In 2020, restrictions to prevent the spread of the COVID-19 led to business closures and loss of work in some sectors. This necessitated the introduction of substantial State supports for firms and workers which helped mitigate the short-term impact on incomes and thus supported households sustain their debt burdens through 2020.

Figure 34.1 plots the annual change in gross household income in the second quarter of 2020 for ten percentiles of the income distribution. The green line shows the change in income without COVID-19 income supports, while the blue line includes these supports. The gap between the two lines illustrates both the scale of the mitigating effects of the COVID-19 income supports and how those most negatively impacted by the crisis benefited the most from the supports, relative to their pre-COVID-19 income. Whilst households in the lower half of the income distribution still experienced falls of between 0.1% and 4.2%, with supports, the slope of the distribution (blue line) is much flatter than the without supports (green) line. It is also notable that higher-income households benefited quite significantly from COVID-19 supports.

Figure 34.2 shows the median debt-to-income ratio, conditional on households having any debt, 52% of HFCS households. Prior to the onset of COVID-19, the debt-to-income ratio was in steady decline, reflecting the general pattern of household deleveraging that has been happening over the last decade. For example, between 2013 and 2018, the median debt ratio for all debt declined from 100 to 64. In Q2 2020, the median ratio with COVID-19 income supports increased by around 0.2 percentage points from 60.7 in Q1 2020 to 60.9 in Q2 2020, before declining again to 60.7 in Q3. As with the income statistics, COVID-19 supports mitigate the increase in the debt ratio. Without supports the median ratio would have increased by 12.3 percentage points to 73.0% in Q2 2020, and would have fallen to 68.0 in Q3. 

Large sections of the Irish economy were closed during parts of 2020, particularly in sectors that provide face-to-face services, because of Government restrictions related to the COVID-19 pandemic. These closures required substantial State supports for workers and employers, including the Pandemic Unemployment Payment (PUP) and Wage Subsidy Schemes (WSS).

Median weekly earnings for people who did not receive COVID-19 income supports increased annually by about 5% in the first three quarters of 2020 and by 7.1% in Q4. However, while the median weekly income (i.e. earnings plus COVID-19 income supports) of people who did receive these income supports increased by 5.7% in the year to Q1 2020, it fell in all other quarters in the year, falling by 12.7% in Q2, 10.5% in Q3 and 4.8% in Q4.  See Figure 34.3

The median income of males who received support from only the WSS fell by just 0.7% in the year to Q4 2020, compared with a drop of 18.6% for those who received only the PUP and a rise of 3.4% for those who received both the PUP and WSS during the quarter.

For females, median earnings and COVID-19 income supports were higher in Q4 2020 for each category of support compared to the same quarter in the previous year. The median income of those who only received the WSS was up by 1.4% in the year, compared with rises of 11.6% for PUP only and 19.6% for those receiving both WSS and PUP in the quarter. See Figure 34.4