Hidden hardship amid the boom

Work is no guarantee of escaping hardship, and many people on low wages are unable to cope at Christmas, writes Carl O'Brien

It's a bitterly cold December evening in Leixlip, Co Kildare, and Vincent de Paul volunteers are organising how to distribute about 100 Christmas food hampers to families in need.

There is nothing outside many of the homes to hint at the hardship inside. Fairy lights twinkle in the windows. There are cars in most of the driveways. The gardens are neatly maintained. Televisions throw flickers of light against the sitting-room walls.

Yet, inside an alarming number of homes in Leixlip there is a quiet sense of despair.

Many working families are struggling to cope, sliding into debt from basic day-to-day expenses, with no safety net apart from unemployment benefit to protect them from hardship.

"There is a feeling nowadays that everyone's prosperous, that we're all doing well," says John Monaghan of the Vincent de Paul, as he drives along one of the housing estates on the edge of town where the charity is helping a number of families. "But we see the other side. Many working families we're helping have moved from welfare to employment, but find they are earning barely enough to get by. For others in work, a trigger like a marriage break-up, illness, a drop in income or loss of a job can cause severe hardship."

Talk of poverty and deprivation seems out of place in a town such as Leixlip. If ever there was a standard bearer for the country's economic boom, this is it. Intel and Hewlett Packard, two linchpins of the soaring economy, are based here, while the town is one of the fastest growing in the State.

Yet, later in the evening, Monaghan and other volunteers pack hampers of turkey, ham, mince pies, as well as staples such as coffee, tea and sugar, to help ease the financial burden on the more vulnerable families. They will provide money - about €200 for a family of four - to help with utility bills. There are also some presents such as children's bikes to distribute to families most in need.

WHILE PEOPLE GENERALLY are better off than they were in the past, and standards of living have improved, in some ways it can be harder to be poor in the new prosperous Ireland, Monaghan says.

"You see some families desperately trying to maintain the impression that things are still okay," he says. "That's why the car in the driveway is often the very last thing to go. It's the last outward sign of wealth."

What is happening in pockets of Leixlip is happening in areas across the country, statistics indicate. At a time when poverty rates generally are falling, there is a category of people where the number at risk of poverty is rising.

They are a group of people who qualify for almost nothing but pay for everything. Outside the income thresholds for benefits such as back-to-school allowances, rent allowance or medical cards, they are exposed to the full brunt of cost increases. They are the working poor.

The number of such people at risk of poverty now exceeds the number of unemployed. There are more working poor than there are poor pensioners. In total about 200,000 people live in a household headed by a person in employment that is at risk of poverty.

Official statistics show the number of such families increased by almost 50 per cent during the boom years. The trend was confirmed again last year when the proportion of working poor increased from 15 to 16 per cent, as other poverty rates fell.

A decade ago the Money Advice and Budgeting Service, the State-funded agency which helps people in debt, found that 90 per cent of its clients were on social welfare. Now more than a third are from people in employment.

It is clearer than ever that a job in itself is not a guarantee of escaping hardship. Most poor people are not the feckless, the hopeless or the helpless. They are people who work very hard for long hours, yet still fall below the official poverty thresholds.

"The issue of the working poor has been virtually ignored in recent budgets," says Fr Seán Healy of Cori (Conference of Religious of Ireland) Justice. "If we are to tackle poverty, there are two groups. Welfare increases have helped those who are unemployed. But we need the other group, the working poor, by taking more imaginative steps."

Many problems lie in the lack of social support for low-income working families. Government increases in welfare and pensions have helped loosen the grip of poverty on tens of thousands of people dependent on welfare such as pensioners, lone parents and the disabled. Yet key benefits such as medical cards, rent supplement, back-to-school allowances and fuel allowances fall away almost the moment a person enters employment.

The doctor-only medical card was seen as a way of tackling this, by introducing higher income thresholds compared with the full medical card.

But just a quarter of the promised 200,000 doctor-only cards have been issued, due mainly to the baffling level of detail required regarding a person's income in order to apply for a card. Ultimately, a card-holder may be able to visit a GP, but may not be able to afford the prescription to tackle their illness.

Inflation - now running at about 4.4 per cent, well above the EU average - devours a greater share of the working poor's income, because they have less in the first place.

"By and large the working poor tend to get by," says Monaghan. "They cope. But they've absolutely no wriggle room. It could be a large utility bill, an unexpected expense like a funeral, or medication. They're outside the thresholds for assistance, so it can hit very hard."

Budget increases have tended to benefit those on welfare, or those earning decent-sized incomes. But the working poor have been caught in the middle, unable to access most of the welfare increases, or benefit from tax credit increases because they don't earn enough.

The Government has taken some steps to to try to address the issue by taking those on the minimum wage out of the tax net. It has also increased the Family Income Supplement, a tax-free weekly payment for employees on low pay worth between €15 and €185 a week.

Yet it has not attempted to grasp what could arguably be the most effective way of addressing the problems facing the working poor - making tax credits refundable.

At present, if a person does not earn enough to use up their tax credit, they don't benefit from any tax reduction. In effect this means those on the lowest pay don't benefit in any way at budget time.

A simple solution which has been proposed for many years by Cori Justice has been to get the State to refund the part of the tax credit which an employee does not benefit from.

"THE MAJOR ADVANTAGE of making tax credits refundable would lie in addressing the disincentives currently associated with low-paid employment," says Fr Healy. "The main beneficiaries of refundable tax credits would be low-paid employees." The Government says it has examined the proposal and has insisted it is unworkable. But there has never been a formal costing on how much repayable tax credits would cost.

There is little doubt there have been improvements in helping to address poverty in more recent times. Social welfare recipients have seen real improvements in their living standards in recent years, while some of the most inequitable tax loopholes are being closed off by the Government.

But the weight of indirect taxes - such as waste charges and hospital charges - the lack of fairness in budget increases, and restrictions in accessing social protection for the working poor are all taking their toll.

In Leixlip, and other places like it across the country, the proportion of those working while still at risk of poverty is almost certain to continue rising unless there is a more radical approach to making low-income work pay better.

"There is no doubt that things have improved significantly since the 1980s," says John Monaghan, before finishing up an evening's volunteering with Vincent de Paul. "We had high unemployment, huge interest rates, mass emigration. The problems we have now are of a different kind. Expectations are higher, people have stretched themselves and borrowed more with low interest rates.

"Often the difficulties can be just temporary," he adds. "People need to be able to see a way out."