Gráinne Weld is Research Associate with the Vincentian Partnership for Social Justice.
The argument is often made that social welfare rates are too generous and that the current national minimum wage is sufficient. However, research by the Vincentian Partnership for Social Justice (VPSJ) tells a different story and its findings show that many welfare dependent and low wage families are struggling to afford a Minimum Essential Standard of Living.
Since 1999, the VPSJ has been undertaking research on the cost of a Minimum Essential Standard of Living (MESL). A MESL is based on needs not wants, but ensures that a household's physical, psychological and social needs are met at a minimum but acceptable level. Through extensive work with focus groups, and inputs from experts where necessary, detailed baskets of the goods and services vital to a household type’s minimum needs are compiled. The data covers 90% of household types in Ireland and is updated on an annual basis to take into account changes in inflation.
The research is widely used by statutory agences and NGOs, and provides a benchmark to assess the adequacy of current social welfare provision and the national minimum wage. The data is also used in the calculation of the Living Wage, and also forms the basis of the Insolvency Service of Ireland's Reasonable Living Expenses (RLE's).
The 2015 Minimum Essential Standard of Living update, published in June, highlights a number of issues in relation to the adequacy of social welfare and the national minimum wage (NMW).
While the last Budget did contain some welcome news, including a €5.00 increase in Child Benefit and a €1.30 increase in the Living Alone Allowance, many low income households are still feeling the effects of several austerity budgets and and cannot afford a MESL. The VPSJ research demonstrates that in 2015 social welfare does not meet the cost of a MESL for 191 of the 214 urban sample household types examined in the research.
One of the household types that are experiencing severe income inadequacy is welfare dependent households with adolescent children. For example, an urban based two parent household with two children, one of primary school going age and one of secondary school going age, and dependent on social welfare has a shortfall of €117.25 per week. The VPSJ data has repeatedly highlighted the particular difficulty faced by low income households with adolescent children in reaching a MESL. Child income supports (with the exception of the Back to School Clothing and Footwear Allowance) are paid at a single rate irrespective of the age of a child and do not take account of increasing costs in adolescence. As a consequence the gap between minimum essential expenditure and income supports widen for welfare dependent households with adolescent children leaving many of these households vulnerable to poverty and social exclusion.
The 2015 update also underscores that a job in and of itself is no guarantee that households will be able to afford a MESL. While Budget 2015 saw the removal of full-time minimum wage workers from paying the USC and the introduction of the Back to Work Family Dividend, the high cost of childcare and private rented accommodation puts a MESL beyond the reach of many low paid households.
The research demonstrates that an urban based two parent household with an infant and in which both adults are working full-time (based on a 37.5 hour working week) on the national minimum wage are unable to afford a MESL. The high cost of private childcare, which in this instance is €215 per week, substantially increases this household's weekly expenditure. Despite both adult working full-time on the NMW this household still has a weekly shortfall of €9 per week. The European Commission in its 2015 Country Report notes that childcare costs in Ireland as a percentage of wages are the highest in the EU and the financial burden imposed by the high cost of childcare can act as a barrier to work, particularly for women. The VPSJ research very clearly demonstrates the need for affordable and accessible services such as childcare. Until such a time as these services are in place a MESL will be put beyond the reach of many low income workers.
Finally, the 2015 update also highlights that an urban based single adult household would need to earn €13.25 per hour to be able to afford private rented accommodation and all the other elements required for a MESL. This is €4.60 above the current national minimum wage rate and again underscores that without available and affordable services such as housing many low income households will struggle to reach a minimum socially accepted standard of living.
This article has touched on just a few of the many household types that are covered in the research. The data demonstrates that without adequate income and access to affordable and available services low income households will have a standard of living that falls far short of what is required for a Minimum Essential Standard of Living.
Further information can be found on www.budgeting.ie and www.MISc.ie.