The Impact of Austerity
The Impact of Austerity
Income, Poverty & Deprivation on the
Island of Ireland
Paul Mac Flynn
NERI (Nevin Economic Research Institute)
Belfast
Paul.macflynn@nerinstitute.net
IHREC & NIHRC Conference Friday 16
th
of May
Austerity in Northern Ireland
•
How has austerity affected NI?
o
Block grant
•
13.2% real terms reduction 2010/11 – 2015/16. Largest of
any UK region
o
Welfare Reform
•
Yet to be apportioned, financial envelope decided. Estimates
of macro impact up to £750m annually. (some already
implemented)
o
Public Sector Pay Freeze
•
Disproportionately affects NI, real terms pay cut
Austerity in Northern Ireland
•
Wider Macro impacts throughout economy
•
Further Reductions beyond 2015.
o
Benefit cap
o
Block grant reductions to 2017/18
•
Effect of Austerity
o
Still to be felt, data available up to 2011/12
Poverty in Northern Ireland
o
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
Poverty in Northern Ireland
Poverty in Northern Ireland
Poverty in Northern Ireland
Poverty NI & UK
Poverty NI & ROI
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
Deprivation Rate ROI
Multiple Deprivation in NI
•
Income
•
Employment
•
Health Deprivation & Disability
•
Education Skills & Training
•
Proximity to Services
•
Living Environment
•
Crime & Disorder
Deprivation in NI
•
Income
•
Employment
•
Health Deprivation & Disability
•
Education Skills & Training
•
Proximity to Services
•
Living Environment
•
Crime & Disorder
Effects of Austerity on Incomes
•
All components of income
o
Earnings
o
Benefits
o
Pension income
o
Investment income
•
Austerity effects net incomes through
o
Changes to tax and benefit rates
o
Earnings – directly in public sector, indirectly in private sector
Incomes North and South
Drivers of Poverty and
Inequality
•
Reduction in public services
•
Withdrawal or reduction in cash benefits
•
Reduction in earnings
•
Key group affected – the “working poor”
o
Group have seen wages fall at the same time they have borne the brunt
of welfare reform through reduced tax credits
Drivers of Poverty and
Inequality
•
Median Hourly pay rates in Northern Ireland, 2006-2013 (£stg)
Low Pay in NI
•
Percentage Earning at or below Minimum Wage or ⅔ of Median
Wage 2007-2013
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
Low Pay in NI
•
Percentage earning below Living Wage by industrial Sub Sector,
Northern Ireland2013
Rights
•
Economic and Social rights
o
Hard to define a ‘right to fair pay’
o
Right to a living wage
o
Right to minimum guaranteed hours of work
o
Right to collective bargaining
•
Access to public services and to appropriate benefits are crucial, but
austerity’s indirect impacts can be just as destructive.
Austerity measures have significantly affected Northern Ireland, with reductions in block grants, welfare reform, and public sector pay freeze exacerbating poverty and deprivation. Data shows the macro impacts on the economy and the sensitive nature of poverty measures in assessing circumstances.
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Presentation Transcript
The Impact of Austerity Income, Poverty & Deprivation on the Island of Ireland IHREC & NIHRC Conference Friday 16th of May Paul Mac Flynn NERI (Nevin Economic Research Institute) Belfast Paul.macflynn@nerinstitute.net
Austerity in Northern Ireland How has austerity affected NI? o Block grant 13.2% real terms reduction 2010/11 2015/16. Largest of any UK region o Welfare Reform Yet to be apportioned, financial envelope decided. Estimates of macro impact up to 750m annually. (some already implemented) o Public Sector Pay Freeze Disproportionately affects NI, real terms pay cut
Austerity in Northern Ireland Wider Macro impacts throughout economy Further Reductions beyond 2015. o Benefit cap o Block grant reductions to 2017/18 Effect of Austerity o Still to be felt, data available up to 2011/12
Poverty in Northern Ireland o 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
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
Multiple Deprivation in NI Income Employment Health Deprivation & Disability Education Skills & Training Proximity to Services Living Environment Crime & Disorder
Deprivation in NI Income Employment Health Deprivation & Disability Education Skills & Training Proximity to Services Living Environment Crime & Disorder
Effects of Austerity on Incomes All components of income o Earnings o Benefits o Pension income o Investment income Austerity effects net incomes through o Changes to tax and benefit rates o Earnings directly in public sector, indirectly in private sector
Drivers of Poverty and Inequality Reduction in public services Withdrawal or reduction in cash benefits Reduction in earnings Key group affected the working poor o Group have seen wages fall at the same time they have borne the brunt of welfare reform through reduced tax credits
Drivers of Poverty and Inequality Median Hourly pay rates in Northern Ireland, 2006-2013 ( stg)
Low Pay in NI Percentage Earning at or below Minimum Wage or of Median Wage 2007-2013
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
Low Pay in NI Percentage earning below Living Wage by industrial Sub Sector, Northern Ireland2013
Rights Economic and Social rights o Hard to define a right to fair pay o Right to a living wage o Right to minimum guaranteed hours of work o Right to collective bargaining Access to public services and to appropriate benefits are crucial, but austerity s indirect impacts can be just as destructive.
