Picture of In-
Work Poverty
in Ireland:
The
Individual
We have also seen that the self-employed face a much higher probability of being below the income threshold, in Ireland as in most other countries. However, employees make up over four-fifths of the working population, so despite their low risk almost two-thirds of the working poor are employees – about 85,000 persons. The remainder of the working poor are self-employed, more than half working in agriculture. Farmers face a particularly high probability of being counted as working poor: they comprise less than 7 per cent of those at work in EU-SILC 2004 but almost 20 per cent of the working poor, or 25,000 persons. Survey-based measurement of farm income poses particular problems and these incomes can also fluctuate substantially from year to year; among other issues, income in kind in terms of home production is in principle included in the measure (and is very much less important now than it would have been in the past), but may not be fully captured. Self-employed other than farmers comprise about 11 per cent of those at work but 15 per cent of the working poor, or about 20,000 persons.
As discussed earlier, being “in work” can be measured in different ways, focusing on the person’s status at the time of the interview or throughout the year; however, this turns out to make little difference to the pattern of poverty risk or the individuals in the sample identified as the working poor. Concentrating on employees, if we use the “main activity status” of individuals (based on the activity status in each month recorded in the survey) to identify those who were employees for over half the year (the approach adopted in the figures produced by Eurostat and reported in the previous section), then 6 per cent were below the income threshold. If we look at those who give their current principal economic status in the survey as employee, then 5.3 per cent are in households below the 60 per cent of median income threshold. Most of those who are currently employed were also in work for most of the previous year, although the “at risk of poverty” rate is higher for the small minority who were not.
We now examine the profile of those who are measured as “working poor”, focusing first on their own individual characteristics and then on those of their household. Figure 10.2 shows the age composition of all those who are at work and below the 60 per cent threshold. We see that, compared with all those at work, the working poor are more concentrated in the older age ranges – over 60 per cent are aged 40 years or more,
compared with 52 per cent of the workforce as a whole. This reflects the older age profile of the self-employed (including farmers), though, with working poor employees are not very different in age terms from all employees.
Figure 10.2: Age Profile of Working Poor Versus All At Work, Ireland 2004
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 aged 18 to 29 aged 30 to 39 aged 40 to 49 aged 50 to 64 All at work Working Poor Working Poor Employees
The working poor are also slightly more likely to be male: 61 per cent of the working poor are men, compared with 57 per cent of all those at work. However, among employees the opposite is true: 49 per cent of working poor employees are men, compared with 52 per cent of all employees. (Since men make up a clear majority of the work-force, they still face a higher probability of in-work poverty.) For both men and women employees, the likelihood of being working poor is lowest in the 25 to 34 year age group; for men it is highest in the 45 to 54 year group, while for women it is highest in the 55 to 64 year range.
As far as educational attainment is concerned, Figure 10.3 shows that the working poor have substantially lower levels of educational attainment than all those at work; almost one-third have no education beyond primary level (compared with 13 per cent of all those at work), and only 41 per cent have attained at least the upper secondary completion qualification, compared with 67 per cent of all those at work. Working poor employees have slightly higher levels of attainment than self-employed working poor, but still have a significantly disadvantaged profile compared with others at work.
This age, gender and educational profile is reflected in the earnings of the employee, one factor in understanding why they are “working poor”. The number of hours worked is a significant influence on earnings particularly among employees, and part-time employees face a much higher poverty risk than full-time ones. (About 4 per cent of full-time male employees, 3 per cent of full-time female employees, and 10 per cent of female part-time employees are in households below the 60 per cent threshold; part-time men face an even higher poverty risk than part-time women, with almost one in five below the threshold, but there are far fewer of them.) The risk of poverty is also clearly related to the position of the employee in the weekly earnings distribution. Even when working full- time, the risk of poverty is 12 per cent for employees in the bottom quintile
of the earnings distribution; this falls to 8 per cent for the second quintile and is only about 1-2 per cent in the rest of the earnings distribution.
Figure 10.3: Educational Attainment of Working Poor Versus All At Work, Ireland 2004 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 No Quals Inter Level Leaving Level Low Tertiary Level High Tertiary Level All at work Working Poor Working Poor Employees
As well as the overall earnings distribution, we can look at the situation of employees falling below conventional low pay thresholds. In the 2004 sample, about 23 per cent of Irish employees had weekly gross earnings below two-thirds of median earnings – a widely used measure of low pay. With about 1,616,000 employees in the state in the 2006 Census, this would correspond to about 370,000 employees. Of these low-paid individuals, though, only 13 per cent were in households “at risk of poverty” – about 48,000 persons. So most low paid employees are not working poor in that sense. On the other hand, 60 per cent of working poor employees are themselves low paid, in terms of their own weekly earnings. This asymmetric relationship between low pay and household poverty is consistent with earlier Irish studies (for example, Nolan, 1998), and with the pattern found in other Western European countries; for example, Nolan and Marx (2000) note that for full-time employees across the ECHP generally about 60 per cent of the low paid are in the top 60 per cent of the income distribution. This reflects the fact that employees, whether low paid or not, are mostly to be found in households not in poverty or towards the bottom of the income distribution. Such households generally do not contain an employee, but where they do contain an employee most often that employee is low paid. The features that distinguish the minority of the low paid who are in households “at risk of poverty” then relate to the household context in which poverty is occurring, as we explore in the next section.
W
e now turn from the individual characteristics of the working poor to the type of households they live in – with those household characteristics likely to be critical in understanding why they are indeed below the “at risk of poverty” threshold. We show in Table 10.5 the composition of the households involved, for all working poor and for working poor employees (who it will be recalled are estimated to number about 130,000 and 85,000 persons respectively). We see that the working poor are predominantly in households with children – only one-third are in households with no children. Only 7 per cent are lone parents with children, so about 60 per cent are in households with two or more adults and children. The largest proportion – 29 per cent – are in households with three or more adults plus children – in many cases these comprise a couple with their offspring,10.7
A Detailed
Picture of In-
Work Poverty
in Ireland:
The
Household
some of whom are still children but others are aged 18 years or over. The corresponding profile for working poor employees shows that these are even more likely to be in households with children. About 9 per cent are in households comprising just one adult with a child or children, but 63 per cent are in households with two or more adults and children. Strikingly, only 2 per cent are living alone. (This profile of course reflects both the distribution of all employees by household composition type and the risk faced by each type of being below the income threshold; for example, single adult employees with children face a much higher probability of being below the income threshold than others, but comprise only a small proportion of all employees.)
Table 10.5: Household Composition for the Working Poor and for Working Poor Employees, Ireland, 2004
Working Poor Working Poor Employees Percentage of those Below 60 Per Cent Median
Equivalised Income
1 adult 8.3 2.3
2 adults 16.0 15.5
3+ adults 10.4 11.7
1 adult with children 6.7 9.0
2 adults, 1 child 6.2 3.9 2 adults, 2 children 8.9 9.5 2 adults, 3 children 7.8 6.6 2 adults, 4+ children 6.5 7.3 3 adults+ with children 29.3 34.0 Total 100 100
As well as household size and composition, the other key feature of the household in this context is the number of people with an income and the source of that income. What is distinctive about the households of the working poor is how few of their working-age adult members are actually in work. This is illustrated in Figure 10.4, which shows that for all those at work, the average number of working-age adults in the household is 2.6. For the working poor, the corresponding figure is only slightly lower, at 2.3. However, for all those at work the average number of persons in the household in work is 2, whereas the corresponding figure for the households of the working poor is only 1.3. The gap is even greater when we focus on those in full-time work, where the figures are 1.6 versus 0.8 respectively for the households of those at work versus the working poor.
Focusing on employees, Figure 10.5 shows that for all employees there are 2.7 persons in the household of working age on average, of whom 2.1 are in work and 1.7 are in full-time work. For working poor employees, on the other hand, there are almost as many working-age adults at 2.5 per household on average, but only 1.4 are in work and only 0.8 in full-time work.
Figure 10.4: Numbers in the Household in Work for the Working Poor Versus All At Work, Ireland 2004
Figure 10.5: Numbers in the Household in Work for Working Poor Employees Versus All Employees, Ireland 2004
Table 10.6: Poverty Risk by Household Composition and Number At Work, Ireland 2004
Percentage Below 60 Per Cent of Median Equivalised Income
2 adults no children
1 at work 10.2
2 at work 2.4
2 adults with children
1 at work 15.1 2 at work 1.4 3 adults no children 1 at work 11.3 2 at work 2.1 3+ at work 0 3 adults no children 1 at work 32.6 2 at work 5.9 3+ at work 7.9
The central role played by the number of persons in the household at work is brought out in Table 10.6, which shows for employees in 2 and 3- adult households how the percentage falling below the 60 per cent
0.0 Working age In work In full-time work 0.5 1.0 1.5 2.0 2.5 3.0 Employee
Employee & poor
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Working age In work In full-time
work
At work
threshold varies depending on the presence or absence of children and the number of adults in work. We see that the risk of poverty is relatively high for employees where only one adult is in work, whether there are children or not, but that the risk is very low indeed where 2 or more are at work except in households of 3 or more adults with children.
The salience of numbers at work in the household is also reflected in the sources of income received, and Figure 10.6 shows that the households of the working poor are quite heavily reliant on social welfare transfers compared with others at work. For 28 per cent of the working poor, at least half of all the income coming into the household was from social welfare (compared with a figure of only 7 per cent for all those at work).
Figure 10.6: Social Welfare Transfers as a Percentage of Total Household Income, Working Poor Versus All At Work
0 20 40 60 80 100 <25% 25%- 49% 50%-74% 75% or more % All at work