The results of the latest Survey on Income and Living Conditions makes for interesting, if depressing, reading. The latest batch of data includes 2011 measures for income, inequality, poverty and deprivation as well as some significant revisions to the 2010 data.
2011 was the third successive year of falling disposable income, increasing poverty and deprivation.
- Annual equivalised disposable income fell 3% year on year to €21,440 in 2011, down 12% from its 2008 peak of €24,380 and back at 2006 levels. When inflation is taken into account, despite a brief period of falling prices during 2009-2010, real disposable income is back at levels not seen since the early 2000’s. (equivalised simply means that when presenting household income, the data controls for the fact households are of varying size).
- The at risk of poverty rate increased from 14.7% to 16% year on year, meaning that roughly one in six households have an income less than 60% of that of the household in the middle of the income distribution. While this rate remains highest for those under 18 years of age and lowest for those over 65 (with rate remaining relatively static for both groups in recent years), the rate has increased significantly for those of working age. This is not surprising given that unemployment has soared while pensioners have been spared the brunt of austerity measures.
- Since its 2007 low of 11.8%, the deprivation rate had more than doubled by 2011, reaching 24.5%. This means that one in four people in Ireland experience two or more of the eleven types of enforced deprivation (listed below). For those who are already at risk of poverty, the deprivation rate rises to 43.1%. However, those higher up the income distribution are increasingly experiencing deprivation, the rate for this group (i.e. 84% of the population) rising from 19.1% in 2010 to 21% in 2011 (driven by large increases in the rate of deprivation experienced by third level graduates). Fuel poverty is clearly on the rise with one in eight (12.2%) unable to afford heating at some stage in 2011, up from one in ten (10.5%) in 2010.
- The rate of consistent poverty increased marginally from 6.3% to 6.9% year on year, up from a 2008 low of 4.2%. The consistent poverty rate is the proportion of people who are both at risk of poverty and experiencing deprivation. This increase was relatively subdued due to the fact that the bulk of the increase in deprivation rate in 2011 was accounted for by those who do not fall below the at risk of poverty threshold.
- Inequality, as measured by the GINI coefficient, was down marginally year on year from 31.6 in 2010 to 31.1 in 2011, having increased sharply from 29.3 in 2009 after several years of trending downwards. The most significant revision of the 2010 data – compared to the preliminary results published previously – was in the estimated GINI coefficient. The increase from 29.3 to 31.6 in 2010, although still large, was significantly less than the increase to 33.9% which had previously been estimated. (when calculating the GINI coefficient, 0% corresponds to perfect income equality while a higher coefficient implies a more unequal income distribution).
What is striking is not only that incomes have fallen significantly – equivalised direct income is back at 2004 levels, around €380 per week – but how much worse things would be if the social safety net had not been strengthened during the 2004-2008 period and relatively protected during the 2009-2011 period. Equivalised social transfers increased by some 74% from €81.51 per week in 2004 to €141.65 per week in 2011), far ahead of the rate of inflation. Were it not for social transfers, the at risk of poverty rate would be more than three times higher at 50.7% in 2011. In 2004, the corresponding rate was 39.8%, demonstrating, as the CSO point out, the “increasing dependence of individuals on social transfers to remain above the at risk of poverty threshold”.
I have written previously about what I call the ‘Inchydoney interlude’, the period after 2004 during which the Fianna Fail-led government ramped up social spending, thereby reversing long-standing trends towards greater income inequality in Ireland. I call this an interlude, because those long-standing trends appear to have reasserted themselves in earnest after the onset of economic crisis.
While the ESRI has estimated that the burden of austerity has been imposed on a broadly progressive basis, impacting most on those with the highest incomes, over the 2008-2011 period, the fact that they estimate the impact of both the 2012 and 2013 budgets to be regressive, this does not suggest that government policy will act as a break on rising inequality.
Note: Basic indicators of enforced deprivation:
1. Two pairs of strong shoes
2. A warm waterproof overcoat
3. Buy new (not second-hand) clothes
4. Eat meat with meat, chicken, fish (or vegetarian equivalent) every second day
5. Have a roast joint or its equivalent once a week
6. Had to go without heating during the last year through lack of money
7. Keep the home adequately warm
8. Buy presents for family or friends at least once a year
9. Replace any worn out furniture
10. Have family or friends for a drink or meal once a month
11. Have a morning, afternoon or evening out in the last fortnight for entertainment
vicduggan 