In this weeks blog, NERI Co-director, Paul Mac Flynn explores some of the key findings from his NERI Report Series 'Incomes in Northern Ireland - A decade of change'.
The last decade has seen significant disruption and change to Northern Ireland’s economy. The decade began in the aftermath of a global financial crisis. A change of UK government then saw a significant and sustained period of reductions in government expenditure. The recovery from the crisis came slowly in the second half of the decade, but showed signs of waning on the eve of the covid-19 pandemic.
The combination of post-crash unemployment, followed by reductions in government expenditure and eventual recovery in employment have led to significant pressures on household incomes over the last decade. However, the effect of these factors has not been evenly distributed.
This report sets out the economic context of the last decade in Northern Ireland and then looks at how these trends have impacted on household income. It then focuses on the composition of that income before looking in greater depth at the components of income themselves.
A number of findings stand out. Firstly, growth in earnings has considerably benefited those in the lower end of the income distribution. They have seen the highest levels of growth and that growth has contributed the most to the growth of total income. For middle- and upper-income households, earnings growth has positively impacted growth in total income but it has been more subdued.
However, on benefit income, the poorest households have been the clear losers from this downward trend of growth. While low-income households have gained from earnings growth, for the poorest lost out most on benefit income. This suggests that while buoyant earnings will always be the key driver of income growth, they cannot be the sole driver.
Taken together, the growth income from employment has contributed significantly to the growth in household income over the last decade. However, for the poorest households, the growth in earnings has been severely dented by the decline in benefit income. Government policy must clearly re-examine its role in maintaining household income and accept its complex make-up.