Re-evaluating the Irish cost-of-living crisis

Image Credit: Kanchanachitkhamma

Hannah Costello examines the cost of living crisis, looking at rising costs, decreasing housing supply, what the government is doing about it and how it ties into the war in Ukraine, climate change, and COVID-19.

The well-worn Irish political acronym – GUBU –  could well be applied to the state of world affairs since the 11th of March 2020. While not unprecedented in a historical sense, the coronavirus pandemic, the war in Ukraine, and increasingly dramatic changes in climate have been grotesque, unbelievable, bizarre and unprecedented, in comparison to recent history.

For Ireland, the winter to come will be one of the most challenging winters in generations. Calls have been made for government intervention to own up and fix the problem to come. The Irish economy and people are currently going through turmoil, the result of several different factors. One of these factors is the Irish dependence on fossil fuels. This serves as the fundamental cause of high energy prices, in particular with regard to the current instability of fossil fuels due to the war in Ukraine. 

The Climate Change Advisory Council has called on the government to transition to “more affordable, clean and secure energy”, with the Council stating this would preferably be accomplished by focusing “on measures that can be immediately deployed to assist those most in need in the coming months and in the years ahead”.

University students, in particular, are suffering more in this crisis

Budget 2023 helped to shed light on the numerous problems driving the cost of living crisis. The budget was focused on four main areas: social welfare, health, childcare & education and housing. University students, in particular, are suffering more in this crisis than others, in part due to the amount of money spent versus that earned. Of the four headings, health, childcare & education and housing generally affect university students the most – one example being the recent uproar at the lack, and increased price of, student accommodation. 

Although this article isn’t a breakdown of the Budget, there is a need to call attention to government promises, such as ??€1.2 billion being allocated for energy supports to help consumers, the allocation of €3.2 billion to the department of Further and Higher Education, and  the reduction of €1000 in student contribution charges.

The above commitments from the government show some promise in their understanding of what the problems actually are, but still raise questions, such as why the €1000 reduction in fees is not permanent. However, with Ireland having the second highest third-level fees in Europe – only behind the UK in terms of cost, many students may breathe a sigh of relief at the temporary reduction in fees. 

the costs in Ireland are 40 per cent higher than the rest of the EU

With the rise in costs across the world, it has been found that the costs in Ireland are 40 per cent higher than the rest of the EU. The combined housing costs alone – rents, mortgage rates, gas and electricity – are the most expensive at 89pc above the EU average. As seen in the graph below, the cost of living in Ireland is astronomical compared to the EU.

While this data was sourced before the release of Budget 2023, the budget, for the most part, is temporary, meaning that the cost differences seen above will most likely remain. While we are not under the impression that Ireland is a cheap place to live, the stark difference in the price gap between Ireland and the EU is ridiculous. The government should be looking into measures to lower the impact of high prices and the cost of living in Ireland. The ever-rising cost of living will do nothing short of driving people, especially graduates, to leave Ireland in pursuit of living in a cheaper economy – likely leading to a rapid increase in emigration. 

The cost of living crisis has affected Ireland to such an extent that a new ministerial position for consumer affairs should be created. Obviously, and rightly, Ireland has a large focus on business and enterprise in almost all areas of government. Still, there is a fundamental lack in the importance being placed on the consumer. The consumer is a large part of the Irish economy, with consumption being a core element of economic activity. The decisions that households make in consumption, in turn, dictate the products produced by firms. 

the world is now experiencing ‘a self-inflicted lockdown’

The COVID-19 pandemic has resulted in a severe downturn for the Irish economy, as seen with the reduction in spending by households, with emphasis placed on savings and spending on necessities. At the same time, consumer spending and consumption declines are normal for a market. However, today's crisis is strange in the sense that households haven't had a choice even where they haven't had a loss of income – as observed by the Central Bank of Ireland. 

While most countries globally have experienced a lockdown of some kind imposed by governments, the world is now experiencing 'a self-inflicted lockdown'. Whereby the costs of living globally are shooting up, and the average consumer simply can't afford to spend any of their money. Students especially can attest to the reduction in going out due to increased costs, and not having access to affordable housing. Some have noticed that they are having to make the decision to cut out most 'luxuries' from their lives, from eating less meat, to going out less for food or drink, and some even have to cut down on their takeaway coffee consumption. 

Students naturally have been voicing their concerns on the matter. “I feel as though I am spending more money”, said Anne*, a stage 2 Arts & Humanities student, “A sandwich in Centra is €5, which is ridiculous.” 

Jack*, another stage two Arts student, tells me that "My accommodation on campus went up this year, from €845 to €875, and that's for the cheap accommodation on campus. It's daylight robbery, and for most of us, we don't have a choice and have to spend the money. That extra €30 could’ve been spent elsewhere where it is needed. " 

Furthermore, the students had concerns about the cost of public transportation; "the buses don't come, and even when they do, they're full, and you can't get a seat, so you're left waiting for another two hours. I’ve gotten to the point now where I’ve decided to drive to university instead because it’s more reliable."

To sum up, life for most university students is going abysmally, with most facing the prospect of poorer academic performance due to a lack of transportation, and lower levels of accommodation near the university. Students are now facing a ‘self-inflicted quarantine’ due to the rise in the cost of living, including the prices for food and drink on campus, and their source of income is being drained further by increases in the cost of housing by UCD. Urgent action is required.

*Names changed to protect students anonymity