Burton denies troika’s dole rate claims

Joan Burton’s officials have said the majority of dole payments are not excessive after troika officials again demanded a crackdown on Ireland’s welfare system.

The defence from the social protection minister’s officials comes after strong criticism of dole payouts in a draft European Commission report on the bailout.

The report noted budget overruns in the area of welfare payments and the need for “better targeting of the social support schemes”.

Troika officials said more needs to be done to “eliminate work disincentives and unemployment traps caused by Ireland’s benefits system”, especially payments that do not fall with the length of unemployment.

However, after queries from the Irish Examiner, Ms Burton’s office hit back.

Jobseekers’ support schemes were under active consideration, the department said, but a concern was ensuring welfare payments provided “adequate income replacement” while also providing the incentive to return to work.

Crucially, the department went on to explain that research proved that Ireland’s income replacement rate was not excessively high.

Replacement rates for income levels measure the proportion of welfare benefits received when unemployed against take home pay if in work.

The statement read: “Generally, the higher the replacement rate, the lower the incentive to work. Most literature on the subject of replacement rates works from the assumption that a replacement rate significantly in excess of 70% may be considered to be excessive, while a replacement rate significantly less than 70% may be considered inadequate.”

Ms Burton’s officials said detailed analyses of net incomes of people on the Live Register, comparing welfare income to the net incomes of typical household types in the workforce, showed that “the majority” of welfare recipients have replacement rates of less than 70%. This meant they were not considered excessive.

The statement added: “In particular, when measured against the national minimum wage circa 90% of recipients have a rate of less than 70% and circa 10% have a rate of less than 80%.”