Share of household income from welfare up 50%

The proportion of households’ income made up of social welfare payments increased by 50 per cent between 2004 and 2011, figures published this morning show.

The figures are included in a report, Social Transfers and Poverty Alleviation in Ireland, from the Economic and Social Research Institute. The report emphasises the increasing importance of social welfare transfers in alleviating poverty.

According to the report, the share of Irish households' income made up of transfers from the Department of Social Protection increased from 20 per cent in 2004 to 30 per cent by 2011.

“This was largely due to the rise in unemployment, leading to more receiving unemployment-related payments and to the fall in market incomes (from work, interest/dividends and rents),” says the report.

"In 2011, 87 per cent of households received some social transfer income, up slightly from 85 per cent on 2004. The figure is high because all households with dependent children receive child benefit and virtually all adults of retirement age received social transfers related to old age."

Impact
The average value of social transfers has increased from €233 in 2004 to €327 in 2011. Both figures are set at 2011 rates. The increasing impact social transfers have in alleviating poverty is set out.

Their effectiveness at reducing poverty is measured by looking at the extent to which transfers reduce the gap between what a household’s average market income would be and the poverty threshold for the same household. “In 2011 social transfers reduced this gap by 88 per cent, up from 84 per cent in 2004. In 2011 the poverty reduction effectiveness of social transfers was very high for all life cycle groups, ranging from 84 per cent for working age adults to 95 per cent for retired people. The effectiveness for children and people in jobless households was about the same as for the rest of the population (87 per cent).”

The authors say the figures reinforce the importance of emphasising child poverty in the national social targets for poverty reduction.