Social welfare not enough to keep people out of poverty, warns charities report

Current social welfare rates are not sufficient to keep people out of poverty, even after the latest budget increases, a new report says.

It also shows that almost half of the population (44.9 per cent) would have incomes below the poverty line over the past year if they could not rely on welfare supports.

The report, Enabling Citizens: Money Matters, is produced by The Wheel, the national association of charities.

It focuses on inadequate incomes and those experiencing “financial exclusion”, a term defined by an inability to secure a bank account.

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“Currently social welfare supports are not adequate to prevent people from falling below the poverty line or to provide them with an income to afford a minimum essential standard of living based on the current cost of goods and services necessary to live in dignity,” the report says.

Among those identified as having inadequate access to welfare support are women who rely on access through their partner, migrant workers and Irish people returning from abroad, and asylum seekers in the direct provision system.

Research included in the document states that in 2015 8.7 per cent of the population – more than 403,000 people – were in consistent poverty in 2015. One in four was in material deprivation and almost one in six were living below the poverty line of €227.97 per week.

Poverty levels among children are higher than those for the general population. In 2016 141,700 or over 11 per cent of all children, were in consistent poverty.

Official poverty statistics are “a very crude way of capturing what is in reality a very difficult experience for people”, the report says.

“Shame, low self-esteem and anxiety often accompany poverty, which has a disabling effect on people’s capacity to seek work and progress their lives.”

A first step to fixing the problem, The Wheel says, is to ensure everyone has access to adequate income in order to live with dignity.

While incomes in Ireland are growing, it says, Ireland is a low-pay economy with the third lowest wage levels in the OECD (Organisation for Economic Cooperation and Development).

The report focuses on the phenomenon of “financial exclusion” in which people face difficulties accessing financial services such as bank accounts and insurance.

Lack of such access is linked to higher costs and difficulties in aspects of life, with poor mental health the most commonly reported effect.

In 2011 the Economic and Social Research Institute (ESRI) put the number of Irish households without a current bank account at 20 per cent.

Those most at risk of financial exclusion and indebtedness are older people, the unemployed, lone parents, social housing tenants and low-income earners.

On the question of money-lending, the report says there are currently 41 licensed operators that offer short-term, high-cost credit. In 2013, 360,000 people had such loans which totalled €200 million.

Interest rates are always over 23 per cent, running as high as 187 per cent, with common loan amounts ranging between €200 and €500.

“The lack of choice...means that people are not in a strong position to negotiate low levels of interest repayment when they find themselves in near-term financial need and a money lender is accessible,” the report notes.

In 2008, it says, banks were asked to provide and promote basic accounts to financially excluded groups, but by 2011 the ESRI observed that progress was “weak”.

Further, the report notes that financial exclusion of a “sizable percentage of the population is simply not a political priority” and has failed to attract the level of interest of mortgage arrears and repossessions.