Nat O’Connor is lecturer in social policy at UCD’s school of social policy, social work and social justice, and author of a recent report published by the Community Platform: What would it take to eliminate consistent poverty by 2030? The full report is available to download here.
Introduction
Consistent poverty is a unique Irish statistic that combines risk-of-poverty (having an income less than 60% of the median) with the experience of deprivation (inability to afford two or more of 11 basic items such as a warm coat or home heating). The latest statistics show that 3.6% of the population—including 4.8% of all children—lives in consistent poverty (SILC 2023, CSO). The government has pledged action to take most children out of consistent poverty, and there is a new Child Poverty and Wellbeing Programme Office in the Department of the Taoiseach tasked with developing a strategy for this. Despite this recognition of the issue, too many people seem to think that Ireland is now so wealthy that poverty is not a major social problem anymore. As people experiencing poverty will tell you, which includes nearly one in every twenty children in Ireland, many people in poverty never greatly benefited from the Celtic Tiger but they are still suffering the effects of the 2008 crash, never mind the impact of COVID and the recent surge of inflation. The Community Platform’s report, which this paper is based on, sets out to put poverty back on the political agenda, and to point to the obvious, but seemingly illusive, need for whoever forms the next government to do something different to achieve the targets to reduce or eliminate consistent poverty.
Poverty Targets
In 1997, Ireland’s first National Anti-Poverty Strategy (NAPS) set a target of eliminating consistent poverty. In 2002, its successor, Building an Inclusive Society, set a target to “reduce the numbers of those who are ‘consistently poor’ below 2% and, if possible, eliminate consistent poverty”. The National Action Plan for Social Inclusion 2007-2016 sought to reduce consistent poverty to between 2% and 4% by 2012 and to eliminate it by 2016. The subsequent National Social Target for Poverty Reduction set a less ambitious target of reducing consistent poverty to 4% by 2016 and 2% by 2020. Most recently, the Roadmap for Social Inclusion 2020-2025 set the target as 2% by 2025, to be reduced from 5.6% in 2018.
Figure 1. Consistent Poverty (% population in blue; number of people in orange-right axis), break in series from 2020 (Source: SILC, CSO)
Despite all these plans, consistent poverty has never gone below 4%, as shown in Figure 1, and it rose to 9% in 2013 in the aftermath of the 2008 crash before declining again. This core target, repeated by multiple government across multiple strategies, is simply not being met. At this point, it is tempting to repeat the line attributed to Albert Einstein that “insanity is doing the same thing over and over and expecting different results”, but actually what is happening here is subtly different. What policymakers have failed to grasp is that what did work to radically reduce consistent poverty from the late 1990s to early 2000s will not work today. That is because the situation and attributes of those people who remain in consistent poverty are distinct from the much larger population of people who were in consistent poverty in the early 1990s.
Consistent poverty was 15.1% in 1994, but it reduced to 6.2% by 2000 (Government of Ireland 2002). This can be attributed to the dramatic economic development that occurred in the first phase of the ‘Celtic Tiger’ period, when Ireland was catching up with West European economies, due to a combination of European structural funds, the expansion of foreign direct investment and multinational corporations in Ireland, and increased state investment in infrastructure and education. But despite another two decades of strategies, there has been no permanent decrease in consistent poverty. Instead, the rate has fluctuated with trends in the economy. This begs the question of whether a wholly different approach is needed to meet the target of 2% or to eliminate consistent poverty entirely.
Structural Causes of Poverty
The core argument of the Community Platform report is that we need to focus on the structural factors that cause poverty, or which block or prevent people from exiting poverty. That is why the report focuses on those groups who are disproportionately likely to be in consistent poverty, such as lone parents, people who are disabled, people who experienced educational disadvantage, renters, Travellers and Roma, people fleeing domestic violence, etc. The Community Platform’s members include organisations focused on just these groups and issues. The report gives excerpts from recent budget submissions or policy documents from each of the then 31 members of the Platform, while also pointing to the research and analysis that lies behind their proposals.
The great reduction in consistent poverty in the late 1990s was due to higher levels of employment, and better paid jobs. While necessary, this approach was and remains insufficient to eradicate consistent poverty. While it focused on economic growth and job creation, the 1997 National Anti-Poverty Strategy also recognised the importance of income adequacy, improving access to higher quality public services, the need to address the specific needs of groups at high risk-of-poverty, and the need to support disadvantaged communities. In other words, it recognised that not everyone in consistent poverty can get out of poverty by accessing good quality employment, as many of those who remain in poverty are unable to work for a variety of reasons.
However, today’s Roadmap for Social Inclusion is more narrowly focused on the premise that a good job is the sole route out of poverty, as opposed to one of several routes. Income adequacy is not mentioned at all in the Roadmap. The singular focus on employment shows the gaps in its analysis, as there is no solution presented for those who are unable to work or for those who are unable to secure an adequate income from work. For example, while the national level of consistent poverty was 3.6%, it was 16.5% among those unable to work due to health, 8.5% among renters and 7.1% among lone parents.
Examples: Disabled People, Renters and Lone Parents
Disabled people experience very high rates of risk-of-poverty (35%) and deprivation (44%) (SILC 2023, CSO). Even before the period of high inflation, people with long-term illnesses or conditions were much more likely to experience poverty. The state has recognised the additional cost associated with disability, but there has been no concrete action to address the income inadequacy that this brings about for many people. Ireland also has among the lowest levels of employment for people with disabilities in the EU, which points to a lack of supports for employers and workers alike to help disabled people get and retain jobs; see for example, Leonard 2023.
Seven in ten people in consistent poverty were renters, and this includes private rented housing as well as social housing. Four in ten renters found housing costs to be a ‘heavy burden’ and another four in ten found it to be ‘somewhat of a burden’ (SILC 2023, CSO). In other words, their incomes were inadequate to cover the cost of rent, especially high private sector rents. Among the solutions proposed in the Community Platform report are greater investment in public housing, a fund to help renters in arrears, higher Housing Assistance Payment rates, a dedicated homelessness prevention budget, and a deposit protection scheme.
In additional to a high level of consistent poverty, lone parents experience one of highest deprivation rates of any household type, at 44%, which is 2.5 times the national average (SILC 2023, CSO). To address the income adequacy of lone parents, the Qualified Child Increase component of welfare could be increased, Child Benefit and child maintenance could be removed from means tests, SUSI grants could be increased and more access to Jobseekers Transitional Payment are among the suggestions; on the latter point, see Dukelow et al (2024). Reducing the cost of childcare would also greatly assist lone parents.
Marginalised Groups Hidden in National Statistics
The report also highlights that national statistics do not have a sufficient sample size to give us data on smaller groups, such as Travellers, Roma or specific migrant groups. We need to draw on other sources, including bespoke studies, which provide ample evidence of need, such as the Census finding that only 16.8% of Travellers aged 15 and older were at work, compared to 56.2% of the whole population (Census 2022, CSO). Much higher levels of ill health and significantly lower life expectancy among members of the Traveller Community point to the consequences of deep, inter-generational poverty that many of them experience. While the government has produced various strategies, more funding is needed to implement the actions in all of them, including the National Traveller and Roma Inclusion Strategy. And there needs to be more access to housing and more initiatives to ensure workplaces are free from discrimination.
The Economics of Poverty
Underpinning the argument about structural causes of poverty and structural barriers to exiting poverty, the report has a small section on the economics of poverty, which it is worth discussing here in more detail.
A finding specific to Ireland is that the reduction of poverty is highly correlated with economic growth. This is consistent with the analysis that more job opportunities and the higher incomes associated with employment lead to reduced poverty. However, it also points to the risk that progress on reducing consistent poverty depends on favourable economic circumstances and is liable to reverse the next time the economy slows down or hits turbulence, such as the recent period of high inflation. We should put in place enough safeguards so that the people who are worst off are protected from such downturns.
When the recent high inflation occurred, leading to the ‘cost of living crisis’, the IMF and many other bodies were quick to say that governments could and should both reduce inflation and protect vulnerable households. Ireland’s commitments under the Sustainable Development Goals also include prioritising those who are furthest behind and pledging to leave no one behind. Despite this, deprivation has remained high in recent years. And during the recent period of high inflation, weekly welfare rates were allowed to fall in real terms, and one-off cash payments did not offset the full extent of lost spending power.
Moreover, there seems to be a disconnect at the heart of government policy between economic strategies and anti-poverty strategies. The Roadmap for Social Inclusion is predicated on economic growth leading to job creation, and jobs being the only route out of poverty. And various pronouncements suggest that spending on welfare or other anti-poverty supports is contingent upon the state of the public finances, as a cost rather than an investment. This disconnect needs to change.
Economic Strategy
Hoping for high, sustained economic growth sufficient to eliminate consistent poverty is not a credible approach. There will always be setbacks in the economy, and unless anti-poverty targets are integrated into the economic strategy, those who are poorest will always be left behind, including being among the first to lose their jobs when the economy weakens.
The economics literature on the relationship of economic growth to poverty and inequality suggests that another approach is not only possible, but essential. Analysis by World Bank economist Bourguignon (2014), shows the following:
- Economic growth reduces absolute poverty, but not income or wealth inequality.
- Measures directed at reducing poverty foster economic growth.
- Countries with higher inequality have lower growth.
- Reduction in wealth inequality fosters growth and reduces poverty.
The first two points indicate that there is a positive role played by anti-poverty measures to support economic growth. In other words, it is not the case that a growing economy simply grants governments enough money to address poverty, but strategic actions to reduce poverty are pro-growth, in a virtuous circle. The third and fourth points indicate that there is a negative role played by income and wealth inequality, which are inimical to economic growth.
The conclusion derived from this, developed for example in Martin Ravallion’s The Economics of Poverty (2016), is that an optimum strategy for economic growth—as well as an optimum strategy for reducing poverty—is to have a combined strategy with three elements:
- General measures to foster economic growth
- Specific measures to reduce poverty
- Specific measures to reduce wealth inequality
This is not to say that governments can just pour unlimited money into social welfare payments and expect the economy to grow. Rather, the proposal is to focus on anti-poverty actions that address the structural causes of poverty and the barriers to exiting poverty. Just like earlier governments went from seeing education as a cost to be met when we can afford it, to seeing education as a crucial investment for the future, there is a need to see spending on structural initiatives to reduce poverty as investments that will strengthen economic growth.
Why Eliminating Consistent Poverty is Feasible
Going beyond the content of the report, the hope here is to demonstrate just how feasible it is for Ireland to eliminate consistent poverty. There were 185,385 people in consistent poverty in 2023, probably representing no more than 90,000 households, out of a population of 5.2 million people in Ireland.
While there are larger numbers of people at risk-of-poverty or experiencing deprivation, the scale of consistent poverty is not overwhelming. For example, if interventions to eliminate consistent poverty cost as much as an average of €5,000 per household, that would cost €450 million. With the annual budget for 2025 nearly at €120 billion, including tax cuts of over €1.4 billion given in Budget 2025, that scale of ambition is readily affordable, and it is likely to achieve the goal of taking all 57,840 children out of consistent poverty.
An SVP report by Dr Micheál Collins of UCD shows that the cost of addressing poverty to public services could be €4.5 billon, with a range of estimates from €3 billion to €7.2 billion. There is a clear logic in investing to reduce the worst instances of poverty to bring those costs down.
The SVP report also shows that average income inadequacy among those in poverty (in 2017) was €2,900 below the poverty line. The figure of €5,000 suggested above—which represents the value of in-kind services as well as any cash payments—is an estimate derived from this income gap, allowing that those households in consistent poverty are likely to be those for whom the gap is wider. The figure of €5,000 also accounts for high price inflation since 2017.
Some more examples can help illustrate how eliminating consistent poverty could be achieved. For the 36,305 people in consistent poverty despite being in employment, a higher minimum wage combined with guarantees of adequate hours per week could see them exit poverty by putting responsibility on employers rather than the public purse. For the 10,670 older people, schemes to guarantee a minimum pension income combined with more supports for older people living alone could prevent anyone experiencing consistent poverty in their final years. For those unable to work due to illness or disability, a scheme of support for employers could be a win-win solution that helps Ireland reach EU average levels of employment for disabled people. Combined with a targeted, needs-specific cost of disability supplementary payment, this could see 36,536 disabled people leave consistent poverty. And so on.
Ireland without consistent poverty would not be utopia. We would still face the reality that many people have low incomes making them at risk-of-poverty (currently one in seven people are at risk-of-poverty, 13.6%, when adjusted for inflation) and likewise many people would still be unable to afford basic goods (currently one in six people, 17.3%, experience deprivation) (SILC 2023, CSO). But these other measures of poverty must surely improve if we focus resources on addressing the structural reasons for consistent poverty. We might reasonably expect risk-of-poverty and deprivation rates to decline significantly alongside the elimination of consistent poverty. Moreover, the worst forms of deprivation could be eliminated, such as the inability to afford a protein-rich meal every second day or the inability to afford a warm coat or sturdy shoes.
Report Recommendations
The report has six interlinked recommendations, which in summary are:
- All political parties to commit to eliminating consistent poverty by 2030.
- A repurposed anti-poverty strategy focused on structural issues.
- A focus on the diverse, specific structural barriers affecting different groups.
- Ensuring a route out of poverty for those unable to work or to secure an adequate income from work.
- Reduction of wealth inequality.
- Focus on reducing material deprivation.
Reducing Wealth Inequality
On the point about wealth inequality, this relates to the economics literature showing that reducing wealth inequality helps reduce poverty while also promoting economic growth. For this reason, the OECD, G20 and individual countries such as France have been examining the potential for a greater level of taxation on wealth as opposed to income or consumption as a growth-friendly way to reduce poverty and inequality.
In Ireland, the top 10% of the population hold two-thirds (66.2%) of all wealth, a third of which is held by the top 1%, whereas the bottom 50% have an average net debt (negative wealth) of 3.4%. That makes Ireland one of the most unequal countries in Europe when it comes to the distribution of wealth (World Inequality Database). At the end of 2023, the combined wealth of Irish households surpassed €1 trillion, most of which is held by the top 10%.
Irish society has the capacity to use a tiny fraction of our wealth to eliminate consistent poverty, and by doing so, we would strengthen our economic model and increase long-term economic growth. We would also bring tens of thousands of people out of unnecessarily deep hardship, while giving tens of thousands of children genuinely brighter futures.
Read the full report here.
You can also download the shorter version from PublicPolicy.ie here.