Why welfare rates must increase by €9 in Budget 2020

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Social Justice Ireland is proposing a €9 increase in core social welfare payments to maintain their benchmark in Budget 2020. We are also proposing a €5 increase in the living alone allowance, an increase of €20.50 in the domiciliary care allowance, and an increase of €300 in the carer’s annual support grant.  A lesson from past experiences of economic recovery and growth is that the weakest in our society get left behind unless welfare increases keep track with increases elsewhere in the economy.  A rise in poverty is inevitable if welfare rates do not keep pace with these changes in Budget 2020.  The €5 increases in core welfare payments in Budgets 2017, 2018 and 2019 were very welcome, but were not enough to keep pace with the benchmark. A further increase of €9 in Budget 2020 is required to address the growing gap between welfare payments and average earnings.

The proposals presented to the Minister of Employment Affairs and Social Protection at the Pre-Budget Forum are:
Minimum social welfare rates
Benchmarking minimum rates of social welfare payments to movements in average earnings is an important policy priority.  In order to maintain the benchmark of 27.5% of average earnings minimum social welfare rates should increase by €9 per week in Budget 2020.
State Pension contributory and non-contributory
Introduce a single-rate universal state social welfare pension from January 2020 at the rate of €257.30.
Domiciliary Care Allowance
Increase the domiciliary care allowance from €309.50 to €330.  Expand the Free Travel Scheme to include people in receipt of the Domiciliary Care Allowance.
Carer’s Support Grant
Increase the annual Carer’s Support grant from €1,700 to €2,000.
Jobseekers rates – under 26
Equalise Jobseekers rates for the under 26s at the increased rate of €212 per week.
Living Alone Allowance
Increase the Living Alone Allowance by €5 per week.
Fuel Allowance
Increase Fuel Allowance rates to €24.85 (currently €22.50) in order to achieve purchasing power parity with 2010 levels, and reintroduce a 32 week payment period.
Direct Provision
Increase the weekly allowance for children in Direct Provision to €31.80 in line with the QCI rate.
Cost of Disability
Introduce a cost of disability payment of €20 per week.

Full details on how these proposals can be funded in a sustainable way are available in Budget Choices 2020.

What is the Social Welfare Benchmark?
Just over a decade ago, Budget 2007 benchmarked the minimum social welfare rate at 30 per cent of Gross Average Industrial Earnings (GAIE). Today that figure is equivalent to 27.5 per cent of the new average earnings data being collected by the CSO. Applying this benchmark using CSO data for 2018 and ESRI projections for wage growth in 2019 (3.2 per cent) allows us to compare this benchmark with current welfare rates.  In 2019 the updated value of 27.5 per cent of average weekly earnings equals €212, implying a shortfall of €9 between current minimum social welfare rates (€203) and this threshold.