According to an analysis by the Parliamentary Budget Office (PBO) of the Oireachtas, individuals not in the workforce are seeing their real incomes increase more than employees. For 2023/24, the increase for those in employment is just 1.8%, with public servants experiencing the smallest growth at only 0.5%. Could the department be looking to reduce social welfare payments?
In contrast, many welfare recipients are comparatively better off. The 157,000 people on disability allowances will see a net income increase of 3.8%, as will the 146,000 on Jobseeker’s Allowance. Those receiving the widow’s or widower’s contributory pension will see a 3.6% rise by the end of the year, largely due to flat-rate increases in welfare rates.
The PBO calculated these figures by subtracting inflation from the nominal increase in earnings. With inflation at 5.2% last year and a forecast of 2.1% for this year, wage growth was up 4.6% last year and is expected to increase by another 4.5% this year.
It is concerning for the Government that while real incomes are growing, wages are not keeping pace with price increases for those in employment. The PBO’s Spring Commentary highlights the current economic conditions and notes the increasing reliance on overseas workers in Ireland, where unemployment is at 4.5%, effectively full employment. The report also highlights stagnation in sectors like construction and ICT and emphasizes the importance of improving women’s labor force participation through flexible working options, childcare subsidies, and in-work benefits.
The PBO also comments on the ongoing impact of Covid on the health budget, suggesting that Covid-related spending may become a permanent fixture. Despite budget surpluses of more than €8bn per annum, the Government plans to increase the national debt, though the PBO does not view this debt trajectory as unsustainable. They suggest using excess corporation tax receipts to reduce absolute debt and create more fiscal capacity to handle future economic shocks.
Given this context, is the department considering reducing social welfare payments to address these disparities and economic concerns? Could the department be looking to reduce social welfare payments?