Work, Low Pay & Welfare - Budget 2027

Recent increases in the cost of living have highlighted the continued vulnerability of low income households, particularly in relation to essentials goods and services. The Consumer Price Index rose by 3.7 per cent in the year to April 2026, highest since January 2024, driven heavily by sharp increases in education, housing, electricity, gas, and fuel costs. These rising expenses are eroding the real value of earnings. The Government's Annual Progress Report (2026) further suggests that inflationary pressures are likely to increase should current disruptions continue.

At the same time, Ireland is currently experiencing full employment, with an unemployment rate of 4.9 per cent in Q1 2026. However, this headline statistic masks a troubling picture of economic hardship. In 2025, more than 148,000 people with jobs were living on incomes below the poverty line, the ‘Working Poor’. In Q1 2026, almost one in every four part-time employees, some 133,700 people, were underemployed, meaning that they have part-time work but would like more hours. This presents a picture of low-paid and precarious employment behind the ‘full employment’ headline.

According to research published by the Living Wage Technical Group, the actual living wage for 2025/26 was €15.40. While the national minimum wage increased to €14.15 per hour from January 2026, this still leaves full-time minimum wage workers earning €48.75 per week (€2,535/year) less than the Living Wage, revealing a persistent shortfall in income adequacy. 

Social Justice Ireland was disappointed by the Government’s decision to postpone the full introduction of a Living Wage until 2029. Given the increasing pressures facing households, particularly those on low incomes struggling to make ends meet, Budget 2027 should mark the full implementation of the Living Wage to ensure that work provides adequate income. Alongside this, the Government should introduce targeted additional supports to immediately alleviate ongoing cost of living pressures for our workforce. 

Supporting low paid workers through Refundable Tax Credits

Many people assume that a job is an automatic poverty reliever, and this has been a key driver of Government policy, but this is clearly not the case. Employment only relieves poverty if it is well-paid and secure. The rise of precarious work has created a structural crisis where 5.8 per cent of employed people in Ireland are still experiencing poverty. Introducing a system of Refundable Tax Credits, at a cost of €210 million in 2027, would allow low income workers who do not earn enough to use their full credits directly to have the unused portion of these credits paid to them as a cash refund. 

Supporting low paid workers through the Tax Credits System

Social Justice Ireland calls on Government to pursue employment-friendly tax policies that reward work, support labour market participation, and ease the transition from welfare to work. In Budget 2027, Government should increase both the Employee and Earned Income Tax credits by €5 per week at a full year cost of €712 million, providing additional support for workers. Increasing the tax credits alongside making them refundable would make Ireland’s tax system fairer, address part of the working poor problem, and improve the living standards of a substantial number of people.

Making tax credits refundable would make Ireland’s tax system fairer, address part of the working poor problem, and improve the living standards of a substantial number of people.

 Benchmarking Social Welfare Rates

Inequality harms individuals and society. The significant increase in living costs and persistent inflationary pressures in recent years have highlighted these issues more clearly. In 2025, without social transfers, 33 per cent of the population would have fallen below the poverty line, compared with the actual rate of 12.6 per cent. This underlying poverty rate points to a highly unequal distribution of market income. Despite substantial social protection measures, inequality has remained remarkably persistent over the past five decades, with Ireland continuing to record the highest proportion of people at risk of poverty before social transfers among EU member states.

In 2025, there were over 687,000 people in Ireland living below the poverty line. 122,425 older people are living in poverty, an increase of 15 per cent compared to 2024. This number would be substantially higher were it not for the impact of one-off measures. A social welfare payment must provide an adequate income that keeps people out of poverty and allows for a household to provide for a basic but decent standard of living.

Around two decades ago, Budget 2007 benchmarked the minimum social welfare rate at 30 per cent of Gross Average Industrial Earnings (GAIE). Today that figure is equivalent to 27.5 per cent of the average weekly earnings data being collected by the CSO. Applying this benchmark using CSO data and projections for wage growth in 2026 allows us to compare this benchmark with current welfare rates.

A €24 increase is required to benchmark core social welfare rates to 27.5 per cent of average earnings and to address the impact of continued inflation on low income households. 

Budget 2027 must commit to maintaining and subsequently building on this benchmark equivalent to 27.5 per cent of average weekly earnings. This is even more critical in light of sharp increases to essentials such as rent, energy and heating costs. Even with falling rates of inflation, prices remain high placing real pressures on household budgets. Recent Budgets have focused on temporary measures. What is needed is certainty and permanence for those reliant on social transfers. As a start Budget 2027 should increase minimum social welfare rates by €15 per week at a cost of €516m with the balance delivered in Budget 2028. 

Equalising Rates for under-25s

In addition, the rate of jobseekers for those aged between 18 and 24 (not living independently) is currently inadequate to meet even the most basic of needs and must be increased to the full adult rate at a  cost of €69m. 

Fuel Allowance 

Extend the Fuel Allowance for four more weeks at a cost of €71m.