As the UK economy enters recovery phase, attention is turning to the subject of living standards and whether household incomes have revived to the same extent. Research to date indicates that households in Northern Ireland have yet to experience any significant recovery.
Despite disagreement on a precise measurement for living standards, this paper examines income for households and individuals based on the latest available survey data. Overall trends however hide conflicting experiences for households based on the different streams of income they receive. This has given rise to speculation that older generations and those at the top of the income distribution have recovered lost ground whilst younger and poorer households remain left behind.
The evidence on a generational divide points to a collapse in employment income which has impacted more significantly on incomes in younger households. The main components of income for older generations have either remained steady or increased marginally. This is not to say older generations have prospered at the expense of younger generations.
The cause of the divergence in income growth can be directly attributed to falling employment incomes for younger generations. There has been no general increase in income inequality, but the collapse of employment income has favoured those at higher middle incomes. Consequently it is those on lower middle incomes who have fared worst.
Policy responses need to reflect that absent a significant uplift in employment income particularly at lower levels of remuneration, the emerging divides will become entrenched. This is particularly acute challenge for Northern Ireland as the lowest income region of the United Kingdom.