Cost of living: Further rises in energy prices could see costs rise by €67 a week

The government has come in for criticism from a Cork TD for its proposals on a new living wage for all employees during the current crisis. 
Cost of living: Further rises in energy prices could see costs rise by €67 a week

The number of Irish households estimated to be in energy poverty has passed 29%, according to research by the Economic and Social Research Institute (ESRI).

The number of Irish households estimated to be in energy poverty has passed 29%, according to research by the Economic and Social Research Institute (ESRI).

Based on one measure – the number of people who spend more than a tenth of their net income on energy bills, excluding motor fuel – recent energy inflation has increased the share of households in energy poverty to 29.4%.

This is up from 13.2% in 2015/16, the latest year of data available, and above the previous record of 23% in 1994/95.

This is a rough estimate of calculating fuel poverty, as it does not capture people who cannot afford to spend 10% of their income on heating, and it may include households who may turn their heating up much higher than the average household.

The ESRI research on energy poverty and deprivation was funded by the Community Foundation for Ireland.

It found that energy inflation between January 2021 and April 2022 increased the cost of estimated household consumption by €21.27 per week, on average. This rises to €38.63 per week when motor fuels are included.

If energy prices rise by a further 25%, the ESRI estimates energy costs would increase by an average of €36.57, excluding motor fuels, or €67.66 if they are included.

The research concluded that up to 43% of households could be at risk of energy poverty if energy bills increase by a further 25%.

Changes more burdensome for lower-income families

Niall Farrell, one of the authors of the report, said: “Our research finds that, on average, these changes are more burdensome for lower-income households, rural households and those at risk of poverty.

“This is because energy expenditures tend to comprise a larger share of income for these households.” 

Barra Roantree, another report author, said: “Our findings have important implications for policy.

“If the objective is to protect those most affected by rising energy prices, cutting indirect taxes is a poorly targeted response. This is as most of the revenue is spent compensating higher-income households who have been less affected.”

It said increasing welfare payments, the fuel allowance, and even lump-sum payments like the household electricity credit are better targeted at those most affected by energy inflation.

In February, the Government announced a €200 electricity grant, a 20% reduction in public transport fares, and a €125 lump sum for Fuel Allowance recipients as part of a cost-of-living package.

Ministers have repeatedly said in recent weeks that the Government would not be taking any more direct measures to help those affected by the cost of living before the Budget is announced in October, and would instead work to reduce the cost of childcare and third-level education.

Cost of living protests 

As concern mounts about the rising costs, a cost of living protest will take place in Cork and at locations around the country this weekend. 

The Cork protest begins on Patrick Street at 2pm. 

Meanwhile, the government has come in for criticism for its proposals on a new living wage for all employees during the current crisis. 

Earlier this week,  Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar outlined proposals to introduce a living wage for all employees, starting from next year. 

He will now consult with various interested parties, including employer and worker representative groups, unions and the public on the draft plan.

Under the plans, it is proposed that the living wage will be set at 60% of the median wage in any given year, which in 2022 would be €12.17 per hour. 

The national minimum wage is currently €10.50 per hour and the national minimum wage will remain in place until the 60% living wage is fully phased in, in 2026, but will increase over the years as usual, closing the gap between it and the living wage. 

Socialist Party TD Mick Barry said Tánaiste Leo Varadkar and the Government were selling out the low-paid with their new living wage proposals, adding that the proposals will mean no increase in the minimum wage until next year.

Mr Barry said that it was “obscene” to ask low-paid workers to wait four years for the living wage rate to be mandatory and to replace the minimum wage, and claimed the living wage rates for the next four years are being set too low given the current cost of living crisis.

“The Tánaiste is proposing that there be no increase in the minimum wage until next year,” Mr Barry said.

“That’s scandalous really because the increase in January was less than 3% at a time when inflation is running at more than 10% for low income households.

Deputy Barry said the Government was, with its living wage proposals, trying to set themselves up as the champions of the low paid, at the same time it had effectively slashed the pay of the lowest paid and frozen it now for another six months.

He said the Government needs to explain why the living wage was set at €12.90 last year and it was now proposing that it be set at €12.17, in the middle of a cost of living crisis.

Mr Barry said many workers are now caught in a double bind with low pay and sky high rents and called for the minimum wage to be increased to €15 an hour now.

Reacting to a claim by Mr Varadkar that most minimum wage earners were not the main breadwinner in their homes, Deputy Barry said he didn’t think those on the minimum wage would too impressed.

“I think there’s something a little bit stomach-churning about a Government politician on a basic of €195,000 per annum lecturing people on not much more than one tenth of that sum about why they need to make do,” Mr Barry said.

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