. However, adult- and household-centred measures may not pick up the particular experiences of children. The deprivation items collected in SILC and used in this analysis are reported by adults. Collecting information directly from children may provide a more accurate account of their lived experiences.