Pay rises of 14% will be needed by the end of this year if workers' incomes are to keep pace with inflation.
A study by the ESRI has found that after-tax disposable income fell in 2021 for the poorest fifth of the workforce, while it stagnated for those on salaries of less than €46,000 a year.
There's been a significant rise in 'material deprivation' in the past year, which measures those who can't afford two items from a list of 10 essentials like warm clothing or a roast dinner.
Assistant Professor in Economics at Trinity College Dr Barra Roantree says despite a strong labour market, income inequality is increasing.
"What we found, which is surprising to us, is despite the very strong labour market recovery following the easing of Covid restrictions, what we've actually seen to real household after-tax income is growth in that just stall.
"And it even fell at the very bottom of the distribution. Income inequality increased for the first time since 2017, and we also had quite a large rise year on year in what's called material deprivation."
