Impact of COVID-19 Income Supports on Employees, Q4 2020 - Insights from Real Time Administrative Sources, Series 2

Introduction

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). Employees who received these income supports saw their income (earnings plus COVID-19 supports) fall by 12.7% in the year to Q2 2020. The scale of the annual fall lessened in subsequent quarters with average income down 10.5% in Q3 and 4.8% in Q4. Without COVID-19 supports, the income of these employees would have fallen considerably more.

‘Impact of COVID-19 Income Supports on Employees, Q4 2020’ is a new Frontier Publication from the Central Statistics office (CSO) and follows the first edition published in December 2020 which focused on Q3 2020. It analyses how weekly earnings evolved during 2020, were affected by the pandemic and the impact COVID-19 income supports had on employee incomes. Employees are categorised as Recipients or Non-Recipients based on whether they received COVID-19 income supports and further details are provided on recipients who received only WSS payments in a quarter; only PUP payments in a quarter; or who received both WSS and PUP payments in a quarter, as they moved into unemployment from supported employment, or from supported employment to unemployment.

This report is part of the CSO series ‘Insights from Real Time Administrative Sources’, which uses administrative data on employee earnings and COVID-19 support scheme payments from the Revenue Commissioners and Department of Social Protection (DSP) to provide insight and timely statistics to inform society and decision makers. As a CSO Frontier Series Publication, particular care must be taken when interpreting the statistics in this experimental analysis.

The key findings of the analysis are as follows:

• Median weekly income (i.e. earnings plus COVID-19 income supports) of all employees increased by 4.6% in the year to Q4 2020 - without such supports employee earnings would have remained unchanged from Q4 2019.
• The proportion of employees who received the Pandemic Unemployment Payment (PUP) and/or the Wage Subsidy Scheme (WSS) rose from 13.9% of employees in Q1 2020 to almost 40% in Q2 before falling back to 30.1% in Q3 and 25.2% in Q4.
• Median weekly earnings of employees 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.
• Median weekly income (i.e. earnings plus COVID-19 income supports) of employees who did receive COVID-19 income supports rose in the year to Q1 2020, but fell in all other quarters in the year, by 12.7% in Q2, 10.5% in Q3 and 4.8% in Q4.
• The median weekly income of male COVID-19 support recipients was more negatively impacted by the pandemic, with a drop of 7.9%, compared to a rise of 0.2% for females in the year to Q4 2020.
• There were annual increases in the median weekly income of employees aged under 25 in each quarter of 2020 for both those who received and did not receive COVID-19 income supports.
• The lowest earners (bottom 20%) in 2019 had the largest annual income growth in each quarter in 2020 for both employees who received supports and those who did not.
• Of the lowest earning (bottom 20%) employees, the income growth of support recipients was approximately double that of employees who did not receive supports in the year to Q4 2020. 
• All recipient groups of COVID-19 income supports had large falls in income in the year to Q2 2020. The scale of the fall in income reduced in Q3 and Q4 2020.
• 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 in the quarter.
• The median income of males who received support from only the PUP during the quarter fell by 18.6% in the year to Q4 2020, compared with an increase of 11.6% for female PUP only recipients.
• Employees in the Border region had the highest annual growth in median weekly income in all three recipient groups in the year to Q4 2020, while the Dublin region had the lowest growth in median income for recipients of both WSS and PUP and had the largest falls in income for PUP only.
• Income increased in the year to Q4 2020 for all recipient groups who were in the lowest employee earnings quintile in Q4 2019, with a rise of 54.8% for those who received PUP and WSS during the quarter, 27.0% for PUP only recipients and 19.9% for WSS only recipients. For all other quintiles, there were falls in income for each of the recipient groups, with the largest falls in the higher quintiles.
• In the year to Q2 2020, median weekly income fell by 5.6% but this decrease would have been 15.0% if no COVID-19 income supports had been available.
• In the year to Q4 2020, median weekly income rose by 4.6% but would have remained level with no supports. This difference illustrates the impact of COVID-19 income supports for employees in a hypothetical scenario where no job seekers benefit, or allowance was available.
• With no COVID-19 income supports, the share of all employees earning less than €300 a week would have increased from 16.6% to 24.1% between Q4 2019 and Q4 2020. With supports, the share of all employees earning less than €300 a week actually dropped from 16.6% to 12.5%, a fall of 4.1 percentage points.

Results and Analysis

COVID-19 income supports were introduced in March 2020 to support employers and workers affected by the pandemic. Employees who moved in and out of employment in 2020, as restrictions changed and businesses adapted, may have used one or more of the COVID-19 income supports in a quarter or within the year.

The proportion of employees receiving either the PUP and/or the WSS in a quarter rose from 13.9% in Q1 2020 to almost 40% in Q2 before falling back to 30.1% in Q3 and 25.2% in Q4.

Employees receiving only the WSS were the largest recipient group from Q2 2020 onwards, accounting for 18.3% of employees in Q2 2020 but dropping to 16.1% in Q3 and 11.4% in Q4. The support received by 11.1% of employees in Q1 2020 was the PUP, rising to 15.7% in Q2 before dropping to 9.5% in Q3 and 9.1% in Q4. About 5% of employees received both the PUP and the WSS in a quarter between Q2 2020 and Q4 2020. These employees had either moved from supported employment (receiving WSS) into unemployment (receiving PUP) or had moved from unemployment (receiving PUP) into supported employment (receiving WSS) within the quarter. See Table 1.1 and Figure 1.1

Section 1: Recipients and Non-Recipients of COVID-19 Income Support

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 Table 1.2 and Figure 1.2

This section compares trends in the weekly income of employees who did and did not receive COVID-19 income supports (recipients and non-recipients).  Only employees who received either earnings and/or income support in both the reference quarter and the same quarter of the previous year were analysed in a matched cohort approach. Employee earnings and COVID-19 income support payments were added to calculate median income statistics for recipient employees.

Median weekly income for male employees who received COVID-19 supports fell more than for females.

In the year to Q2 2020, the median weekly income for male employees fell by 17.5% compared with a drop of just 2.8% for females. In Q3, male employees had an annual decrease of 12.4% in median weekly income compared with a drop of 4.6% for females, while in Q4, there was an annual decrease of 7.9% for males compared with a small increase of 0.2% for females. See Table 1.2 and Figure 1.3

There were annual increases in the median weekly income of employees aged under 25 in each quarter of 2020 for both those who received and did not receive COVID-19 income supports. The young employees who did not receive income supports had higher annual rises in median weekly income compared with those who received supports in all quarters of 2020 except Q4.  In Q4, young employees with no income support had an annual rise of 26.7% in median weekly earnings compared with a rise of 31.5% in median weekly earnings for those with income support.

Recipient employees aged 25 and over had a drop of 16.9% in median weekly income in the year to Q2 2020, with smaller falls of 13.0% in Q3 and 7.9% in Q4. In contrast, non-recipient employees age 25 and over had annual increases in median weekly earnings in every quarter in 2020. See Table 1.2 and Figure 1.4

Employees were divided into five equal sized groups (quintiles) based on their earnings in each quarter of 2019, with the lowest 20% of earners in the first, or bottom, quintile and the top 20% of earners in the fifth, or top, quintile. The median weekly earnings of recipient and non-recipient employees in every quintile was compared, for each quarter of 2019, with the median weekly income in the same quarter of 2020.

The largest annual income growth in each quarter of 2020 was for employees (both recipients and non-recipients) in the bottom quintile. In all the other quintiles, employees who received COVID-19 income supports had annual falls in income in Q2, Q3 and Q4, but employees who had no income supports had annual increases in income in every quarter of 2020.

The median weekly income of recipient employees in the bottom income quintile increased by 41.0% in the year to Q4 2020. Recipients in all other quintiles had falls in median weekly income in the year to Q4 2020, with the largest fall of 11.8% for the highest earners, those in the top quintile.

The median weekly income for non-recipients increased in all quintiles in the year to Q4 2020. The largest increase of 21.3% was for those in the bottom quintile, while the smallest increase was 4.7% for the top quintile. The increase in the fifth quintile is the highest annual increase this quintile experienced in 2020. See Table 1.4 and Figure 1.5

The rise in median weekly earnings for non-recipient employees in the lowest quintile was mainly among younger age groups, the wholesale & retail sector and those who changed jobs during the year.

Section 2: Detailed Recipients of COVID-19 Income Support 

This section analyses employees who in a particular quarter received a PUP payment only, a WSS payment only or both a PUP and WSS payment during the quarter. Those who received both a PUP and WSS payment during the quarter had either moved from supported employment (receiving WSS) into unemployment (receiving PUP) or had moved from unemployment (receiving PUP) into supported employment (receiving WSS) within the quarter. A matched cohort approach was taken which restricted the analysis to employees who received either earnings or income support in both the reference quarter and the same quarter of the previous year. Employee earnings and COVID-19 income support payments were added to calculate median income statistics for the three groups of recipient employees.

The median weekly income of employees who received supports from WSS only fell by 13.5% in the year to Q2 2020. This compared to a fall of 9.8% for those who received PUP and WSS supports during the quarter and 6.0% for those who received PUP payments only. The fall in income was less substantial for recipient groups in the year to Q3 2020 with falls of 9.2%, 4.1% and 0.8% for recipients of WSS only, PUP only and WSS & PUP respectively. In the year to Q4 2020, the average weekly income for recipients of WSS and PUP increased by 11.6%, while those who received WSS only fell by 0.5% and those who received PUP only fell 1.7%. See Table 1.5 and Figure 1.6

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 Table 1.5 and Figure 1.7

Incomes grew at a higher rate during 2020 for recipients aged under 25 compared with those aged 25 and over. Employees aged under 25 who received both the PUP and WSS during the quarter had annual growth of 48.9% in their median income in Q4 2020, compared with rises of 35.3% for those who received only the PUP and 17.4% for the WSS only.

Employees aged 25 years and over who received income supports had falls in income in Q2, Q3 and Q4 of 2020, with one exception – an increase of 3.6% in the year to Q4 2020 for those who received both the WSS and PUP in the quarter. In the year to Q4 2020, the median weekly income of WSS only recipients fell 1.9% while PUP only recipients had a drop of 16.3%. See Table 1.5 and Figure 1.8

Employees in the Border region had the highest annual growth in median weekly income in all three recipient groups in the year to Q4 2020, increasing by 17.0% for PUP and WSS recipients, 16.4% for PUP only recipients and 2.9% for WSS only recipients. The Dublin region had the lowest growth in median income for recipients of both WSS and PUP (5.8%) and had the largest falls in income for PUP only recipients (-10.8%) and WSS only recipients (-3.0%). 

In the year to Q2 and Q3 2020 median weekly income of WSS only recipients had fallen in all regions. In Q4 2020, WSS only recipients in the Dublin and Mid-East regions had falls in median income, while in all other regions there was annual income growth for WSS only recipients. In Q2 2020, recipients of PUP only experienced annual falls in median weekly income across all region, with the exception of the Border region. In Q3 2020, three regions had annual growth in income and in Q4 2020 PUP only recipients in five of the eight regions experienced growth in median weekly income. See Table 1.5 and Figure 1.9

Income increased in the year to Q4 2020 for all recipient employee groups in the lowest income quintile who received COVID-19 support, with a rise of 54.8% for those who received PUP and WSS during a quarter, 27.0% for PUP only recipients and 19.9% for WSS only recipients. For all other quintiles, there were falls in income for each of the recipient groups, with the largest falls in the higher quintiles. with one exception, a rise for recipients of PUP and WSS in the second quintile. See Table 1.7 and Figure 1.10

Sections 3: Employee Earnings with and without COVID-19 Income Supports

This section explores the earnings trends across 2020 in the hypothetical situation where no COVID-19 income supports were available. A comparison is then made with the actual situation where employees received COVID-19 income supports, which allows the support these payments gave in 2020 to employee income to be quantified.

However, if COVID-19 income supports were not available, it is likely that employees who lost their employment due to the COVID-19 pandemic would have been eligible to apply for DSP Job Seekers Benefit or Assistance. This analysis does not take account of this scenario. Therefore, the estimates below showing no COVID-19 income supports are very much a lower bound of earnings growth in 2020.

In the year to Q2 2020, median weekly income fell by 5.6% but this decrease would have been 15.0% if no COVID-19 income supports had been available. This difference illustrates the impact of COVID-19 income supports for employees.

Median weekly income (including supports) rose by just 0.3% in the year to Q3 2020, but would have dropped by 5.7% in a scenario with no COVID-19 income supports. In the year to Q4 2020, median weekly income rose by 4.6% but would have remained level with no supports. See Table 1.8 and Figure 1.11

Without supports, the median weekly earnings of employees under 25 would have fallen by 36.4% in the year to Q2 2020. With supports, the median income for these employees actually increased by 16.9%. These differences were smaller in Q3, where there would have been a drop of 8.9% without support compared to an increase of 10.3% with supports. By Q4 2020, median weekly earnings without supports would have fallen 7.1% in the year compared with an actual rise of 23.5% including income supports.

The differences are smaller for those aged 25 and over. Without supports, the median weekly earnings of employees aged 25 and over would have fallen 12.5% in the year to Q2, but, in reality, there was a fall of 6.0%. In the year to Q3 2020, there would have been a drop of 3.8% with no support but the actual result was a fall of 0.1%. By Q4 2020, median weekly earnings without supports would have risen slightly by 0.1% compared with an actual increase of 4.0% including income supports. See Table 1.9 and Figure 1.12

With no COVID-19 income supports, the share of employees earning less than €300 a week would have increased from 16.6% to 24.1% between Q4 2019 and Q4 2020, a rise of 7.5 percentage points. The causes of this change would have been lower earnings for some employees and loss of employment (with no earnings) for other employees.

In reality, the inclusion of COVID-19 income supports led to the share of people earning less than €300 a week dropping from 16.6% to 12.5%, a fall of 4.1 percentage points. The main reason for this was that income support payments moved employees over the earnings threshold of €300 into the higher earnings band. See Figure 3.3.

Without supports, the proportion of employees in the three middle earnings bands would have dropped and there would have been a small increase (from 25.1% to 27.1%) in the proportion in the top band earning €1,000 or more. When supports are included, the proportion of employees in the top earnings band of €1,000 or more rose from 25.1% to 27.9%. See Table 1.9 and Figure 1.13.

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