Poverty, inequality and Budget 2012

Sinéad Pentony30/11/2011

Sinéad Pentony: The publication of the preliminary results from the 2010 Survey of Income and Living Conditions (SILC) is very timely in the run up to the budget as it clearly illustrates the impact of austerity measures on the levels inequality and poverty. The results also confirm the findings from TASC’s Equality Audit of Budget 2011, which clearly shows that low income groups lost proportionately more of their income than higher income groups as result of the budgetary measures for 2011. These measures will exacerbate income inequality and lead to growing numbers being put ‘at risk of poverty’ and forced to live in poverty. Given that next week’s budget looks set to continue the failed austerity policies of previous budgets, we can expect to see these trends continue for the foreseeable future. However, there are alternatives, and the choices that are made next week will clearly illustrate the political priorities of the current government.

The headline SILC results show us that income inequality between 2009 and 2010 increased, with the average income of those in the highest income quintile 5.5 times that of those in the lowest income quintile. The ratio between 2008 and 2009 was 4.3 times. The ‘at risk of poverty’ threshold decreased from €12,064 to €10,831, reflecting declining incomes and cuts in social welfare payments over the last number of budgets, and this was accompanied by a sharp rise (12 per cent) in the number of people who are now classed as being ‘at risk of poverty’ - from 14.1 per cent in 2009 to 15.8 per cent in 2010. The proportion of the population ‘at risk of poverty’ is now back to 2006-2007 levels.

One of the most striking figures is the 30 per cent increase in the deprivation rate, which is defined as being deprived of two or more essential items that are deemed essential for meeting basic living requirements. The deprivation rate increased from 17.1 per cent to 22.5 per cent between 2009 and 2010 and the CSO has highlighted the fact that much of the increase has come from those who are NOT ‘at risk of poverty’. The combination of the deprivation rate and at risk of poverty rate gives us the measure of consistent poverty, and this increased from 5.5 per cent to 6.2 per cent. While this might not sound like a lot, the number of people in consistent poverty has increased by almost 50 per cent since 2008, the onset of the current crisis.

Once again, the SILC 2010 preliminary results show us that the groups identified as being most ‘at risk of poverty’ were children and single adult households with children. Almost one in five children were ‘at risk of poverty’ in 2010, with the rate increasing from 18.6 per cent to 19.5 per cent between 2009 and 2010. The ‘at risk of poverty’ rate for households composed of one adult with children was 20.5 per cent. When we look at the rate of consistent poverty, we see once again that children are the group most likely to experience consistent poverty.

The crucial role of social transfers in providing a large proportion of the population with income supports to meet basic needs is also evident, with the results showing us that over half of the population - 51 per cent - would be deemed to be’ at risk of poverty’ if social transfers were excluded from income. In 2004, this figure stood at 39.8 per cent.

These results show us the devastating effects of the policy responses to the crisis on children in particular and on single adult households with children. The burden of the adjustment has clearly been placed on those groups in society that are least able to absorb reductions in income and loss of access to vital public services. There are also strong economic arguments for protecting the incomes of those already on low incomes, particularly in relation to maintaining and boosting demand in the domestic economy.

The National Anti-Poverty Strategy is in tatters, and that there is a need for a complete shift in policy and how we formulate policies aimed at addressing poverty and inequality. All budget proposals should be equality proofed in advance of the budget, and this can only be achieved by undertaking a full distributional analysis to identify how different groups in society are likely to be affected. Budgetary measures should be audited for their effects on different groups after implementation.

We also need to change our system of taxation and benefits to increase the incomes of the low paid and those on welfare. This will have the dual impact of reducing poverty and inequality and protecting existing jobs in the local economy by maintaining aggregate demand. So we potentially have a win-win situation for the economy, and for the society which it should serve.

Posted in: EconomicsInequalityInequality

Tagged with: incomeinequalityCSObudget

Sinéad Pentony

Sinead Pentony

Sinéad Pentony is Associate Director with the Trinity Foundation, Trinity College Dublin working towards securing private funding and other support for a range of projects - primarily from individuals, companies and foundations.

Her fundraising portfolio includes supporting the Schools of Computer Science and Statistics; Mathematics; and Pharmacy and Pharmaceutical Sciences to deliver on their strategic priorities with the help of philanthropy support and sponsorship.

She has been working in the not-for-profit sector since the mid-1990s and generating income and fundraising has been a key part of her roles. She develops strategic relationships with a view to delivering mutually beneficial outcomes.

Her previous roles have involved undertaking research and policy work across a variety of public policy areas, policy influencing and advocacy work with a wide variety of stakeholders, public communications, lecturing, and leading or supported strategic planning and review processes aimed at refocusing the work of programmes and organisations in a changing context.

Sinéad was previously head of policy with TASC.


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