How will Budget 2020 affect poverty rates?

Posted on Thursday, 17 October 2019
Persistent Poverty

Today is International Day for the Eradication of Poverty. What did last week's Budget do to help eradicate poverty?

Before we answer that, it is worth reminding ourselves that one in every six people in Ireland lives with an income below the poverty line (15.7% of the population). As highlighted in our most recent Poverty Focus briefing, this corresponds to approximately 760,000 people. Poverty levels reached their lowest point in Ireland in 2009 when 14.1 per cent of the population were classified as poor. Since then the rate has increased, though in recent years, Budgetary policies which increased core welfare payments have helped to bring it back down again.

Budget 2020 has included some welcome initiatives that will assist those living below the poverty line. These include increases in the Living Alone Allowance and the Qualified Child Payment; something that is particularly welcome given that approximately 230,000 children in Ireland live below the poverty line.

However, the Budget lacked any serious initiatives to significantly reduce poverty. At rates of near full employment, the simple policy solution to ‘create more jobs’ no longer stands, especially with around 110,000 people experiencing poverty despite being in employment. We also regret that the equalisation of Jobseekers Allowance rates for young people has been restricted to a small cohort.

In our Budget submission, Social Justice Ireland pointed out that a lesson from previous experiences of economic growth is that the vulnerable in our society get left behind unless welfare increases keep track with increases elsewhere in the economy. A €9 per week increase in minimum social welfare payments was required in order that social welfare rates keep up with wage growth (based on a benchmark of 27.5% of average earnings). Yet there was no universal increase in these payments at all.

If social welfare rates are allowed to fall behind earnings over time, increases in poverty are inevitable. In fact according to the ESRI, the government funded economic research institute, we can expect Budget 2020 to increase poverty in 2020 compared to a neutral benchmark.