Do policies keep women from improving their financial well-being?
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By Melissa Boyle
Lone parents living in poverty and having low educational attainment is a familiar story, but are policies shaping these outcomes?
According to Onefamily, one in four families in Ireland are one-parent families and 86.4% of these are headed by a mother. The most recent Survey on Income and Living Expenses reports that individuals living in households with one adult and one or more children aged under 18 were most likely to be experiencing enforced deprivation. This group also struggled the most to make ends meet. Why is it that lone parents, who are mainly women, struggle with poverty? Could policies be part of the answer?
A report examining the impact of policy interventions on the at-risk-of-poverty (AROP) rate concluded that increasing female labour market participation could reduce the AROP rate by 2.9 percentage points and over 5 percentage points for children. The report also noted that increased participation rates and hours worked by lone parents had only modest effects on the AROP rate, although this modest result reflects this group's small size in the overall population.
But these results were also based on the assumption that lone parents would work and get paid at similar rates as women with comparable educational qualifications, which are assumed to be minimal among lone parents. Lone parents living in poverty and having low educational attainment is a familiar story, but does policy play a part in shaping these outcomes?
A recent article examined the Debt Relief Notice (DRN) personal insolvency policy and revealed that the policy kept individuals in a state of poverty for several years. Those who wished to gain employment and improve their financial well-being were prevented from doing so by the DRN’s barriers. This policy was implemented to assist over-indebted individuals who are unable to pay anything towards their debts and have a disposable income of no more than €60 per month after allowable outgoings. This debt resolution is for individuals with low income and assets with credit debts such as personal loans and credit cards. To be eligible for a DRN arrangement, the individual’s total debts must not exceed €35,000.
The circumstances of one female lone parent in the report illuminate a barrier to her entering employment arising from her insolvency agreement. Returning to the workforce to improve her financial situation could dissolve her insolvency agreement and require her to resume repaying her creditors. She would also not see much improvement in her financial situation due to the DRN policy stipulation on income increases.
If an individual’s net income increases by more than €400 per month during their DRN’s supervision period, they must hand over 50% of that increase to pay their creditors. Considering the additional expenses that come with a job – transportation costs, childcare and increased rent for those in social housing – it is clear why someone in a DRN arrangement would decide against working.
Three years, which is the maximum for a DRN supervision period, is a long time for an individual to be out of the workforce. Long periods of unemployment can keep individuals in the social welfare system and at risk of falling into over-indebtedness yet again. The DRN policy can deter people from seeking economic improvement and therefore
DRN arrangements can actually incentivise individuals not to pursue upward mobility through employment. This impacts not just the person who is undertaking the DRN arrangement, but also their children and future generations. These impacts extend beyond financial status and affect educational and occupational attainment as well as health outcomes. According to the OECD, it can take four or five generations for low-income families to achieve an average income.
Inadequate childcare policies can also keep struggling families in poverty. The high cost of childcare is one factor driving many mothers to step back from working outside the home. While the Government has introduced the National Childcare Scheme to help families with childcare, many still struggle due to the lack of affordable childcare options. Even with government assistance, privately owned childcare in Ireland is too expensive for parents with low incomes.
The Central Statistics Office (CSO) recently updated its research paper on inflation broken down by various household characteristics. Lower-income households are experiencing inflation at 10.3%, compared with 8.2% for the highest-income households. The lack of affordable childcare centres will unfortunately prevent many women from returning to the workforce and building financial resilience against rising inflation.
These are just two policies that could impact the economic positions of those living in consistent poverty. Policymakers need to examine policies specifically targeted at, or with the potential to affect, lone parents through a gender lens. This simple exercise would reveal any policy contradictions like the one in the DRN insolvency policy, which was meant to return individuals to economic activity but may actually keep them in a state of poverty.
Policymakers need to encourage a return to employment, not inhibit it. Stronger synergies between government departments will prevent conflicting policies and ensure they work cohesively towards improving the financial well-being of those dealing with consistent poverty.
This article was previously published on RTE Brainstorm