The value of state pensions has fallen by 12 euros a week, and soaring inflation since last year has wiped out more than 1,000 euros from the average worker’s wage packet.
New figures from Congressional advisory bodies reveal how the biggest surge in living expenses for nearly 40 years has eroded salaries, state pensions, welfare payments, and student subsidies.
According to data from the Parliamentary Budget Office, the average worker’s income is substantially less than € 1,000 a year compared to last year, but the value of the state pension is down € 12 a week or € 624 a year.
Minimum wage workers, state pensioners and social welfare recipients will suffer the sharpest percentage decline in the value of their income, approximately 4 pc.
The numbers have been edited to provide guidance to politicians and are based on this year’s 7% inflation forecast.
The Institute for Economic and Social Studies (ESRI) predicted an average of 7.1%.
This figure shows that inflation dropped € 1,244 a year, or € 23.90 a week, from last year’s average employee income of € 44,370, despite taking into account the expected growth of 4% in wages. I am.
If wages rise by only 2.3% this year, the value of wages will fall by € 1,949.
Gardai, the highest-earning group included, expects to save more than € 2,000 last year with an average revenue value of € 72,001.
The average wage of workers in the private sector is € 40,201 this year, compared to € 52,469 in the public sector.
The payment of the student grant recipient failed at a value of € 11.
The numbers emerged as the government was forced to introduce new measures to help struggling households cope with rising costs ahead of the October budget.
According to the numbers, rising prices will push down the purchasing power of state pensions by 12 euros a week this year.
Payments of € 248.30 per week last year are worth € 236.50 on a real basis this year, a decrease of 4.8%.
Most workers reduce the value of wages by 2.8%, as inflation is expected to offset the 4% rise in wages.
Those who have received a more modest increase, or who have not received it at all, will be struck further in their pockets.
Tom McDonnell, co-director of the Nevin Institute for Economic Research, wasn’t surprised by the numbers and warned that “inflation is currently at 7.8%, so things could get worse.”
“I knew that real income was totally badly hit because the increase was generally well below 7pc,” he said.
“For example, minimum wage workers had to settle with an increase of only 2.9%, which could be equivalent to real income exceeding 4% this year.”
McDonnell said inflation was highest in the poorest 20% of households, including a single minimum wage earner, most social welfare recipients, and state pensioners living alone.
“This is the situation for various campaign groups seeking a € 15 to € 20 increase in welfare fees,” he said.
“The groups that have experienced the highest levels of inflation since December 2016 are renters and single parents … Child poverty may increase.”
He said inflation is lower than the average of Ireland’s top 40% of households, which have tended to accumulate significant savings in recent years.
“The clear implication is that budget 2023 should focus on targeted measures for low-income households, renters and single parents,” he said.
“In my view, it’s time to start benchmarking welfare rates, including the introduction of enhanced child income support.”
McDonnell called for state intervention to reduce childcare and public transport costs, thereby improving women’s workforce participation and gender equality, supporting climate goals and reducing workers’ cost burdens. Said.
“Therefore, this will diminish the need for nominal wage growth,” he said.
In education, he can make strong claims to strengthen state subsidies for textbooks, school meals, college tuition, etc. and extend the care of free general practitioners to more groups. Said that it would help families in need.
I added that tax cuts would be disproportionately beneficial.
Fergal O’Brien, Ibeck’s director of lobbying and influence, said it is impossible for employers to perfectly match inflation with salary increases.
“We can’t keep up with inflation,” he said. “We must take a multi-year perspective in the medium term.
“In the last decade, average wage growth has doubled that of annual inflation. Obviously, there is no doubt that inflation is higher than wage growth, but at this point employers are chasing inflation. It’s not right for the economy. “
He states that affordable employers are raising wages and believes that the government has a role to play in avoiding budget tax policies.
“In particular, we will focus on increasing the entrance to the highest tax rates,” he said.
“The second area that the government can support is social wages, especially other services that the government can support to ease the increased living costs faced by workers in raising children and the cost pressure on their families.”