Recent research by the ESRI as part of their Budget Perspectives 2021 series examined the potential cost and distributional effect of Covid-19 unemployment. It found that the Pandemic Unemployment Payment and Temporary Wage Subsidy Scheme significantly softened the financial impact of Covid-19 on families and household income. Families in the lower 40% of the income distribution were better insulated from income losses due to a combination of the pre-existing tax-benefit system, the pandemic policy measures and the fact that such families were less likely to contain someone in employment. Additional Budget Perspective 2021 papers focused on the implications of Covid-19 for minimum wage employment; and the effect of the pandemic on consumption and indirect tax.
With regard to the benefits of social protection payments, we know that social transfers in Ireland are highly effective in alleviating poverty. This is most evident when considering the At Risk of Poverty rate (the percentage of the population with incomes below 60% of the median income), produced by the CSO from the annual Survey on Income and Living Conditions. The most recently available data is for 2018 and shows that social transfers reduced the national at risk of poverty rate by over half from 30.2% (before social transfers) to 14%.
My Department undertakes social impact assessments of the main welfare and direct tax budgetary policies, before and after the Budget each year. The Social Impact Assessment (SIA) is an evidence-based methodology which estimates the likely distributive effects of policies on household incomes, families and poverty. The analysis is generated through the ESRI’s tax/benefit micro-simulation model, SWITCH, which has recently been upgraded and will allow some analysis of the impact of the Pandemic Unemployment Payment and the Temporary Wage Subsidy.
With regard to specific socio-economic research, my Department has funded a poverty and social inclusion research programme since 1987. Research topics are selected to reflect current national and EU policy priorities and this research informs policy implementation and the development of new policies within the Department. The contract for a new poverty and social inclusion research programme has been awarded to the ESRI. It is expected the resulting research will include analysis of the impact of the Covid-19 pandemic on the most vulnerable in Irish society, as well as inform the implementation of the Roadmap for Social Inclusion 2020 – 2025. In addition, my Department monitors independent research on areas of interest and commissions research where required.
I hope that this clarifies the matter for the Deputy.