News Comment

Tuesday 16 September 2014

Where is the justice in leaving working poor to shoulder the burden of recovery?

Eamon Delaney

Published 01/07/2014 | 02:30

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Social Protection Minister Joan Burton has tried to address the welfare traps that stop people from going back to work. Photo: Damien Eagers
Social Protection Minister Joan Burton has tried to address the welfare traps that stop people from going back to work. Photo: Damien Eagers

The latest report by Social Justice Ireland about poverty contains revelations that are shocking and yet not so surprising. It claims 170,000 more people are living in poverty since the beginning of the recession and one in five children live in households with incomes below the poverty line. But the really damning statistic is that 16pc of adults living in poverty are actually working. Indeed, it is surprising that this figure is not actually higher.

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Many of us would have problems over the years with the definition of 'poverty' as used by Fr Sean Healy of Social Justice Ireland, and the way the definition was rather relative during the boom. However, now that times have changed so dramatically, his statistics and focus are particularly apt. For this is not a crisis that is hitting everyone equally.

The reality is that we have not a two-tier economy but a three-tier one. There are those at the top still enjoying a relatively good lifestyle. There are those at the bottom who are on social welfare, and there are those in the middle: the squeezed middle.

But sometimes those in the middle must feel that they'd be better at the bottom and on welfare, where at least they would have secure and regular benefits, especially if they have children.

There is the added distinction between public and private workers, and the fact that it is the latter who overwhelmingly constitute our 'working poor'. Through the Croke Park and Haddington Road agreements, public sector workers endured pay cuts that were nothing like what was happening in the private sector. And, crucially, they faced no job cuts.

And yet despite these advantages, their unions are already looking for a reversal of even these cuts. Yesterday, the Public Service Executive Union called for a restoration of cuts made to their members of over €65,000. Not much 'working poverty' there. And little sense of a wider solidarity either, given that it is the working poor who have to pay more in taxes to fund these public sector advantages.

In fact, in calling for pay rises, the PSEU ridiculed the alternative, of giving much needed public tax cuts, as just a 'populist' measure. Incredible!

And yet taxes, especially for lower-end salaries, are at the crux of the issue, as Fr Sean Heay has outlined. Taxes on middle and low-income workers are keeping them in poverty or driving people away from jobs and out of the country.

It was reported recently that half of those emigrating had jobs but didn't want to stay here. Why would they? If you are earning just over €32,000 per annum you face a whopping upper marginal rate of 52pc tax!

Meanwhile, new jobs are going unfilled in the services and hotel sector, because the wage levels can't compete either with the public service (were such jobs available), or with our still substantial welfare culture. With taxes on middle to low-income workers so high, our welfare system still seems, by comparison, a better and more secure option. In fairness, Minister Joan Burton has done heroic work to try and address the 'welfare traps' that are deterring people from taking jobs, or part-time jobs, for fear of losing their benefits or rent allowance, but there is still much to be done. And such is our superficial political culture that when she does address these issues, such as a reassessment of the rent or lone parents' allowances, she is criticised as being hard-hearted. You just can't win.

The reality is that many of those automatically regarded as the traditional 'poor' are actually better off than the new phenomenon of the working poor. For this is where our new poverty actually lies: either with those who are just hanging on to jobs and businesses or those others who are understandably staying in the welfare system and find it impossible to give up their benefits, especially if they have to pay for childcare, travel and endless new charges. It's just not worth their while, especially with so many wages now competitively low.

Meanwhile, rents are rising, as are property prices, and those in distressed mortgages are getting little respite from the banks.

But that's the way it is: the 'squeezed middle' takes the brunt of the measures implemented to correct our public finances, while other parts of our society remain relatively protected, such as the public sector, the institutionalised welfare system and, of course, the reckless financiers.

But many ordinary citizens have decided not to suffer this injustice any more and tens of thousands have just emigrated, despite the new jobs being created. This is the reality of our working poor.

Irish Independent

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