The Impact of Austerity Income, Poverty & Deprivation on the Island of Ireland Paul Mac Flynn NERI (Nevin Economic Research Institute) Belfast 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 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 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, (£stg)

Low Pay in NI Percentage Earning at or below Minimum Wage or ⅔ of Median Wage

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.