Thursday 23 November 2017

Poor families hardest hit by recession, but squeezed middle also big losers

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Charlie Weston

Charlie Weston

The vast majority of families were hit by the recession, new research shows.

Some 97pc of families reported being affected by the great recession that occurred between 2008 and 2012, according to research from the Economic and Social Research Institute (Esri).

But a quarter of families reported being "very significantly" affected by the downturn.

Household incomes took a pounding from cuts in wages and reductions in social welfare payments, the report, on families with children, found.

The biggest economic hit was taken by the most vulnerable.

But the squeezed middle was also hard hit, especially as this group entered the recession in a relatively comfortable position financially.

Debate

A fierce debate raged during the downturn over which groups bore the brunt of the austerity measures.

People in middle and upper income groups were hit hard by wage cuts, job losses, and the hiking of income and other taxes and levies.

Many social welfare payments were not cut, but child benefit was reduced and there were changes to the lone-parent payment.

Hardest hit by the recession were poorer families, according to the new Esri study. This includes households where the main breadwinner was unskilled.

Families in this category had to cut back on spending on food and clothing.

A smaller effect was reported by those in the higher professional classes, such as doctors, engineers, solicitors and senior officials.

But the hit to incomes was huge in relative terms for this category because they entered the recession with low levels of economic stress.

This group is often referred to as the squeezed middle. This is the group that was heavily indebted when the downturn started, and was hit hard by the plunge in property prices.

Some 62pc of households where there were members working outside the home reported a cut in wages.

Lone parents experienced the largest risk in economic stress, the report by Dorothy Watson and other academics showed.

Irish Independent

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