IRELAND’S POOREST HOUSEHOLDS saw their income fall even further during the Covid-19 pandemic due to a decline in the number of hours worked, new research from the Economic and Social Research Institute (ESRI) has shown.
This is despite a strong labour market recovery which saw 200,000 more people employed in 2021 than in 2020 following the easing of Covid restrictions.
The full report, published by the ESRI using data from the Survey of Income and Living Conditions collected by the Central Statistics Office, will be launched by Equality Minister Roderic O’Gorman on Thursday.
It found that real household income fell for the poorest tenth of people between 2020 and 2021. While income growth stalled for most other low earners, incomes grew for moderate and higher earners.
“This pattern of growth meant that measures of income inequality – which declined to their lowest recorded level in 2020 – increased in the latest year of data available, the first such increase since 2017,” the report states.
It states that the fall in earnings for lower-income households was driven by a drop in hours worked per week and months of full-time work per year.
“This suggests that the impact of the labour market recovery in 2021 was more muted for those in lower- than higher-income households, despite Revenue (2023) statistics showing that individual earnings growth has been strongest at the bottom of the individual earnings distribution in recent years,” the report states.
The research also examined the material deprivation rate – the share of individuals unable to afford two or more items from a list of ten essentials.
These include two pairs of strong shoes; a warm waterproof overcoat; new (not secondhand) clothes; a meal with meat, chicken, fish (or vegetarian equivalent) every second day and home heating during the last year.
It found that the material deprivation rate rose from 13.3% in 2021 to 16.6% last year.
The report found that the material deprivation rate for a single adult with children was 42% in 2022, compared to 15.9% for two adults with children.
The slow income growth documented in the study occurred before the sharp rise in prices following the invasion of Ukraine in February 2022.
Barra Roantree, assistant professor of economics at Trinity College Dublin and lead author of the report said policymakers should be concerned by its findings.
“Ongoing high rates of inflation are likely to further erode incomes, raising the prospect of three years without real income growth for most households,” he said.
“Policymakers will face difficult decisions in Budget 2024 about which groups to prioritise given our reliance on potentially transitory receipts from corporation tax, with untargeted tax cuts or increases in spending risking stoking further inflation.”
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