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Why we must not ignore the continuing cost of poverty

By Andrew Webb

The Assembly elections are upon us. Over the past number of weeks, each party has been busy making its case in what has been a relatively low key campaign, lacking in any real controversy. As ever, the economy features heavily in each party's manifesto, with a range of ambitions (costed or otherwise) on job creation, business support, skills and infrastructure.

The Assembly elections mark the end of a three-year election cycle in Northern Ireland that covered the new council and Westminster votes, so it feels like a good time for reflection. At election time, I am always reminded of how Ronald Reagan boiled the 1980 US Presidential election down to the famous "are you better off now than you were…?" line. Obviously, "better off" goes far beyond economics but statistics on Northern Ireland wage levels, poverty and economic inactivity are enlightening.

On the face of it, average annual wages are up by just over £2,000 from £21,580 in 2011 to £23,643 today. Inflation has bitten into that increase somewhat. In fact, after inflation, average salaries here are only 2.5% higher now that in 2011. Fortunately, significant recent decreases in fuel, energy and food and drink prices as well as increases in tax-free allowances have resulted in more disposable income. According to Asda's income tracker, the disposable weekly income of families in Northern Ireland is now £100, up from £93 a week last year. So, we may feel a bit better off but it isn't necessarily as a result of wage growth.

Much more worrying for Northern Ireland's progress are statistics that were brought to light in recent weeks on poverty and economic inactivity. On the basis of 'relative poverty' (income below 60% of the median after housing costs have been deducted), the Joseph Rowntree Foundation (JRF) has highlighted in their Monitoring Report on Poverty and Social Exclusion in Northern Ireland that one in five people in Northern Ireland are in relative poverty. This equates to about 380,000 people and is unchanged over the mandate of the last Assembly. Looking further back, the poverty rate here has increased slightly compared to the end of the recession.

There have also been significant changes in the composition of the groups in poverty. For example, there are 30,000 more working age adults in poverty now that before the recession. Breaking that down further, to the under-30s, shows that one in four people aged between 16 and 29 are living in poverty. While levels of 'in work' poverty account are substantial, the majority of people living in poverty are classified as economically inactive - a measure of those of working age who are not available for work due to illness, studies, retirement or because of duties in the home. How the statistics on this cohort has changed over time is another key consideration in whether we are better off than we were previously.

Although the latest labour market figures suggest a slight increase in unemployment, there has been some recent improvement in economic inactivity rates. At the beginning of the last Assembly term, economic inactivity rates were 26.8%. Today they are half a percentage point lower on 26.3%. It is progress, and it would be churlish not to point out that inactivity rates are the lowest they have been since data collection began in 1995, but to place it in context, inactivity rates fell by close to two percentage points in the UK as a whole since the start of the last Assembly mandate and Northern Ireland's rates are currently just over 4.5 percentage points higher than in the UK.

JRF has looked behind the inactivity figures for Northern Ireland and GB and some immediate differences are obvious. Economic inactivity is much higher among young people, disabled people and lone parents in NI than in GB. It is not all negative, however. Much of the difference in economic activity levels between NI and GB in the young people category is due to higher levels of participation in education. The higher inactivity levels among lone parents and disabled people are mountains to climb and will require serious policy consideration and action, as will the issue of in-work poverty. Poverty imposes significant costs, not just in economic terms, but in human terms - educational attainment is lower, health suffers and potential is wasted.

There is much to commend in terms of how Northern Ireland has emerged from the worst global economic conditions in many of our lifetimes, but over the course of the past five years or more, it is difficult to find evidence that Northern Ireland is closing the prosperity gap with the rest of the UK - an inactivity strategy was launched but is, as yet, unfunded.

In the period following the election, our politicians will enter negotiations to develop a Programme for Government. Hopefully we can all answer 'Yes' in five years when asked if we are better off than we are now. There will be no joy in repetition if we are telling the same story on poverty.

In next week's Economy Watch, we hear from Neil Gibson of the Ulster University economic policy centre

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