Work and Poverty in Ireland

December 11, 2012

Welfare payments more effective in reducing financial poverty than EU norm

New research report finds 22% of Irish population living in jobless households

Today (Tuesday 11 December 2012) a new research report on Work and Poverty in Ireland by the Economic and Social Research Institute (ESRI) is published. The report measures changes in the level of jobless households (households where adults spend less than one fifth of the available time in employment) and in-work poverty in Ireland. The focus of the report is on working-age adults and their dependent children between 2004 and 2010, a period spanning economic growth and deep recession. The report finds that the percentage of people in jobless households increased very rapidly after the start of the recession, from 15 per cent in 2007 to 22 per cent in 2010 (latest data). The percentage in Ireland is now double the average across Europe. The high rate in Ireland is partly due to the level of unemployment, but other important factors are that, compared to other EU countries, jobless adults in Ireland are less likely to live with a working adult and they are much more likely to live with children. The report finds a strong link between household joblessness and poverty. It highlights the vital role played by welfare payments and other social transfers in lifting jobless households out of financial poverty. Ireland is somewhat unique in Europe in the effectiveness of social transfers in reducing income poverty. While the Irish social welfare system has become more efficient over time at lifting people in jobless households above the national financial poverty threshold, there has been essentially no improvement in their living standards (as measured by the basic deprivation indicator, 51 per cent in 2010 for those in jobless households) or levels of financial stress (58 per cent in 2010). The risk of living in a jobless household is higher for people with low levels of education, in lone parent households and in households where an adult has a disability. Over one third of those living in jobless households were children and nearly one fifth were adults with a disability. Taken together, these two groups account for over one half of those living in jobless households. The Irish rate of in-work poverty (people with a job but who are living in poor households) is similar to the EU average. It increased slightly after the recession (from 7 per cent in 2007 to 8 per cent in 2010). The risk of being in-work poor is higher for the self-employed, those in a low-skilled occupation, people working part-time and those with no educational qualifications. About two in five of the in-work poor in 2010 were self-employed. Compared to adults in jobless households, the working poor do not appear to be as disadvantaged in terms of education, social class or household structure. Policy implications

  • Household joblessness should be recognised as a risk factor for poverty in Ireland. Joblessness takes account of the labour market status of other household members and barriers to working such as caring for young children, caring for someone with a disability, or being unable to work because of personal illness or disability.
  • Maintaining an adequate level of income support for those in jobless households is important, particularly given that over one half are either adults with a disability or are children.
  • Labour market activation of adults in jobless households needs to be emphasised as a long term solution to poverty. This requires a broad range of policies, including childcare, services and supports for people with a disability as well as the more traditional activation strategies focused on job search and developing education and work skills.
  • The rate at which social welfare and in-kind benefits are withdrawn as someone begins to earn needs to be carefully planned to avoid causing an increase in in-work poverty

Report author Dorothy Watson said: “There were some unexpected findings. While unemployment is clearly important in accounting for the high level of joblessness in Ireland, it is far from being the dominant factor. Only about one third of the adults in jobless households would classify themselves as unemployed. Tackling household joblessness will require a very broad approach, addressing a range of barriers to work. The solution will need to consider childcare and support services for people with a disability, as well as support for job search and skills development.” Ms Joan Burton TD, Minister for Social Protection said: “I am particularly concerned about the situation of children living in jobless households. There are grave social and economic risks in letting almost a quarter of Irish children grow up in jobless households. These risks include child poverty, limited educational achievements and ultimately, the intergenerational transmission of unemployment and poverty. It is for this reason that my Department provided financial support in Budget 2013 to the new area based approach to child poverty being developed by the Department of Children and Youth Affairs and the Office of the Tánaiste.“  

Notes for Editors: 1. The report Work and Poverty in Ireland: An Analysis of CSO Survey on Income and Living Conditions 2004-2010, by Dorothy Watson (ESRI), Bertrand Maître (ESRI) and Christopher Whelan (UCD), will be published on our website on Tuesday 11/12/2012. The embargo is until 00:01 am Tuesday 11 December. A research briefing on the report will also be available. 2. The report will be launched at the conference 'Work and Poverty - National and EU Perspectives', taking place on Tuesday 11 December 2012 at the ESRI, and attended by c 100 participants representing government departments, the social partners and unemployed and poverty organisations. It is organised by the Department of Social Protection and the Economic and Social Research Institute. Full details and the Conference programme are available on our website. 3. Members of the Media are invited to attend the Conference

Details of the research 1. The study is based on the Central Statistics Office national Survey of Income and Living Conditions (SILC), covering the period 2004 to 2010. It uses data from Eurostat to compare the situation in Ireland with that of EU member states. 2. The two indicators used in the study are: household joblessness, as measured using the EU indicator of 'very low work intensity', i.e. where less than 20 per cent of available adult time is allocated to paid work. Most very low work intensity households have no working age adult in employment. 3. The second indicator is in-work poverty, which identifies adults in employment living in households with total incomes below 60 per cent of median income (c €210 per person per week in 2010). 4. The report is an output of the Department of Social Protection/ESRI research programme on monitoring poverty trends and providing analysis and evidence to inform policy.