Tuesday, October 8, 2013

At-risk-of-poverty or social exclusion

Eurostat has a release out today with some regional indicators of employment, population and social exclusion.  The indicator of social exclusion is drawn from three measures:

  • The at-risk-of-poverty rate
  • Proportion of people who are severely materially deprived
  • Proportion of people under 60 who live in households with very-low work intensity

The figure published by Eurostat give the percentage of the population who fall into at least one of the above categories.  The 2011 figure for Ireland is 29.4% which is well above the EU28 average of 24.3%.  Of the countries in the Euro area only Greece fares worse.

However, it is worth breaking down the overall figure into its constituent parts.  The at-risk-of-poverty rate is the proportion of the population with an equivalised income (i.e. after controlling for household size) of less than 60% the median income.  The rate in Ireland is around 16% which compares reasonably favourable to an EU28 rate of 17%.

The rate of severe material deprivation is the proportion of the population who cannot afford at least four of the following:

  1. to pay rent/mortgage or utility bills on time
  2. to keep home adequately warm,
  3. to face unexpected expenses,
  4. to eat meat, fish or a protein equivalent every second day,
  5. a one week holiday away from home,
  6. a car,
  7. a washing machine,
  8. a colour TV,
  9. a telephone (including mobile phone)

The rate in Ireland is around 7.5% compared to an EU28 rate of 9.0%.  So for both the at-risk-of-poverty rate and the severe-material-deprivation rate Ireland is a little below the EU average.  So why then do we fare so badly on the combined measure of at-risk-of-poverty or social exclusion?  It is all down to the final component – very-low work intensity.

This measures the proportion of the population aged under 60 who live in households where the adults (those aged 18 to 59) work less than 20% of the available time.  For a single person that would be working less than 2.5 months in the year.  On this measure Ireland is almost “off the scales” as shown in this chart from Eurostat.  Click to enlarge.


Until the recent accession of Croatia, Ireland’s rate of very-low work intensity was around ten percentage points higher than the second highest rate.  It is this measure of social exclusion rather than at-risk-of-poverty rates that explains Ireland’s poor position in the aggregate measure reported today by Eurostat.

1 comment:

  1. I have said before, and I repeat now, this is at the heart of many social issues in Ireland. If we could bring Ireland's VLWI rates even into line with the European average, then welfare spending would fall, tax revenues would rise (a little), employment rates would rise, and AROPE should fall.

    This was an issue during 1995-2005, but was not addressed.