and
Employment
Table 4.1: Risk of Income Poverty by Household Employment Status by Year
% < 50% of Median % <60% of Median % <70% of Median
1994 2000 1994 2000 1994 2000
No work 11.2 73.6 41.4 85.2 75.8 90.7
Mixed 4.1 9.9 9.1 17.5 15.9 25.3
All work 1.3 3.7 2.7 6.3 4.0 9.4
All 4.7 16.2 14.0 21.9 25.0 27.1
For work-poor households the number below the 60 per cent line more than doubled to reach a level of 85 per cent. The rate for the mixed group also came close to doubling in reaching a level of 17 per cent. Finally, the figure for the work-rich group more than doubled and by 2000 was just in excess of 6 per cent. As a consequence of these changes the vast majority of work-poor households fell below the 60 per cent income line but this situation had come about largely because of the overall increase in poverty rather than because of any significant change in the differential in risk between work-poor and work-rich households. Thus in 1994 the former were fifteen times more likely to be poor and in 2000 fourteen times more likely.
Finally, the 70 per cent median income poverty line represents another type of case where the overall poverty rate remained fairly constant – going from 25 per cent to 27 per cent – allowing fairly straightforward comparisons over time. In the case of work-poor households the poverty rate rose from 76 per cent to 91 per cent constituting a proportionate increase of almost 20 per cent. The mixed group households saw a corresponding increase from 16 per cent to 25 per cent involving an increase of the order of 60 per cent. However, the sharpest increase was observed for the work- rich households where the relevant figure more than doubled from 4 per cent to 9 per cent. As a consequence, while the absolute difference between work-rich and work-poor households in numbers under the 70 per cent line rose, the differential risk declined from nineteen to one to less than ten to one.
It should be clear by now that interpretation of the trend in poverty rates across employment status is by no means a simple matter. The conclusions one draws will be influenced by the poverty line on which one focuses and whether one focuses on absolute or relative change. The situation is also complicated by the fact that the distribution of households across the categories of the classification of employment concentration changes so dramatically in a short period of time. This produces results that at first glance seem paradoxical. Thus, in the case of the 70 per cent income line while the overall rate of increase in poverty is extremely modest, at the same time a substantial increase in the rate is observed within each of the sub-categories of employment status. The paradox is explained by the substantial increase in numbers in the categories with lower, although increasing, risk of poverty. Change for the employment status sub-groups has taken place in the context of an overall increase in income inequality that is reflected in the relatively
sharp increase in the number of households below the 50 per cent and 60 per cent lines. The major change for the work-poor group is the dramatic increase in the extent to which they are concentrated below the 50 per cent line. Although the other groups also experienced an increase in exposure to this risk it was on a much lower scale and consequently a sharp increase in differentials between the work-poor group and the others was observed. At the 60 per cent line on the other hand the relative increase is more even and at the 60 per cent line the increase is sharpest for the work-rich households. Thus, while as we might have expected, the situation of the diminishing work-poor households deteriorated over time so too did that of the rapidly expanding categories of mixed and work- rich households.
In order to understand the nature of the changes that have taken place we need to take into account not only trends in poverty rates over time but also the change in the distribution of households across employment status. This is illustrated when, as in Table 4.2, we turn our attention from risk of poverty to incidence of poverty. In other words, we focus not on the chances of falling below the poverty line but on the composition of the poor. In the case of the 50 per cent line there has been a shift over time in the importance of work-poor households. Such households now constitute almost two-thirds of those below that threshold compared with just over half in 1994. For the 60 per cent and 70 per cent lines, however, the trend is in the opposite direction and work-poor households now constitute a smaller proportion. In 1994 they made up two-thirds of those below 60 per cent of median income but by 2000 this had fallen to below six out of ten. Similarly, in 1994 they made up just over two-thirds of those below the 70 per cent line but by 2000 this had fallen to nearly half. Correspondingly, the number of work-rich households below 60 per cent of median income rose from 7 per cent to 14 per cent and the number under the 70 per cent threshold went from 6 per cent to over 17 per cent. Thus income poverty is a problem affecting predominantly work-poor households only if one restricts ones focus to the 50 per cent line. At the same time it is necessary to take into account that by 2000 over half those located below the 70 per cent line were also below the 50 per cent line whereas in 1994 this was true of less than one in five.
Table 4.2: Incidence of Income Poverty by Household Employment Status by Year
% < 50% of Median % <60% of Median % <70% of Median
1994 2000 1994 2000 1994 2000
No work 53.0 66.6 65.3 56.9 67.0 49.1
Mixed 37.2 22.2 27.8 29.0 27.3 33.8
All work 9.8 11.2 6.8 14.1 5.6 17.1
P
overty is now widely conceptualised in terms of exclusion from the life of one’s society because of a lack of resources, and so involves experiencing various forms of what a particular society would regard as serious deprivation (Townsend 1979). A definition of poverty in very much these terms has been enshrined in the National Anti-Poverty Strategy (NAPS 1997, 1999). As has been argued in previous work, income on its own has limitations for capturing such exclusion. Those below lower relative income lines in particular are often not those experiencing the corresponding levels of deprivation. Consequently, income and deprivation approaches to identifying the most disadvantaged tend to identify groups with quite different socio-demographic profiles (Callan et al., 1993; Nolan and Whelan, 1996). This has been shown to be true across a wide range of European Union countries (Whelan et al., 2001; Layte et al., 2001.)The Irish case is even more complex, because the very rapid growth in average incomes since 1994 poses particular problems in capturing what is generally regarded as exclusion. In such circumstances, relying on relative income lines alone could lead to particularly misleading conclusions. Direct measures of deprivation can provide a valuable and complementary source of information in measuring poverty and assessing poverty trends. A measure of poverty combining both low income and manifest deprivation was developed at The Economic and Social Research Institute (ESRI) initially using the 1987 survey results. Callan, Nolan and Whelan (1993) and Nolan and Whelan (1996) used a range of deprivation indicators to produce different indices of deprivation, and identified those both below relative income poverty lines and experiencing what was termed basic deprivation as experiencing generalised deprivation due to lack of resources. This ‘consistent’ poverty measure was subsequently the basis for the global poverty reduction target adopted in the National Anti-Poverty Strategy. Given the scale of economic change that took place between 1994 and 2000, we feel that a sensible approach is to examine trends in life-style deprivation before proceeding to examine comparable trends in the consistent poverty measure. We concentrate on the basic and secondary deprivation dimensions, which have earlier been shown to bear the stronger relationship to household income. Table 4.3 shows the nature of the items involved. Basic life-style deprivation items focus on current economic pressures as reflected in the enforced lack of items such as food and clothing and the experience of debt problems. Secondary life-style deprivation involves the enforced absence of consumer durables such as a car, a telephone and leisure activities.