IMF claims level of poverty has been 'relatively stable'

THE PROGRESSIVE nature of successive measures aimed at closing the deficit over recent years and Ireland’s strong social supports have helped to prevent a rise in poverty, according to the latest IMF report.

Ireland’s success in avoiding a change in poverty rates relative to Europe has happened despite it having to experience a greater than average economic slump, according to the report.

It looks at the effect of the crisis on poverty levels using a range of different ways of measuring the phenomenon.

The measure used in Ireland is the consistent poverty measure, which combines data on deprivation with an at-risk-of-poverty threshold set at 60 per cent of equivalised household disposable income.

The report said poverty, by this measure, had been “relatively stable”. At 6.2 per cent in 2010, the consistent poverty rate was still below 2006 levels.

Although it rose during the crisis for the population as a whole, it was at low levels for those aged 65 and above, the IMF said.

The amount of income which designated a household as being at risk of poverty in Ireland was above the EU average in both 2006 and 2010, according to the report.

Furthermore, the percentage of the population that came in below the threshold fell from 18.5 per cent, in 2006 to 16.1 per cent in 2010.

The report said that while some recent data had raised concerns about rising inequality, this might have partly reflected sampling variations as budget consolidation had been progressive overall to date.

Recent data from the Survey on Income and Living Conditions showed a rise in the ratio of net disposable income in the top quintile to that in the bottom quintile from 4.4 to 5.3 between 2008 and 2010 (slightly above the EU average of 5).

However, the IMF report said there may be problems with the data. It said sample composition changes were large, with half the respondents being new.

The report said the ESRI had found that cumulative budgetary consolidation over 2009-12 had been progressive, with the exception perhaps of the 2012 standard VAT rate increase, “although this only applied to half of consumption as many essentials are zero-rated”.