SOCIAL welfare is working well at reducing poverty, but must avoid "welfare traps" which discourage people from getting back to work, according to a major new economic report published today.
There was also a massive surge in the amount received with the average household getting €327 a week in social welfare payments in 2011, up from €233 in 2004. This means that nearly one-third (30pc) of the income of each household in Ireland came from benefit payments in 2011, up from 20pc in 2004.
Some 87pc of households get social welfare payments and the ESRI said the reason this was so high was because of universal child benefit payments and the fact that virtually all retirees get pensions or other old age payments.
Increased payment rates accounted for some of the rise in social welfare income. But most of it was down to the high number of people who lost jobs during the recession and began receiving unemployment-related benefits.
The report on 'Social and Poverty Alleviation in Ireland' found that social welfare was highly effective in reducing the poverty gap.
While Ireland was middle of the table in this regard in 2005, by 2010 it was second only to Finland among the 15 older EU states for effectively reducing poverty.
But further improvements must be weighed against other policy goals -- such as encouraging more people to work.
"In the long run, placing too much emphasis on a narrow conception of poverty reduction efficiency could have negative consequences for other goals, such as reducing the rate of household joblessness," it said.
And it noted the high number of homes where nobody worked -- even during the boom -- suggested the need for labour activation measures to encourage more people to work as Ireland moved out of recession, with training and support targeted at lone parents and the disabled.
To stop welfare traps a "whole household" approach was needed to consider the impact of someone taking up work on means-tested payments to other family members.
"We need to consider the impact of one individual beginning to earn market income on the benefit entitlements of others in the same tax/benefit unit," it said.
Today's report also says more could be done to tackle child poverty given its negative long-term consequences, and the fact social welfare did more to reduce poverty amongst old people than among children.
The Irish Independent recently highlighted how a family could be €4,000 a year better off on social welfare than with one parent working full-time in a low-paying job -- partly because of ancillary benefits like rent supplement.
We found that for a family of four with nobody working, social welfare entitlements including rent supplement could deliver an annual income of €33,000, whereas if one parent was on the minimum wage, their total income would be just €29,000.
And last week it emerged that high childcare charges -- typically amounting to over €16,000 a year for two children -- put a serious dent in the finances of even well-off households.
A quarter of Irish families say the costs have deterred them from going back to work, training or taking extra hours. Social Protection Minister Joan Burton, who will launch the latest report today, said it highlighted the crucial role of the welfare system in alleviating poverty and income redistribution.
"The challenge now is to ensure those who are vulnerable -- children and the long-term unemployed, in particular -- are not left behind as the economic recovery takes hold," she said.
"Tackling the issue of jobless households -- where no adult member works, and the number of which actually increased during the boom years -- will be key in this regard, and is a core aim of the Pathways to Work strategy," she said.