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I grew up poor in a family of 10 children in the Republic of Ireland. At the time, Ireland had one of the highest poverty rates among industrialized countries. That was five decades ago, well before the Ireland of today where progressive government social and economic policies have improved the standard of living for many people there.
While policies like free post-secondary education, a living wage (not a minimum wage) for low-income earners and co-operative job/ economic strategies between labour, business and government have set Ireland on a better course, the child poverty rate remains stubbornly high (it is on par with Canada’s at about 15 per cent).
That’s because, according to recent studies measuring poverty, both Canadian and Irish government spending on family and social benefits falls far short of where these investments can mitigate the growing gap between rich and poor in global market economies, and show meaningful results in decreasing poverty rates.
Where we should be looking for a socio-economic model that benefits the majority of citizens and where poverty rates are lowest – between 2 and 5 per cent – is Denmark, Finland, Sweden and Norway.
Outperforming Canada and all the other Organization for Economic Co-operation and Development (OECD) countries, in many quality of life indices, these Scandinavian countries have high taxation rates (between 42 per cent and 52 per cent of gross domestic product) compared to Canada’s rate of 34 per cent of GDP, high social program spending, and high worker unionization rates of more than 80 per cent.
In addition, according to a UNICEF study, the government policies of these countries are the most effective at alleviating the effects of “market” forces on the poor, and conversely, in lowering child poverty rates.
Conscious that the income gap between rich and poor in a booming Irish economy was growing, Ireland tackled the problem of low incomes on several fronts.
These policies included raising the minimum wage to a living wage – about $12 an hour as of this January – taking low-income earners off the income tax rolls, increasing child care, housing and heat subsidies, and pumping more money into workers’ training programs.
Ireland even increased welfare rates for those between jobs and targeted economically depressed communities for job-creation programs.
Without this aggressive government intervention, poverty rates in Ireland would be much higher than they are.
The naysayers in Canada, opposed to raising the minimum wage and government policies like social housing and universal child care, should take heed that the economic sky did not fall in Ireland. Rather, economic growth skyrocketed, and the standard of living of many people has increased.
In both Ireland and several of the Scandinavian countries, close links between business, trade unions and universities have boosted the skills of the workforce in the growing, knowledge-based economy.
In short, there is greater social cohesion, equality of opportunity and poverty rates are lower in countries where there is high tax, where governments redistribute a higher percentage of the national income to protect low-wage earners and the poor against market forces, where the majority of workers are unionized, and where child care is free or subsidized.
Go figure. Everything the pro-market, less government proponents say is bad, is really good for working families and the poor.
Of the OECD countries, only Mexico, with a 28 per cent child poverty rate, has a higher rate of child poverty than the United States at 22 per cent.
Marked by low taxes, low unionization rates, for-profit health care, low minimum wage rates, and great income disparity, the U.S. is not the socio-economic model Canadians should aspire to.
Yet, it is the model promoted by Prime Minister Stephen Harper who in the last election campaign said he believes “all taxes are bad,” who has fronted organizations vehemently opposed to labour unions that help raise workers’ wages and who favours tax cuts to investments in social spending.
In the coming federal election, voters can give Harper a strong message: Lower child poverty and improve the quality of life for poor and middle-income earners or else we will give the heave-ho to you and your “new” government.
Sid Ryan is Ontario president of the Canadian Union of Public Employees
© 2007 Torstar Corporation
Length: 702 words