People with jobs account for more than a quarter of all those in poverty - Poverty Focus 2024
Workers account for more than a quarter of people in poverty. Over time poverty figures for those in employment, the working poor, have remained more-or-less static, reflecting a persistent problem with low earnings. In 2023, almost 145,000 people in employment were still at risk of poverty. This is a remarkable statistic, and it is important that policy better recognises and addresses this problem. In Poverty Focus 2024 we focus on the nature and experiences of poverty in Ireland. Drawing on the available statistical evidence, we outline how poverty is measured, the value of the poverty line and consider many of the groups in our society who are most exposed to living life below the poverty line. This year we pay particular attention the working poor.
Policy must begin to ask how, in a period of full-employment, and jobs going unfilled, the number of ‘working poor’ and the proportion of workers who are low paid remains stubbornly high? In a ‘tight’ labour market, with full employment, a job should pay a living wage and offer decent pay and conditions to workers. The next Government must prioritise this issue and at a time of ‘full employment’, deliver coherent policy design ensuring good quality jobs and that work pays.
Low pay
Many working families on low earnings struggle to achieve a basic standard of living. Low pay in Ireland is most common among female workers; young workers; those working in retail, hotels and security sectors; single parents; and those on temporary contracts. A higher proportion of low paid employees are living in households that struggle financially, borrow for day to day living costs, and experience deprivation. Refundable tax credits, the living wage and policies which protect the value of the minimum wage and attempt to keep those on that wage out of the income tax net are important policy initiatives in this area.
Living Wage
Improvements in the low pay rates received by many employees offers an important method by which levels of poverty and exclusion can be reduced. Paying low paid employees a Living Wage offers the prospect of significantly improving the living standards of these employees.
Refundable Tax Credits
One of the most effective mechanisms available within the present system to address the problem of the working poor would be to make tax credits refundable. If a low income worker does not earn enough to use up their full tax credit then they will not benefit from any income tax reductions introduced by the Government in its annual budget. Making tax credits refundable would be a simple solution to this problem.
Poverty Focus 2024: key findings
- One in every ten people in Ireland lives on an income below the poverty line (10.6 per cent of the population). Based on the most recent Census data, this corresponds to almost 560,000 people.
- Without cost of living supports the at risk of poverty rate would have been 13 per cent.
- While these measures supported vulnerable households, particular people aged over 65, the majority of these measures are one off in nature, This presents a particular challenge to the next Government in terms of the long term economic and social impact on households as these temporary measures wind down.
- When poverty is analysed by age, the 2023 figures show that just over 14 per cent of children aged under 18 are living in relative income poverty, more than 176,900 children.
- Almost 65,000 pensioners are living in poverty. Without one off cost of living measures, the rate of poverty among older people would double.
- About 145,000 workers are living at risk of poverty, 6 per cent of those who are employed. Poverty figures for the working poor have shown little movement over time reflecting a persistent problem with low earnings.
- Income inequality has remained stubbornly stable over the past fifty years. While the total value of income has increased, not much has changed about its distribution. The share of total household disposable income going to the top quintile (20 per cent) of households between 1973 and 2022 has steadily remained between 40 and 45 per cent.
- Since 2012 poverty has fallen among the unemployed, children, students and those working in the home, but has risen for workers, those who are retired and people who have a long-term illness or disability.
- Targeted measures that prioritise those households with the least resources and the most needs can yield welcome poverty reductions. However, these anti-poverty interventions need to be sustained; something than has been lacking in recent budgetary policy.
Income adequacy
The prioritisation of low-income and welfare dependent families in Budgetary policy, as our findings show, works, and leads to reductions in poverty. Unfortunately, the most recent Budgets have shifted away from this approach; meaning much of the recent progress will be reversed. More needs to be done to target low-income households. We warmly welcome progress in reducing Ireland’s overall poverty rate. However, the underlying trends in the income distribution; where there are small nominal increases in welfare alongside more pronounced increases in earnings and reductions in income taxation are likely to widen income divides and push poverty upwards. The next Government will have to deal with the economic and social impact on vulnerable households as cost of living measures wind down. Benchmarking core social welfare rates to average earnings would help mitigate this impact, and give long-term certainty to households on fixed incomes.
Reducing Poverty – policy priorities for the next Government
Social Justice Ireland believes that the next Government and policy-makers generally should:
- Acknowledge that Ireland has an on-going poverty problem.
- Acknowledge the failure to meet repeated policy targets on poverty reduction and commit sufficient resources to achieve ambitious and credible new targets.
- Adopt new, ambitious targets aimed at reducing poverty among particular vulnerable groups such as children, lone parents, jobless households and those in social rented housing.
- Link the value of all core welfare payments to movements in average earnings, so that welfare dependent households do not fall behind.
- Recognise the problem of the ‘working poor’. Make tax credits refundable to address the situation of households in poverty which are headed by a person with a job.
- Support the widespread adoption of a Living Wage so that low paid workers receive an adequate income and can afford a minimum, but decent, standard of living.
- Introduce a cost of disability allowance to address the poverty and social exclusion of people with a long-term illness or disability.
- Recognise the reality of poverty among migrants and adopt policies to assist this group. Including the full implementation of the White Paper on the Elimination of Direct Provision.
- Accept that persistent poverty should be used as the primary indicator of poverty measurement and assist the CSO in allocating sufficient resources to collect this data.
- Examine and support viable, alternative policy options aimed at giving priority to protecting vulnerable sectors of society.
- Carry out in-depth social impact assessments prior to implementing proposed policy initiatives that impact on the income and public services that many low income households depend on. This should include the poverty-proofing of all public policy initiatives.
- Introduce a universal basic income system. No other approach has the capacity to ensure all members of society have sufficient income to live life with dignity.