Cost of living crisis hitting low-income households hardest - report

The cost of living crisis has affected lower-income households the most, according to think tank TASC, which has examined inequality and the cost of living since Covid-19.

Its latest report, 'The state we are in: Inequality in Ireland 2022', finds that welfare supports during the pandemic played an important role in mitigating and reducing levels of inequality in Irish society.

However, increases in living costs are now hitting the poorest the hardest.

The report notes that this cohort spends a larger share of a limited budget on energy and food bills, two areas that have seen significant price increases in the past year.

In 2020, 17.5% of households spent more than 10% of income on energy, which equates to energy poverty.

"It is very likely that energy poverty increased considerably in 2022 as the year-on-year inflation rate for energy products was 43.6% as of March 2022."

While it acknowledges that the impact of the crisis on energy provider profits is not known, the report suggests the Government investigate if Irish energy providers have profited.

It notes that Italy has announced a tax on excess profits of energy companies of 25%.

Excess profits are defined as the increase in profits reported between October 2021 and March 2022 compared with the previous year.

TASC said similar measures could be pursued in Ireland and it includes this in its recommendations.

The report found that welfare supports during Covid played an important role in mitigating and reducing levels of inequality in Irish society.

Report author Robert Sweeney said this shows the potential for a determined and coherent State policy on tackling inequality to deliver real progress if applied in the longer term.

The report proposes a number of key measures to reduce wage and labour income inequality, including an immediate increase of the minimum wage by €1 per hour to address inflation rates currently running at over 6%, and a sliding scale of retrofit grants to deliver greater progressivity and encourage all income households to retrofit.

It suggests sector-by-sector collective bargaining - as practised in most continental and especially Nordic countries - to provide the best route to reducing wage inequality, and public procurement practices to improve labour standards, such as in construction where contracts should not be given to firms that use bogus self-employment practices.

It also calls for an increase in public spending on transport and infrastructure investment above current levels, to ensure that major transport projects such as Metrolink are delivered on time.