Austerity budgets hit lone parents hardest – ESRI

Women bore the brunt of Government decisions to cut welfare payments during the austerity years new research shows, with stay-at-home mothers and low-income earners faring the worst.

According to new research from the Economic and Social Research Institute (ESRI), funded by the Parliamentary Budget Office (PBO), successive budgets since 2008 have had a greater impact on diminishing women's disposable incomes when compared with men.

The study found that gender differences were most pronounced during the austerity budgets (2008-2012), but that subsequent budgets have meted out their impact with a more even hand across the genders.

The ESRI said the differences come down to the economic activity of the genders, because women are more likely than men to be lone parents, to be out of the labour force and to benefit from child-related supports. The figures show that just 1 per cent of men are stay-at-home parents compared to 29 per cent of women.

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"Although tax and welfare policies do not typically differentiate based on gender, they can affect men and women differently. Men tend to have higher earnings than women, resulting in different income tax liabilities and benefit entitlement," said Dr Karina Doorley, an author of the report.

Indeed when it’s a matter more of income taxes than a combination of taxes and welfare payments, the differences are eroded, with single men and women without children seeing their incomes decline in a similar manner. Moreover, little difference was found in terms of how men and women who both work have fared.

But lone parents, who are mainly women, lost proportionally more than singles without children, with the figures showing that women who don’t work saw their disposable income declining by 8.5 per cent in the period 2012-2018, or by 13 per cent from 2008-2012. This compares with a respective decline of 4.4 per cent and 6.5 per cent for men who don’t work. The main driver in the decline of women’s disposable incomes has been the decline in welfare benefits, as well as child benefit.

Gender proofing

Men in work fared the best, as their disposable incomes increased by 1 per cent over the period from 2012-2018, compared with a fall of 0.7 per cent for women in work. Retired men also saw austerity budgets have a more benign impact on their pocket than retired women, with the former seeing their disposable incomes decline by 0.9 per cent from 2012-2018, compared with 1.8 per cent for female pensioners.

While welfare benefits such as child benefit and family supplements were cut in successive austerity budgets, a compounding factor has been that welfare payments failed to keep pace with inflation during the recovery period.

“As a result, much of the differential impact of tax and benefit changes is concentrated in the lower half of the income distribution,” the ESRI said.

The authors’ advice for gender-proofing future budgets is that policy changes should not disproportionally affect tax units with children, or tax units where one member of a couple doesn’t work.

The 2018 budget, for example, increased the tax credit that stay-at-home parents are eligible for.

In a separate publication published on Tuesday, the PBO called for the use of the model used by the ESRI in preparing its gender report to assess the impact by gender of future budget proposals.