Why this Research?
Current debates about the eradication of poverty are not sufficiently informed by socially agreed empirically based income standards. The question is rarely asked 'What level of income is needed for a minimum acceptable standard of living?' For the most part measures of income adequacy are arbitrary. They have been developed by negotiation between policy-makers at national level and not by informed social consensus about what households need to have a MESL.
What is a Minimum Essential Standard of Living?
A Minimum Essential Standard of Living (MESL) is derived from a negotiated consensus on what people believe is a minimum. It is a standard of living which meets an individual's / household's physical, psychological, social needs. This is calculated by identifying the goods and services required by different household types in order to meet their minimum needs. A Minimum Income Standard (MIS) is the income required in order to achieve a minimum essential standard of living in Ireland.
How is MESL determined?
Focus groups are held for each household type. In a series of sessions the groups arrive at a negotiated consensus about the goods and services a household requires to have a minimum essential standard of living. Experts are consulted in order to ensure that the negotiated consensus meets basic criteria e.g. nutritional standards. Each group consists of 8 - 10 people from a mixture of social and economic backgrounds, and represents the household under consideration e.g. focus groups of parents with children determine the minimum requirements of such households. In order to ensure reliability and validity three different focus groups are established for each household type. The process is detailed, time-consuming and thorough.
What does it include?
The MESL is concerned with more than survival. It focuses on needs not wants. It identifies the minimum goods and services that everyone should afford. It is based on the assumption that individuals, and all the members of the household, enjoy good health and do not have a disability. While a minimum income standard in itself cannot guarantee a minimum essential standard of living an individual or a household with an income which falls below the minimum income standard is unlikely to achieve this standard of living.
How is the MESL expenditure standard arrived at?
The goods and services (shopping baskets) which are the outcome of the final negotiated consensus are priced in stores identified by the focus groups. The baskets cover 16 areas of expenditure. The totals of each of the categories of household budgets show the expenditure required to enjoy a minimum essential standard of living.
What is the Minimum Income Standard?
The Minimum Income Standard (MIS) is the second side of the consensual budget standards research. It is derived from the MESL expenditure budget. The MIS defines the gross income a household needs in order to reach their minimum essential standard of living. It takes account of the likely tax liability and social welfare entitlements of the household in question.
To whom does it apply?
- Familes with children - Two parent & One parent households
- Adults of working age, without children - Adults living alone and Couples living together
- Pensioner couple households
- Pensioners living alone
How is the Minimum Income Standard related to the Poverty Line?
While it is relevant to the discussion on poverty it is not a poverty threshold. The participants in the focus groups concentrated on MESL for all household types. However the MIS is relevant to debates on poverty and in particular to considerations of income poverty.
The Minimum Income Standard and the ISI guidelines on Reasonable Living Expenses
The VPSJ welcomes the publication of the Insolvency Service of Ireland’s (ISI) guidelines on Reasonable Living Expenses, which are modelled on the Minimum Essential Budget Standard research conducted by the VPSJ. The VPSJ is pleased that the ISI has utilised much of the established minimum budget standards data, but notes that the ISI model is adapted from the Minimum Essential Budget Standard data.
The ISI model excludes certain areas of expenditure which are included in the Minimum Essential Budget Standards data. Consequently the results produced by the Minimum Income Standard calculator are different from the ISI guidelines on Reasonable Living Expenses, as is the data published in the VPSJ’s research reports and the expenditure and income data available on www.budgeting.ie.
A full statement on the ISI guidelines is available from the VPSJ here.
Who produced it?
The research is undertaken by the Vincentian Partnership for Social Justice. The initial work was under the guidance of Professor Jonathan Bradshaw from the Family Budget Unit, University of York. The latter research conducted by the VPSJ has been in consultation with the Centre for Research on Social Policy, University of Loughborough.
The Minimum Income Standard for Ireland (2012) research was carried out in co-operation with Dr. Micheál Collins from the Department of Economics, Trinity College Dublin and co-funded by the IRCHSS.
When and how is it being updated?
The original research began in 1999 and findings presented in 2001, 2004, 2006, 2008 and 2010. For the Minimum Income Standard for Ireland study, published in 2012, the dataset was extended to include an infant, an unemployed 19 year old living in the family home, and a female single adult of working age. The VPSJ has since undertaken a review of the contents of the household budgets, going back to focus groups to establish how the attitudes about what constitutes a minimum changed between 2006 and 2012 over time. Furthermore, the additional and different needs of households with more than two children were also examined.
Since 2006 the material has been updated annually taking into consideration changes in inflation rates. The appropriate CPI sub indices rates are applied to each category. Updating annually allows changes in the cost of goods and services to be tracked and provides up-to-date information on the cost of a minimum essential standard of living. The expenditure data used in the Minimum Income Standard calculator is updated in the second quarter of each year.
The calculations for the Minimum Income Standard are updated annually to reflect any changes to Income Tax, PRSI, Social Welfare, etc. This update is scheduled to be undertaken in the first quarter of each year once the detail of measures announced by Government in the Budget are clear and come into effect.
What research has been published to date?
Visit the VPSJ's Minimum Essential Budget Standards Research Centre website for Research Reports, Working & Technical Papers, Annual Updates, Policy Submissions to Government, etc.
What are other applications of the research?
- Having a benchmark about what it costs for household types to have an acceptable standard of living opens up a space to examine the adequacy of the National Minimum Wage and social welfare transfers. The VPSJ have identified gaps in social welfare provision and the inadequacy of the minimum wage for a number of household types. These findings are presented in pre-budget and policy submissions to highlight individuals and families living on an inadequate income.
- The VPSJ has for the last number of years being invited to make a presentation to the Minister and the Department Employment Affairs and Social Protection at the Pre-Budget Forum.
- The VPSJ was invited to make a presentation to the Office of the UN Special Rapporteur on Extreme Poverty and Human Rights
- The VPSJ met with officials from the Department of Finance to discuss how the research could be used with regard to income retention and debt resolution, in the context of households with mortgage arrears.
- The research is being used by a number of organizations such as MABS, the Society of St Vincent de Paul, Age Action and FLAC who are involved with people experiencing poverty, social exclusion and debt.
- The VPSJ has been involved with the development of minimum income standards at EU level.
Where can I learn more about this research?
You can visit the VPSJ's website dedicated to this research, www.budgeting.ie, where you can access copies of each of our research reports providing detailed information on the methodology and data upon which this calculator is built.
Detailed budgets for each household type, and their potential incomes across a range of case studies are also published on our website. These budgets and income case studies are updated for inflation and budgetary changes annually, data from 2006 through to 2013 is available.
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