A BOOK written by two ESRI economists for Combat Poverty Agency, which was launched at a seminar in Dublin Castle last Monday, deals with the welfare implications of demographic trends.
The study concludes that "for the first time in the modern era, it is now possible for Ireland to look forward with some confidence to a period of well balanced population performance combined with economic progress", during which the challenge will be "to make the best use of the unprecedented opportunities that are developing".
This book brings together comprehensively for the first time four or five remarkable demographic and economic developments which have been in process of emerging for some time past and highlights the cumulative significance of these developments for Irish social policy.
One of these is the reversal since 1986 of the earlier strongly negative trend of "economic dependency", defined as the ratio of dependants to workers in our society. Between 1951 and 1986, the number of dependants for every hundred workers rose by three fifths, from 143 to 229.
As a result, a large part of the increase in output per worker during that period of onethird of a century was absorbed in supporting a rapidly rising number of dependants, either within the families of the workers themselves, or through the taxes the work force had to pay to support others in the community.
Since 1986 this economic dependency ratio has been declining rapidly, a fact to which I have been drawing attention since January 1992, when I forecast in this column that by 2012 the 1986 ratio would have fallen by over one quarter to 170.
I was wrong about the time scale, for it is now clear that we will reach that figure within the next 12 months, i.e. in a period of 11-12 years instead of the 26 year period that I allowed for this process when making my forecast.
On the basis of the current trend in this economic dependency ratio alone, even if there had been no increase whatever in the output of the economy in the 20 years between 1986 and 2006, our average material living standards would be raised by almost 50 per cent. Of course our output has been rising rapidly and is likely to continue doing so.
FIVE years ago, in that same article, I suggested that, as during most of our period as a member of the European Community our growth rate had exceeded that of the rest of the EC by over 1 per cent a year, we might reasonably hope to continue to gain on, our partners by 1 per cent annually in the period ahead.
Since then our GNP growth rate has in fact been roughly three times as fast as that of our partners, exceeding their performance by an average of four percentage points per annum.
I also suggested that in the years ahead we could look forward to an annual growth of some 15,000-20,000 in employment. Once again I was wrong for in the past four years employment has risen by an average of 45,000 a year mainly because of faster than expected economic growth, but also because this growth is now yielding higher returns in the form of jobs than was formerly the case.
In 1994, when the ESRI published its last medium term review, its projection for employment growth in the period 1996-2001 was 15,000 a year. The ESRI authors of this book on welfare and demography now forecast an increase of 28,000 jobs a year in the years from 1996 to 2001, reverting to 15,000 a year thereafter.
However, books are a long time in gestation; further data published since this one was written, now point towards a considerably faster growth of employment than its authors projected.
Finally, emigration. Despite our experience of significant net immigration during the 1970s, until recently it has been almost universally believed there would continue to be a net outflow of young people from Ireland for the foreseeable future. Indeed, in October 1995 the CSO estimated that a net outflow of 20,000 had taken place in the four years to 1995.
When the 1991 population census was taken six months later, it was found that between April 1991 and April 1995 the net outflow had been fewer than 3,000 - which in the following 12 months was more than offset by an estimated net inflow of more than 6,000 in the following 12 months.
In its medium term review in 1994, the ESRI estimated that between 1996 and 2001 there would be a further net outflow of 83,000 people. When its next medium term review is published in the next few weeks, I very much doubt whether there will be provision in it for any net emigration. Indeed, at Monday's seminar it was the possibility of net immigration in the early part the next century that featured in the discussion.
Thus, a combination of a higher rate of job generation and a much faster rate of economic growth than previously thought possible has led to a much more rapid rise in employment than ever before. In turn this has been drawing back to Ireland emigrants of earlier years, together with their families formed abroad, on a scale that is now at least balancing the numbers of younger people still leaving to work elsewhere.
As to dependency, unemployment has been falling - by about almost one quarter in the past four years on the basis of the Labour Force data - and this has been accompanied by a large scale movement into the labour force by formerly dependent women.
Moreover, for more than a decade past the number of children has also been declining quite rapidly as result of the post 1980 collapse in the birth rate.
WITHIN the past four years, the cumulative effect of all this has been a drop of some 120,000 in the number of dependants within the past four years and an increase of 180,000 in the numbers at work - a quite astonishing dependency turnaround in such a brief period.
In marked contrast to the rest of Europe, the ratio of retired people over 65 to people at work in Ireland will actually decrease during the decade ahead, and even when age dependency starts to rise thereafter, this problem will be much less acute here than elsewhere.
This does not, of course, mean that we should not seek to supplement State pensions by encouraging supplementary private provision, but simply that, unlike the rest of Europe, Ireland is not facing a pensions crisis.
In fact, uniquely, we are going to have an opportunity to create here a caring society, in which poverty could be removed by well judged State action, while simultaneously reducing significantly the burden of taxation on those at work.
A good deal of progress has been made in this direction, as is made clear by the ESRI's report on income support and work incentives, published the day before yesterday.
It shows that between 1978 and 1994 unemployment assistance for a three child family in Ireland was raised from just under half of the average manufacturing wage to three fifths, whereas in the same period in Britain these payments moved bin precisely the opposite direction, falling from three fifths of the average wage to little more than two fifths.
Our problem in the years ahead will not be one of lack of resources to relieve poverty, but rather how to achieve this without inhibiting a return to work by the unskilled as the wages for this kind of work are depressed in a period that is likely to be marked by a continuing lack of demand for this kind of labour.
Perhaps a wad will be found to resolve this problem within the present tax and welfare structure. If not, we must then be prepared to look at more radical solutions such as the basic income proposal, reviewed in this column last week.
It would be absurd and totally indefensible that a country which is becoming rapidly endowed with the means of effectively eliminating poverty should fail to do so solely because of an unwillingness to rethink a cumbersome administrative system of income transfers which it has inherited from a time in the past when Ireland was too poor a country to be able to care adequately for the less well off in our society.