First rule of analysis: data tells you what it tells you. One should be cautious about making general assumptions. For when you ‘look under the hood’ you may find the data has deeper layers and the story that emerges may not hold up the original assumption.
I was reminded of this rule following the publication of Social Justice Ireland’s Poverty Focus 2018. In that, they made a rather straight-forward, sourced and uncontroversial point: that there are over 100,000 workers at risk of poverty.
A number of people took to Twitter pointing out – quite correctly – that Ireland does well in this category compared to other European countries. Ireland has the third lowest level of in-work at-risk of poverty among our EU peer-group (other northern and central European economies). Only Belgium and Finland have lower levels. On the face of it, this is a good statistic story.
However, not all is what it seems, especially when we examine the layers of data below this particular stat.
Let’s start with the at-risk poverty measurement. It refers to the percentage of persons in work with a disposable income below the at-risk poverty threshold which is set at 60 percent of the national median income (median means the mid-point of income distribution whereby 50 percent earns above and 50 percent earns below). So contained within the at-risk stat is three measurements: workers’ income, the at-risk poverty threshold and the national median income to which it is anchored to.
So how does Ireland fare on this anchor – the national median income?
As seen, Ireland ranks well behind other countries. To reach the mean average of our peer-group, we’d need to increase median income by over 13 percent. Note: equivalised refers to factoring in household size while PPP factors in living costs.
With median income so low, so is our at-risk poverty threshold.
In Ireland, the poverty bar is, therefore, lower; easier to jump. In other countries it is much higher. If someone is earning an equivalised income of €11,000 in Ireland, they would not be at-risk of poverty, at least not statistically. However, someone earning €13,000 in Austria would be at-risk. Here’s a question: which would you rather be earning, regardless of statistical categorisation.
We can get an idea of this by looking at the hourly pay of those workers who are probably more at-risk of poverty than others– hospitality workers employed in hotels and restaurants.
Here we find Ireland, again, at the bottom along with the UK. Unfortunately, we don’t have the median wage, only the average. But it tells a similar story as the poverty thresholds. Irish hospitality wages would have to increase by 28 percent to reach the mean average of other countries in our peer group.
If our ranking as 3rd lowest in the in-work at-risk of poverty table is a consistent reflection of actual social conditions for Irish workers, then we should expect this to carry over into the material and social deprivation rate measurement for the employed.
It doesn’t. In 2015, over 9 percent of Irish employed suffered from material and social deprivation, even above the UK. This was nearly twice the mean average of our peer group. It should be noted that Ireland doesn’t report for 2016 and that in 2015, Irish data is labelled ‘unreliable’. However, the decline from 2014 is consistent with published CSO data. And the good news is that in 2016 CSO deprivation rates have fallen further. However, Ireland would still be well above the mean average of our peer group.
And none of this considers the social costs Irish workers face. Unlike workers in other countries in our peer group, we have to pay the market rate for GPs, prescription medicine and childcare. Rents in urban areas are far higher while public transport is subsidised less. The at-risk measurement doesn’t capture this.
So where does this leave us? We have a positive in-work at-risk of poverty measurement (though 100,000 in relative poverty are still far too high). However, relative to our peer-group we are:
- A low-income economy
- A low-wage economy
- A high deprivation society
Our in-work at-risk of poverty measure is a function of median income (comparatively low) and at-risk poverty thresholds (again, comparatively low). And it is not consistent with our relatively high deprivation rate for those in work.
And this is the problem. We can throw out a single stat, assuming it is representative of actual conditions. But when we ‘look under the hood’ – at the underlying and related data, a different picture can emerge. And, at times it puts the single stat in a different perspective. The problem is that the mono-stat is easier to grasp and more amenable to Twitter-length sound-bites.
Looking under the hood demands a broader, more in-depth investigation which, at times, is not so much fun. But at least you’ll get a little closer to what is actually happening and how we compare with other countries.