16% At Risk of Poverty in Ireland – What Does That Mean?

The Central Statistics Office have released some figures on 2011 household incomes and poverty levels in Ireland . The press and TV have all picked up on the poverty figures with headlines such as “Record numbers in Poverty”    – but what do these figures really mean?

The CSO say that 16% of the population are “at risk of poverty”. They define at risk of poverty by comparing someones disposable  income to the national average – and if a persons disposable  income is less than 60% of the national average (median) then they are classed as being at risk of poverty.

No account of changes in the cost of living is taken into account when defining at risk of poverty. It is just a comparison with the average income in the country. It is a method used across the EU.

Disposable Income is defined as income after deductions for Income Tax,PRSI, USC  and it includes all social welfare payments , child benefits etc.

The income comparison uses something called “equivalised income“. This is the individual income adjusted for household size .  It is not a simple division by the size of the family but instead  it uses  0.66 for each person aged 14 or more and  0.33 for each child aged less than 14.

For example these would be the “equivalised incomes” in different households with the same  total disposable income of €40000.
Single person  ; €40,000
Two Adults  ; €24096  (divided by 1.66)
Two Adults 1 Child aged under 14 :  €20000 (divided by 2)
Two Adults 2 children under 14 : €17167 (divided by  2.32)

It is this equivalised figure that is used to define if someone is at risk of poverty .
The average(median) household income in Ireland in 2011 was €41819.
The average equivalised  income was €21440 .
The figure used to define “at risk of poverty” is 60% of €21440 – which is €10889

So – when the CSO state that  someone is “at risk of poverty” they mean that their annual equivalised disposable income is lower than €10889
To work out what this means for different household sizes – we have to multiply it back up by the household weightings again.
Listed below are some disposable (take home) annual income levels for various household types. If the households shown have a disposable income lower than this (after tax etc) then the  CSO report would class them as being at risk of poverty in 2011

Single person €10889 (209.60 a week)
Couple  €18075
Couple 1 child aged 16  €25262
Couple 1 child under 14 €21778
Single parent 2 children under 14  €18075
Couple 3 children under 14  €21778 (€419 a week)

How does Ireland Compare to other Countries?

The CSO report shows Ireland had 16% of the population at risk of poverty in 2011. Our UK neighbours had 16.2% and the EU average was 16.9%