The Soaring Cost of Merely Existing
The Soaring Cost of Merely Existing
James Kemmy discusses the global context and local consequences of our volatile economic state- and the effects it is having on Irish students
The cost of living catastrophe that is currently gripping our society and consuming our everyday reality is unprecedented in scale, triggering the greatest overall decline in Western living standards since the 1970s. Several dominant factors and global headwinds are responsible for producing this situation, most notably the economic fallout from the Russian war in Ukraine (which has drastically altered the dynamics of the energy and oil markets), and stagnant commercial growth in the wake of Covid-19. The culmination of these forces has contributed to chronic macroeconomic instabilities that appear to be redefining the purpose of government in society. Meanwhile, due to the interconnected nature of our globalised modern economy, such problems are internationally contagious and omnipresent, disregarding borders and traditional state defences.
Manifesting in the form of food and fuel price increases, calamity in the energy sector, and pay cuts for workers, living costs are rising hazardously, with inflation at approximately 10% right now and expected by Irish economists to elevate even further next year, despite a slight drop in recent weeks. Meanwhile, inflation in the UK could rise to 18.6% by next January- a brutal illustration of post-Brexit economic reality and the weakened ability to absorb economic shocks.
The scale of the current economic predicament is such that the past twelve months have seen the highest successive levels of inflation since 1984. This has translated into a situation whereby the majority of people, not just those on the very lowest incomes, are experiencing hardship. For instance, a recent survey of 2,300 people conducted by the Irish Mirror found 64% identifying themselves as being in relative or in-work poverty, with half of the remaining 36% classifying themselves as at risk of falling into such poverty. Similarly, 80% of Irish motorists are now being adversely affected by surging fuel prices according to AA Ireland, with the average cost to fill a tank now standing at approximately €108. Again, figures such as these portray the vast reach and pervasiveness of this type of financial turmoil, with its associated strain on middle Ireland now near universal.
With energy bills doubling and possibly tripling following the autumn months, the devastating weaponization of Russia’s gas supply to Europe is being felt now more than ever as increasing cohorts of society are forced to choose between heating and eating. Additionally, food inflation has skyrocketed in several areas, including staples such as dairy, fish and common meats, with recent reports from the Central Statistics Office illustrating 10% price rises for the majority of everyday items and staggering 45% rises in certain cases such as chicken and other poultry goods. According to The Society of St Vincent de Paul, an extra 20% of people have sought charity support already this year compared to last year’s previous record number. Social Justice Ireland meanwhile have expressed concern that we will soon see “post-2008 levels of debt and struggle”, whereby economically vulnerable people will be pushed towards the use of extortionate loan sharks and black-market money lenders as they struggle to stay afloat.
These developments come on top of a national housing crisis, a profound societal issue which is now chronic in scale and severity. Property website Daft.ie’s most recent quarterly report provided stark findings, most notably identifying that there are now just 716 rental properties available nationwide. For context, this amounts to a 97% fall in rental availability since 2009 as noted in the Irish Times, meaning that for every one hundred homes on the market thirteen years ago, there are now just three. Unsurprisingly, this figure represents an all-time low and a drop from last year’s number of 2,500 available rentals.
There is now broad consensus among the relevant stakeholders- tenants, landlords, activists, and economists- that the Irish rental market has a debilitating overreliance on the private sector for the supply of properties. Recent commentary for RTÉ news from Trinity College Dublin economics professor, Ronan Lyons, argues that “shocking” rent increases as a consequence of market shortages can “only be addressed by significantly increased supply.” In the same report meanwhile, head of policy at the Simon Community, Wayne Stanley, has expressed concern at the normalisation of inaction regarding rental supply whereby the collapse of social housing construction in the early 2000s has led to an increasingly prevalent attitude that the housing issue is now “intractable”- involving generational complexities and remedial barriers, somewhat like healthcare.
On a more student-specific level, all of these developments combine to present a difficult picture. This spike in the cost of living must now be endured alongside hefty accommodation costs and tuition fees- now the single highest in the EU for domestic students. While there is talk of a potential reduction in the student contribution charge, it is uncertain whether this will alleviate much of the financial burden on struggling students, with the Union of Students in Ireland (USI) calling for a €1,000 reduction now with the long-term view of fee abolition and universalisation.
According to Trinity College Dublin Provost, Dr Linda Doyle, this generation of adolescents is being “robbed” of a proper college experience, and she urges that to solve the shortage of student accommodation, government must intervene to fundamentally tackle the systemic housing and rental crisis. Most Irish universities are now pleading to private homeowners to take students in with the enticement of the ‘Rent a Room’ relief scheme, which allows for €14,000 to be earned tax-free. However, there is a significant absence of regulation and tenancy protection surrounding such informal rental arrangements, enabling exploitation in certain cases. Moreover, Airbnb lets are now generally seen as more lucrative for homeowners, pushing university students and their accommodation needs further down the rental ladder. For instance, a recent survey conducted by the Irish Mail on Sunday found that there are now three times the number of expensive, short-term Airbnb rentals than typical long-term and shared accommodation leases. These outcomes have led to policy campaigns from opposition parties such as Labour to prohibit the conversion of student halls into short-term tourist accommodation, with the aim of maintaining rents and guaranteeing supply.
Many thousands of students nationwide will also be hit hard by the aforementioned fuel price rises, making commutes for those living at home less accessible as learning moves almost fully back on campus. On the whole, it is very possible that significant numbers of students will defer their university places this coming year, with the various associated costs simply proving too much for many.
On a local level, it is affordability rather than acute shortages that appears the greatest issue for students and people living in Cork generally. While UCC has somewhat expanded its number of centrally owned accommodation units this year (alongside the University of Galway and the University of Limerick), prices are proving very challenging for most. As the second most expensive rental market in the country, Cork City has seen rents rise by almost 12% in the last year, with the average rental price now standing at €1,670, according to Daft’s report.
On a brighter note, there are several plans for alleviation and certain indicators that affairs may improve in the not-too-distant future. The Government is unusually bringing the date of the annual budget forward by several weeks to September 27th to begin tackling the cost of living, setting a potent €1bn aside for such emergency measures alongside the estimated €6.7bn in extra spending. Rumoured to be included in this series of fiscal reforms is a repeat or possible increase in the €200 electricity rebate which was introduced as a novel measure last year. As previously mentioned, there is also a strong likelihood that Higher Education Minister Simon Harris will announce a reduction in the student contribution fee of €250 or even €500 per year.
Additionally, Budget 2023 may see the reintroduction of rent credit, a scheme which previously enabled 200,000 people to meet their accommodation bills, and measures aimed at retaining small property owners within the market, such as the potential ability for landlords to offset rental losses against other taxable income, thereby improving their overall cash position. Social welfare cheques are likely to be raised by €10 or even €15 per week, with recipients of certain payments such as child benefit expected to be given a once-off double bonus before Christmas.