How the crisis hits the most vulnerable and why the rich can afford to pay more

The cost of socialising bank debt has been disproportionately loaded onto the shoulders of the lowest paid and most vulnerable in Irish society. Women, who are over-represented in low or minimum wage work, are suffering particularly. Cuts to social welfare and child benefit have also hit women hard. Meanwhile, the class dimension to unemployment – with those with low levels of education most likely to be unemployed – is both undeniable and seldom discussed. It’s time to bring an end to the rank inequity of asking the poor to pay the price for the crisis, says Mary Murphy, and force the rich to shoulder their fair share of the burden.

We may all feel we are hurting in this crisis but some people are hurting a lot more than others. Many of those suffering the most live in families and communities that had never recovered from the recession of the 1980s. They are more likely to be working class and more likely to be women. They were poor entering the crisis with no savings and nothing to fall back on. Official statistics show that households where the head is ‘in household duties’ (26.7%), unemployed (26%) or on low pay (22.8%) comprise almost three quarters of poor households. While the latest poverty data is for 2009 and does not capture the impact of recent social welfare budget cuts, consistent poverty increased nonetheless from 4.2% to 5.5%. Child poverty increased from 6.3% in 2008 to 8.7% in 2009. This means forced deprivation, real material hardship, stress, worry and debt.

Over one quarter of poor households are headed by someone on home duties, primarily female lone parents and carers. Nata Duwurry uses the concept of ‘hecession’ to highlight how narratives of unemployment are often gendered, focusing almost exclusively on male unemployment. Women, however, having made economic gains during the Celtic Tiger, are the real losers; bearing as they do the brunt of cuts in public services on which women are more reliant but also more likely to be employed in. Women also manage reduced household income and ultimately bear the burden of social spending cuts and poverty; they manage debt and bear the stress of household and child poverty. Women are more likely to rely on social welfare and lone parent households are the most vulnerable of all. They are most at risk of poverty - with a rate of 36.4% - and also report the highest levels of deprivation (63% report one or more indicators of basic deprivation compared with 29% at national level). All of this leaves women very vulnerable in recession but also causes a structural roll back of gender equality.

The crisis is impacting significantly on low-paid workers (more of whom are women) but is also creating more low-paid and part-time work. The number of casual and part-time workers on the Live Register is now 19.5%, up from 12.1% three years earlier. Reduced working hours, private and public sector pay cuts, the public sector pension levy, a series of tax increases and the 2010 universal social charge have wrecked havoc on net take-home pay in both the public and private sectors. While the December 2010 budget cut in the minimum wage may well be reversed, the cuts in sectoral minimum wages are likely to be deeper and impact on a wider group of workers. The increase in unemployment has produced the greatest casualties of the recession. A persistent unemployment rate of 14.7% translated in March 2011 into 435,121 unemployed people (150,968 women and 290,225 men). Long-term unemployment stood at 140,400, or 47% of the overall unemployment figure. Kinsella and Kinsella point to the huge social implications of long-term unemployment, with people working through a cycle of loss similar to bereavement (disbelief, anger, depression, acceptance) eventually adjusting to a life cycle of unemployment. This leaves psychological and economic scarring. Bell and Blanchflower show how unemployment leaves people stressed and unhappy - the psychological effect of joblessness leading to loss of self-esteem, fatalism and loss of control over daily life. This is associated with a physical impact on health. The longer the period of unemployment the harder it is to re-enter the workforce, with younger unemployed people carrying forward a 20% ‘wage scar’ for the rest of their working life. While it seems the crisis has hit almost everyone, Seán Ó Riain shows a particularly disastrous short-term and long-term impact of the recession on those in lower paid manual and service occupations, and the official advisory body Forfás illustrates the inevitable class dimension to unemployment, with young and older males with low levels of education being most at risk of long-term unemployment.

The Poor Can't Pay is a civil society coalition of unions and voluntary/community groups that believes those earning the minimum wage or living on social welfare should not be forced to pay the cost of our present economic crisis. They have consistently opposed cuts in welfare payments. However, the poor, with little political power, have already felt cuts bite. Direct cuts include the abolition of the Christmas Payment, reductions in rent supplement and child benefit cuts as well as weekly welfare cuts of 12 euro. These individual cuts are then multiplied by others to public services that impact most in the most vulnerable poor communities. Groups like The Poor Can’t Pay have pointed out that there are alternative ways to manage austerity. As the chart below shows, the rich, with an incredibly large proportion of Irish disposable income, can afford to pay more. The poorest 50% have only 25% of income. They simply can’t pay more, and forcing them to do so is driving society’s poorest families into deeper levels of poverty. The richest 10% have eleven times more income than the poorest 10%. The rich can pay, and making them pay will also have the secondary benefit of addressing this gross inequality - a worthy objective in its own right.

Table 5.3 Ireland’s Income Distribution by decile group, 2009

Decile

Bottom 10%

2nd

3rd

4th

5th

6th

7th

8th

9th

Top 10%

% of all income

2.28

3.74

5.11

6.41

7.71

9.24

11.6

13.39

16.48

24.48

Source: SILC 2009, Social Justice Ireland Policy Briefing Jan 2011 p6)

Claiming Our Future are hosting a national event in Galway on Saturday 28 May where 500 people will gather to share information, knowledge and perspectives on the relationship between the crisis and income inequality and to strategise on how to leverage political engagement to challenge income inequality. The event will involve discussion of principles that could guide our approach to income equality; on the income, tax and welfare policies that could be implemented to reduce income inequality; and on what local action can be taken to make progress on this far-reaching issue. Find out more here.