Low-income households have been most severely affected by the cost-of-living crisis according to a new report from TASC, Ireland’s think tank for social change. Its latest inequality report says the rising cost of living is felt most by those least able to protect themselves.

The State we are in: Inequality in Ireland 2022 found that Income inequality had fallen in Ireland during the pandemic because of income supports and other Government interventions. But post-pandemic inflation, made worse by the consequences of Russia’s illegal invasion of Ukraine, could reverse this trend.

The report also highlighted the impact of Ireland’s dependency on energy imports. It said the Government should investigate how Ireland’s energy producers have fared during the crisis “and potentially compel energy companies to contribute to the cost-of-living crisis.”

The authors suggest that measures like Italy’s 25% tax on the excess profits of energy companies, which is being used to fund temporary reductions in energy prices, should be explored here.

“An advantage of this measure over price regulation is its precision. It targets excess profits, and the proceeds can deployed as policymakers choose. An alternative measure could be to temporarily regulate energy prices. This could be done by increasing prices according to energy usage, as is done in the case of water.

“While energy use does not perfectly correlate with income, higher-income households tend to consume more energy. Aside from being progressive, the advantage of such an approach over broad subsidies to energy use is that it penalises high energy consumption,” it says.

TASC says Government measures introduced so should have been better targeted.

“Subsidies to enable the consumption of fossil fuels are also problematic given Ireland’s poor performance on emissions. It is therefore important that cost of living measures are accompanied by climate action policies,” it said.

The report also says sector-by-sector collective bargaining, which exists in most rich European countries, offers the best route to reducing wage inequality, and hence income inequality.

Meanwhile, Fórsa last week criticised the absence of agreement between unions, Government and employer representatives on practical measures to expand the range of free and affordable public services is undermining the national response to Ireland’s cost of living crisis.

Speaking at the union’s national conference last week, Fórsa general secretary Kevin Callinan called for intensified dialogue to improve Ireland’s ‘social wage,’ or state spending on welfare supports and public services. He also called for the national minimum wage to be increased to the rate of the higher living wage.

Read the TASC report HERE.