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Poverty, Wages and Violence

Posted on March 29, 2014 by Tom Healy

Tom Healy, Director NERI
Tom Healy, Director NERI

The publication – coincidentally – of two reports in Northern Ireland in the last week has drawn attention to the importance of wages in the Northern economy. While the reports received very extensive media coverage in the Northern media, there was very little in the South. This is regrettable as poverty, wages and community tensions constitute a triad with implications for long-term economic and social stability on the islands of Ireland and Britain. One report, entitled ‘Monitoring Poverty and Social Exclusion in Northern Ireland’, was published by the Joseph Rowntree Foundation (JRF) and drew attention to the extent of low income and the growth in poverty in Northern Ireland over the last 8 years. The other report, the NERI Quarterly Economic Observer (Spring 2014), focussed on the extent of low pay in the North. Both reports draw attention to the problem of low pay in the UK and Northern Ireland in particular. As the JRF report states: ‘Wages and hours matter, as does the distribution of work across households.’

The causes of poverty are complex and multi-faceted. However, it is clear that low pay, involuntary part-time work, joblessness and precarious employment in general are key drivers of poverty. Raising wages in sectors of the economy where rates of pay are traditionally rock bottom or near rock bottom would provide an important social policy to address poverty. Clarifying the concept of a living wage or a living income across different household types; Measuring a living wage/income and Implementing upward pressure on wages in low-wage sectors are important societal response to a growing and widespread problem. In an earlier Blog (‘A serious challenge that businesses and the government must address’) I wrote I exxamined these issues in a little more detail.

The dismantling or weakening of legal protections along with a ‘war on wages’ in particular sectors of the economy in the Republic should serve as a wake-up call there.

One group that has been particularly severely hit in the recent recession, North and South, is young people. The NERI Quarterly published last week reported that 82% of young people (under the age of 21) earned a gross hourly wage of less than the estimated UK ‘Living Wage’(outside London) of £7.45 per hour. In 2013, 67% of young people earn below the ‘low pay’ threshold of 2/3 of the median wage (£6.79 per hour). These workers are likely to be concentrated in low-pay, precarious sectors such as food outlets, retail, hotels and restaurants. Over all age-groups one in four Northern Ireland employees are earning below the UK ‘Living Wage’ threshold. These findings, when taken in conjunction with data on unemployment and under-employment (young people not in education, employment or training where the rate has climbed from 8.6 in 2006 to 21.7% in 2012) give cause for serious concern. Refer to Section 2 of NERI Quarterly Economic Facts (Spring 2014).

Is there a link between poverty, low wages and violence?  The roots of violence and inter-community strife are indeed complex and embedded in a range of historical and political factors which economic researchers are not usually in a position to analyse. Suffice to say that enduring joblessness and poverty especially among children and young adults is a recipe for other social problems. It may, in the longer-term, provide a fertile ground for violence of one sort of another. Pope Francis may not have been specifically thinking of Northern Ireland when he recently wrote: ‘Today in many places we hear a call for greater security. But until exclusion and inequality in society and between people is reversed, it will be impossible to eliminate violence’.

Policy makers and others would do well to attend to the data and the research evidence on poverty, wages and community. Young people in particular have paid a heavy price for the disastrous policies of fiscal austerity. They deserve a better deal before it is too late.

Posted in: JobsNorthern Ireland Wages

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