Since 1994, the Republic's economic growth has made us the envy of our European Union partners. Debates about the extent of poverty and how it has been changing continue, in good times as in bad: is growth solving the problem, failing to have much impact, or even making it worse?
As ever, the answer depends on exactly what one means by poverty. A major innovation here is that since 1997 Ireland has an official National Anti-Poverty Strategy. This set out both an official definition of poverty and an explicit target for its reduction. It defined poverty as not having the resources to attain a standard of living regarded as acceptable by Irish society generally.
The official poverty target was framed in terms of a measure of "consistent poverty" developed at the Economic & Social Research Institute (ESRI), which identifies a household as poor if it is both on low income and deprived of basic necessities.
The baseline poverty level for the original target was derived from results from an ESRI household survey carried out in 1994. A recent study by a team of ESRI researchers, commissioned by the Government as part of National Anti-Poverty Strategy monitoring, brings the picture up to 1997.
The more recent survey reveals very significant reductions in levels of basic deprivation since 1994. The percentage both experiencing basic deprivation and on relatively low income fell sharply, from 15 per cent or less to 10 per cent or less - having fallen only marginally between 1987 and 1994.
This meant that, as the Anti-Poverty Strategy was getting under way, this poverty measure was in fact already close to its target levels for 2007. In the light of this more up-to-date information, the Government recently announced a revised target, to reduce "consistent poverty" to below 5 per cent by 2004.
The causes of a decline in basic deprivation levels are not difficult to understand: they reflect falling unemployment and the fact that average incomes have risen substantially faster than prices, both for those with incomes from work and those relying on social welfare.
However, the news is not all good. Despite the fall in deprivation, the percentage of persons with incomes below a poverty standard calculated as half the average was as high or higher in 1997 as it had been in 1994. About one person in five fell below half average income in 1997. While real incomes and living standards for those continuing to rely on social welfare have risen, they have lagged the exceptionally rapid growth in earnings over the period. This particularly affected the elderly, for example, and those who remained unemployed.
How much does this matter from a poverty perspective? A relative rather than absolute poverty standard makes sense in a state like Ireland essentially because attitudes and expectations about what constitutes an "acceptable" standard of living depend on what people see about them, and thus vary across societies and over time.
This is exactly what is reflected in the definition incorporated in the National Anti-Poverty Strategy, which has been adopted by parties across the political spectrum.
Seeing poverty in these terms does not mean that living standards don't matter and only relativities do. Mechanistic application of a relative income poverty line such as half average income is hazardous, most obviously because it can miss increasing deprivation if average incomes fall, as recently occurred in some Eastern European countries.
By the same token, when average incomes are growing very rapidly such a poverty standard also misses an important part of the story, which is that many of those who are lagging are still experiencing substantial real income increases and falling deprivation.
Precisely because income only gives a partial picture of a household's situation, ESRI research for the last decade or more has emphasised the value of also using non-monetary indicators of deprivation. For example, are people able to afford to heat their house, buy new rather than second-hand clothes, and avoid going into arrears on their electricity bills? Those people whose income is low and who are experiencing basic deprivation of this sort can be identified with some confidence as experiencing what most people would call poverty. It is sharply declining levels of deprivation of this sort which underlies the progress made in terms of the Anti-Poverty Strategy's target.
Over time, as attitudes about what is acceptable and what is not, change. The indicators required to measure poverty in this way will themselves have to adapt. Indeed, over the last decade more people do regard central heating, a telephone or a car, and a colour TV as necessities.
The boom has thus brought with it real progress in reducing poverty, and it is very important that this be recognised and built on. It is also essential, though, to think through the long-term implications. The problem is that over a lengthy period, when growth has stabilised, expectations are likely to catch up again. What is seen as necessary to allow people to participate fully in society will be higher. This is why the numbers falling below a standard like half average income are still of concern from a poverty perspective. If they remain high, then we may simply find ourselves "rediscovering poverty" in 10 or 20 years' time, as happened in both the US and the UK in the 1960s, towards the end of the post-war golden age of economic growth.
This has implications both for anti-poverty policy and for the way progress is measured. On policy, ESRI projections show that if current social welfare policies are continued through to 2001 the proportion below half average income will rise. The key is finding a way of linking social welfare payments explicitly over time to other incomes, as recommended in the NESC study published recently. The fact that the Republic now has an official poverty target for the medium term is a major step forward, but we also need to formulate clearly what an inclusive society would look like in the long term.
Brian Nolan is a Research Professor at the Economic and Social Research Institute.
