Thursday, 21 January 2016

Intergenerational inequality in Ireland: younger generations pay the price of austerity and recovery

Rory Hearne: There is a requirement for a greater focus on who paid the highest price in austerity and who continues to be affected by inequality in the recovery. Austerity and the recession disproportionally impacted negatively on younger generations (particularly increases in child poverty, emigration levels and the restructuring of the labour market towards greater levels of precariousness). There are multiple social crises in areas such as housing and health that result from policies pursued during austerity and these crises contradict the narrative of ‘recovery’.

Ireland is no ‘success’ story for austerity as the scars from austerity policies and the recession continue to hurt particularly children and younger people in the recovery. Take children for example. The number of children aged 0-6 (the most vulnerable age) suffering from deprivation in Ireland doubled from 55,000 in 2007 to 105,000 children suffering deprivation in 2014. Ireland now has the third highest deprivation rate for children aged 0-6 in the EU15 – at 25% (see Figure 1 below). This is over 8 times Norway’s level.

Figure 1  Levels of Deprivation for Children Age 0-6 in EU15, 2014

Source: Eurostat

While one of the most shocking impacts of austerity (cuts to social housing) affecting this country is the rise in number of homeless families with children. The numbers in Figure 2 below show that by September last year there were almost 1,500 children living in emergency homeless accommodation.

Figure 2 Rise in numbers of homeless children nationally

Young people in disadvantaged communities also paid a heavy price as community development organisations had their funding cut significantly and were closed and housing regeneration projects were either abandoned or delayed.

Then there is emigration. While much of the discussion on emigration assumes that it is declining significantly the reality is it continues apace. 35,000 young Irish people emigrated from Ireland last year (See Table 1 below). This is still higher than the number that emigrated in 2010, and it is almost three times the number that were emigrating in 2006.

Table 1 Number of Irish Emigrants 2010-2015
Number of Emigrants
35, 300
Source: CSO

Just under a quarter of a million Irish nationals emigrated between 2010 and 2015. If they had stayed then our unemployment rate could be double what it is now. The ‘recovery’ would not look as rosy with a 16% unemployment rate. The graph in Figure 3 below shows that the overwhelming majority of emigrants have been in the under 40s generations. They continue to leave in extremely high numbers while numbers returning are dropping. Only 12,000 Irish nationals returned in 2015 which is a reduction on the numbers returning during the recession (20,000 came back in 2012).
Given the growth in employment (and skills shortages reported in some sectors) in Ireland the question as to why so many Irish are leaving and not returning requires an answer.

CSO figures show that the majority of people emigrating were either at work or studying prior to leaving Ireland, with fewer than one in seven unemployed and half of emigrants having a third level degree or above.

Obviously there are complex personal issues such as formation of relationships when you are abroad that make it less likely you will return once you have left but there are clear socio-economic factors that are pushing young people to leave and not enticing them back.

Research by the National Youth Council with emigrants shows that there is a broad range of factors in Ireland causing emigration and hindering the return of emigrants including:

• poor infrastructure
 • precarious working conditions and poor salaries
• lack of career opportunities and limited career progression options in Ireland
• the inability to have a career outside of Dublin
• lack of affordable quality housing
 • a prohibitive and high cost health care system with costly health insurance
 • the prevalence of high taxes
• the increasing cost of living
 • difficulty accessing school places (particularly for those returning with children)
the high cost of childcare

Some on the political right are using the continued rates of emigration as an argument for cutting rates of taxation however we can see here that the issue of taxation is just one of many issues.
 The real issues relate to the quality of work on offer, issues around unpaid internships, lack of full-time, permanent employment (note that the youth unemployment rate has been much higher than the general rate and still stands at approximately 20% while many new jobs are short or fixed term contract employment- see Figure 4),  housing costs (particularly cost of rent in Dublin), and a high cost of living. The public sector recruitment embargo has reduced the opportunities in what is traditionally a major area of employment for young people and graduates. New recruits also face a further pay reduction on top of that experienced by existing public sector employees. Emigrants are leaving Ireland so that they can start a family because if they stay they are just not able to afford to do so with the costs of childcare and lack of potential of being able to buy or rent a secure home.

Figure 3: Age profile of Emigrants 2009-2014

Figure 4: Unemployment rate in Ireland for 15-24 and 15-64

These factors are in large part a result of Ireland’s pursuance of the austerity model and continued neoliberal policies of private market, profit-based, delivery of services. Public capital spending was disproportionally cut in social housing, public transport, public works (including flood defences), hospitals, childcare, elderly care facilities, schools– leaving us with a housing crisis and one of the lowest levels of public investment in the EU. Ireland’s ratio of government investment to GDP at 1.7% in 2013 was the lowest ratio in the EU. It will take decades to recover from this, as it did to recover from the 1980s austerity cuts to public investment. New charges were introduced for property and public services such as water, health care (a visit to A & E is now a €100 charge if you don’t have a medical care or private health insurance) and public bus fares have risen between 5 and 15% in the last year.

Alongside austerity policies in addressing the housing crash NAMA was created which took the developer’s toxic loans off the banks (to allow them return to profit), gave the developers and big business write-down’s on their debt and are now selling that housing and land to international property speculators and vulture funds. The housing crisis resulting from this approach is worsening with 30,000 home owners facing a serious threat of repossession of their home in the coming years, while younger generations face rising rents and little possibility of ever owning a home.
It is important to point out that these outcomes are the result of political decisions about where the burden of adjustment was to be placed and what approach to resolving the crisis was to be taken. There were, as there always are, alternative pathways possible. For example, the wealthy and corporate sector were not asked to contribute additionally. They could have been asked to pay a temporary ‘solidarity’ tax in order to avoid rising child deprivation, fund affordable public childcare and housing.  Instead, the low tax rate of multinational corporations was fiercely defended and the suggestions for introducing a wealth tax on Ireland’s richest who grew their wealth by €34bn since 2010, was ignored.

The austerity period and early years of the recovery show clearly that the political and policy priorities underpinning government economic decisions matter and, therefore, require greater analysis and debate in order to avoid widening intergenerational inequality.

Dr Rory Hearne is a Senior Policy Analyst at TASC. You can follow him on twitter @RoryHearne

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