The Impact of Austerity Income, Poverty & Deprivation on the Island of Ireland

1. The Impact of AusterityIncome, Poverty & Deprivation on the Island of Ireland IHREC & NIHRC Conference Friday 16th of May Paul Mac Flynn NERI (NevinEconomic Research Institute) Belfast Paul.macflynn@nerinstitute.net

2. Austerity in Northern Ireland • How has austerity affected NI? • Block grant • 13.2% real terms reduction 2010/11 – 2015/16. Largest of any UK region • Welfare Reform • Yet to be apportioned, financial envelope decided. Estimates of macro impact up to £750m annually. (some already implemented) • Public Sector Pay Freeze • Disproportionately affects NI, real terms pay cut

3. Austerity in Northern Ireland • Wider Macro impacts throughout economy • Further Reductions beyond 2015. • Benefit cap • Block grant reductions to 2017/18 • Effect of Austerity • Still to be felt, data available up to 2011/12

4. Poverty in Northern Ireland • Data available for Absolute and Relative Poverty • Relative Poverty – incomes less than 60% of UK median • Absolute Poverty – incomes less than 60% of inflation adjusted UK median income of previous year

5. Poverty in Northern Ireland

6. Poverty in Northern Ireland

7. Poverty in Northern Ireland

8. Poverty NI & UK

9. Poverty NI & ROI

10. Deprivation • Measures of poverty are sensitive to changes in the income distribution. • Deprivation gives more realistic assessment of circumstances • Better figures in Republic • Latest overall figures for NI in 2010

11. Deprivation Rate ROI

12. Multiple Deprivation in NI • Income • Employment • Health Deprivation & Disability • Education Skills & Training • Proximity to Services • Living Environment • Crime & Disorder

13. Deprivation in NI • Income • Employment • Health Deprivation & Disability • Education Skills & Training • Proximity to Services • Living Environment • Crime & Disorder

14. Effects of Austerity on Incomes • All components of income • Earnings • Benefits • Pension income • Investment income • Austerity effects net incomes through • Changes to tax and benefit rates • Earnings – directly in public sector, indirectly in private sector

15. Incomes North and South

16. Drivers of Poverty and Inequality • Reduction in public services • Withdrawal or reduction in cash benefits • Reduction in earnings • Key group affected – the “working poor” • Group have seen wages fall at the same time they have borne the brunt of welfare reform through reduced tax credits

17. Drivers of Poverty and Inequality • Median Hourly pay rates in Northern Ireland, 2006-2013 (£stg)

18. Low Pay in NI • Percentage Earning at or below Minimum Wage or ⅔ of Median Wage 2007-2013

19. Low Pay in NI • Official measure of low pay suffers same disadvantages as measure of relative poverty • No evidence that those earning above 2/3 of median wage are in anyway comfortable • Not enough to lift people above 60% of median income or 2/3 of the median wage. Achieving this would be pointless if same individual still deprived of basic needs • Like deprivation, Living wage seeks to measure low pay with reference to basic needs • 25% in NI earn below Living wage, disproportionately affects women, young people and those working in certain industries

20. Low Pay in NI • Percentage earning below Living Wage by industrial Sub Sector, Northern Ireland2013

21. Rights • Economic and Social rights • Hard to define a ‘right to fair pay’ • Right to a living wage • Right to minimum guaranteed hours of work • Right to collective bargaining • Access to public services and to appropriate benefits are crucial, but austerity’s indirect impacts can be just as destructive.