2014-04-22 - Socio Economic Review 2014 - Full text and cover - FINAL

including a new indicator measuring average earnings across all the employment
sectors now covered. While the improvement to data sources is welcome, the end
of the GAIE figure poses problems for continuing to calculate the social welfare
benchmark. To this end, Social Justice Ireland commissioned a report in late 2010 to
establish an appropriate way of continuing to calculate this benchmark.
A report entitled ‘Establishing a Benchmark for Ireland’s Social Welfare Payments’
(Collins, 2011) is available on Social Justice Ireland’s website. It established that 30
per cent of GAIE is equivalent to 27.5 per cent of the new average earnings data being
collected by the CSO. A figure of 27.5 per cent of average earnings is therefore the
appropriate benchmark for minimum social welfare payments and reflects a
continuation of the previous benchmark using the new CSO earnings dataset.
Table 3.18 applies this benchmark using CSO data for the third quarter of 2013
(published February 2014). The data is updated using ESRI projections for wage
growth in 2014 (1.4 per cent); an update for 2015 won’t be available until later in
2014 when the ESRI publish wage growth projections for 2015. Between 2012 and
2013 average earnings declined, from €691.93 to €677.13, driven by public sector pay
reductions (Haddington Road Agreement).
In 2014 27.5 per cent of average weekly earnings equals €188.82, marginally more
than the current minimum social welfare rate of €188. The figure is likely to increase
further for 2015 implying that the appropriate budgetary policy in Budget 2015
(October 2014) would be to increase minimum social welfare rates to ensure
equivalence with 27.5 per cent of average weekly earnings. This would address some
of the losses in buying power over recent years and maintain the benchmark. We
will develop this proposal further in our pre-Budget submission in mid-2014.
Table 3.18: Benchmarking Social Welfare Payments for 2014 (€) Year
Average Weekly
Earnings
27.5% of Average
Weekly Earnings
2012* 691.93 190.28
2013* 677.13 186.21
2014** 686.61 188.82
Notes: * actual data from CSO average earnings Q3 of each year
** simulated value based on CSO data and ESRI QEC wage growth projections
3. Income Distribution 75