ANN CAHILL: Report reveals how divide in Irish society continues to widen

A report by the European Commission into ireland Inc has two pages on poverty and children and reveals almost a quarter of people live inhouseholds where nobody is working.

With the highest number of children in jobless households, Ireland risks creating a vicious cycle of poverty and social exclusion, reports Ann Cahill, Europe Correspondent

Less than half the annual report on the state of Ireland Inc from the European Commission deals with the well-rehearsed areas of banks, macro economics, government budgets, debts, and deficits.

The rest of the 64-page document focuses on the everyday issues of people’s lives — from work to health, education to water, poverty to tax — and it notes the aims, aspirations, successes, and failures of all the Government’s good intentions.

In comparing the progress Ireland has made — from the most crisis-ridden country in the EU to proud owner of the fastest GDP growth — with the lack of progress in the critical areas of people’s lives, it makes for sobering reading.

The report’s two pages on poverty and children reveals almost a quarter of people live in households where nobody is working, or have just a few hours a week — the highest proportion in the EU, and more than double the average. It was high before the crisis emerged, but doubled in just four years.

Ireland also has the highest number of children living in jobless households, which increases the risk of creating a vicious cycle, that has risen from 26% in 2007 to 34% in 2013.

“Studies show there is a wide range of household joblessness in need of tailor-made measures going beyond labour market activation interventions,” the report states. It points the finger very clearly at the high cost of childcare, ensuring only one parent can work outside the family home. In 2013, the average childcare fee was €152 per child per week, amounting to around €16,000 a year for a two-child family.

“As a percentage of wages, childcare costs are higher than in any other EU country,” the report notes.

Access to full-time childcare is limited and the quality of services remains a problem, it adds. And while various changes are being planned or in process, “the scattered provisions for childcare support are complicated and difficult to navigate”, says the report.

Meanwhile, some of the data on youth unemployment is frightening, especially in terms of the Ireland being built for tomorrow.

The report says that while employment has begun to grow again, unemployment figures understate the effect of the crisis since many workers who lost their jobs, especially men, are not even bothering to look for work now.

Ireland has had one of the highest percentages of young people not in employment, education, or training, and now an increasing number seem to have lost hope and are not looking.

“A worrying trend in the Irish youth labour market is the increase in involuntary part-time work, which stands at 41.4% of those aged 15-24 years compared to an EU average of 37.5%,” says the report. “It points to increasing labour market segmentation for young people.”

The report finds there are also class mismatches, with unemployment among third-level graduates at 7% but 21% for those who left school early.

However, despite almost a third of companies employing IT professionals, 42% of the Irish workforce has few or no digital skills.

Last year, half of companies — the highest in the EU — said they had problems trying to recruit IT workers.

When it comes to infrastructure, the approach and reasoning is very different to what tends to make the headlines in Ireland. Investment during the boom was mainly in housing, roads, sewerage and health, but it has fallen to just 1.5% of GDP now.

On the issue of infrastructure, the report looks at the weaknesses in the public water supply, and its far-reaching consequences. Key industries such as pharmaceutical depend on major supplies, while potential new residential building in Dublin, where demand is greatest, is being been prevented, the report observes. The result is rising house prices and rents, with adverse social and competitiveness effects.

The water sector is in urgent need of investment, the consequences of having 34 different bodies responsible for it up to now. The report attributes part of the blame to the fact that water rates and collection rates on non-domestic users were low — while domestic users were not charged at all. The result is half of clean water is lost through leaks while treatment facilities remain insufficient.

Capping the cost of water at a low level removes one incentive to conserve water, while Irish Water remaining dependent on central government for funding will mean that it may not be able to borrow on the markets to invest.

And finally it mentions that if Eurostat rules in the next month or two that Irish Water is in fact part of government spending, then it will push up the deficit — though not above the all-important 3% of GDP ceiling.

Reflections on our healthcare system make interesting reading. The two-tier “healthcare sector is atypical among EU member states”, the report notes, saying that, for example, the private system covers the highest share of people in any EU country for supplementary health services.

Spending on healthcare was higher than the EU average but life expectancy and infant mortality are no better than in the rest of the EU. The report warns that continuing budget overruns may mean that the whole health system has reached a point where it needs deeper structural reforms.

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