ESRI: Child poverty in Ireland and the pandemic recession

A new research paper has been published by the The Economic and Social Research Institute (ESRI), which evaluates how the previous recession impacted child poverty and estimates how child income poverty rates will evolve in 2020.

The study shows that even before the 2008 Recession, children faced the worst outcomes compared to working-age adults and older people. Over the course of the recession, children experienced the largest rise in basic deprivation, which is defined as an inability to afford basic goods and services. While the material deprivation rate for children increased from 18 per cent in 2008 to 37 per cent in 2013, the corresponding figures for older people rose from 9 to 16 per cent. Children in one-adult households or in households where the head of the household was unemployed experienced the highest rates of deprivation, exceeding 60 per cent at the peak of the Great Recession. The results also show that despite the reduction of deprivation rates for all age groups during the recovery, by 2018 children remained the most disadvantaged of all groups.

It is stressed that the economic shock caused by the Covid-19 crisis, which has pushed unemployment from historically low levels to an unprecedented 24 per cent, leads to concerns about poverty levels. Given the historical experience, the case of children is of particular concern, as policy measures to date have not specifically targeted them. The paper then estimates income poverty and income changes stemming from the pandemic using a microsimulation approach. This empirical exercise was based on 2017 EU-SILC data. The results show that without an economic recovery in the latter half of the year, child income poverty rates are estimated to rise from 16.6 per cent at the beginning of the year to 21.1 per cent by the end of 2020. An economic recovery, whereby between 61 and 82 per cent of workers who were displaced by the pandemic return to work by the end of September, would see estimated child income poverty rates rise to 18 per cent. 

According to the authors, emergency income support measures, such as the Pandemic Unemployment Payment and the Temporary Wage Subsidy Scheme, have supported families during the pandemic. However, even with these measures in place for the remainder of 2020, we can expect to see child poverty levels rising in the absence of some economic recovery. The study concludes that policies which increase the child-dependent components of social welfare schemes or universal increases to child benefit would help to combat the income losses of the families affected by the crisis. As Ireland heads into a new government, the country has the opportunity to learn from its past by not allowing austerity commitments to overtake one of the state’s most fundamental obligation – to protect children, which ultimately means to protect Ireland’s own future.