Selective Use of Data by Troika has led to inaccurate analysis and inappropriate policy proposals

1. The selective use of data by the Troika is leading to inaccurate analysis which in turn is producing inappropriate policy recommendations for Ireland.
2. Poverty in Ireland is rising despite Troika claims.
3. The vulnerable have not been protected despite ‘Troika’ claims.
4. Accurate analysis of data shows the richest 25% of the population have not been hardest hit despite ‘Troika’ claims to the contrary.

"The selective use of data by the Troika is leading to inaccurate analysis which in turn is producing inappropriate policy recommendations for Ireland. By misusing data the Troika has come to false conclusions and made recommendations that have very bad outcomes for the vulnerable while protecting the better off” according toSocial Justice Ireland.  At a meeting today with the Troika Social Justice Ireland representatives went on to state that: “The vulnerable have not been protected during this recession despite claims to the contrary by the Troika."

In a 36-page Briefing presented to the Troika at today’s meeting Social Justice Ireland set out a range of examples of such misuse of data. Poverty, according to the Troika has fallen between 2006 and 2010. While the poverty rate in 2010 is lower than it was in 2006 it rose quite steeply in both 2009 and 2010. Ignoring this rise in poverty allows the Troika to suggest that Government is doing well in this area and simply needs to continue its current policies. Following this recommendation would see poverty continue to rise dramatically in Ireland.

The briefing, titled ‘Ensuring justice and fairness guide policy decisions’, shows how the Troika’s selective use of data comes to the conclusion that the distribution of the ‘hits’ during the recession have been fair. However, this ignores the most recent research conducted by the European Commission which shows that only in Ireland and Cyprus have the upper quartile NOT taken the brunt of the rise in financial distress in recent times.

Some of the key points made by Social Justice Ireland at their meeting with the Troika today include the following:

On Data, Analysis and Policy Proposals

• Selective use of data by ‘Troika’ members in the analysis and documentation they have produced recently is leading to inaccurate analysis which in turn is leading to inappropriate policy proposals being made.  This is totally unacceptable.
• The ‘Troika’s analysis sets most of the parameters for the Irish Government’s decisions on the Budget and other key areas of policy. So it is crucially important that the analysis is as accurate as possible. 

On the poverty rate

• An example of this unacceptable process in practice can be seen in the analysis provided on poverty. This analysis states that poverty fell between 2006 and 2010.  What this statement hides is the fact that poverty fell in the period 2006-2008 but has been rising since then.
• Based on this selective use of data one could conclude that no damage was being caused to Ireland’s poorest when, in fact, an analysis of the full data shows that their situation has been deteriorating significantly.

On reducing unemployment payments over time

• Another example of this unacceptable process in practice can be seen in much of the discussion concerning the rates of social welfare payments made to people who are unemployed. The argument made in ‘Troika’ publications is that Ireland’s job-seekers allowance does not fall over time.  This contrasts with the situation in many other EU countries.
• This analysis however is a selective use of data as it fails to inform the reader that in many other EU countries people receive a high level of social welfare payment when they first become unemployed – often a high percentage of their salary prior to becoming unemployed. Over a period of time the level of this payment is reduced.
• By contrast in Ireland there is no such tiered system. The very first payment made to a person who becomes unemployed in Ireland is below the poverty line and remains that way for the duration of their unemployment. Once this fact is revealed recommendations urging its reduction so as to be in line with other EU countries are exposed as being inappropriate.

On increases in welfare rates in the last decade

• A further example linked to the two items already highlighted relates to the claim that welfare rates have been raised far faster than pay or inflation has risen in the period since 2004. This again is a selective use of data. It ignores the fact that welfare rates had fallen far behind all other groups in society in the preceding period. The increases in welfare payments in the period 2005-2007 only went part of the way towards re-balancing this situation. 
• In the 25-year period between 1986 and 2011 Government ministers had seen their after-tax income rise by more than €1,000 a week and TDs had seen their after-tax income rise by more than €840 a week. Clerical officers’ after-tax incomes rose by more than €400 a week in the same period. Those on the average industrial wage had seen their incomes rise by more than €340 a week. By contrast the income of an unemployed person rose by less than €144 a week – and €51 of that is attributable to welfare increases in the three years from 2005 to 2007.
• By ignoring the broader data the ‘Troika’ can justify recommending reductions in social welfare rates that still remain below the poverty line.
• Any fair and objective analysis would acknowledge that the increases in social welfare rates in the last decade went only part of the way to bridging the gap that had been allowed to develop between the poorest and the rest of society in the preceding two decades.

On Replacement Ratios

• Closely linked to this is the claim that replacement ratios are high in Ireland and consequently welfare rates for job seekers should be reduced. Again, while there are examples of problematic replacement ratios the typical situation is the opposite of that presented in the analysis provided by the ‘Troika’. This in turn has led to inappropriate policy proposals in this area. 
• The National and Economic Social Council (NESC) addressed the issue of replacement rates in their publication ‘Promoting Economic Recovery and Employment in Ireland’.  The NESC research shows that only 5 per cent of people on the Live Register receive both rent supplement and an increase for qualified adults and for qualified children. 
• NESC notes that the degree of attention paid to this ‘perfect storm’ which is regularly used to present replacement rates in Ireland as high and interpreted as evidence of a disincentive to work is not related to labour supply concerns.  The NESC study shows that Ireland’s replacement ratios are very positive in terms of encouraging people to take up employment.

On distribution of the ‘hits’ during the recession

• A further example of this selective use of data, linked to some of the examples already provided, is the claim that the ‘hits’ have been distributed fairly in recent Government budgets.
• This conclusion ignores a recent study by the European Commission that showed Ireland was one of only two EU countries where the upper quartile of households had not taken the greatest impact of the rise in financial distress.
• This study (published September 2012) showed that over the past year the only countries in which the richest 25% of the population did NOT take the greatest hit were Cyprus and Ireland.

The 36-page Briefing presented to the Troika by Social Justice Ireland provides more details on these and related issues. It provides many examples of where data has been selectively chosen, where this selectivity has led to inaccurate analysis which in turn has led to inappropriate policy proposals being made. 

Social Justice Irelands Breifing to Troika can be accessed here