Poverty Research and
Poverty Measurement
in Finland
2nd Peter Townsend Memorial Conference
22.1.2011
Bristol
Veli-Matti Ritakallio
University of Turku, Finland
Short history of
Finnish poverty (research)
• 1960s to mid-1980s welfare optimism
– Almost no poverty research
– Urbanisation, industrialisation, transition to dual earner family model,
rapid continuous economic growth and strong growth of the welfare state
– Old forms of poverty were disappearing (large families in small farms and
old-aged with extremely low pensions)
• Early 1980s: new's from Great Britain and Sweden
– Poverty exists also in affluent societies
– New ways to conceptualitze poverty (Peter Townsend's 1979
contribution was well known)
– Social exclusion, particularly men, urban poverty
Short history of
Finnish poverty (research) 2
• In 1990s single contributions by social scientists:
– Matti Heikkilä (1990) Poverty and Deprivation in a Welfare State. A Study
of Poverty and Welfare Deficits in Finland (income (fixed threshold))
– Veli-Matti Ritakallio “Poverty in Finland” (1994) Poverty in Finland. A
Study of Effects of Income Transfers (income (50% threshold),
expenditure (50% threshold) and social assistance approaches)
• Since 2000 more activity, because of EU OMC?!
• Statistics Finland (semi-official (European) poverty rates):
– Low income (poverty) rates 50% poverty line since 1996
– Low income (poverty) rates 60% and 50% poverty line since 2001
Early 1990s economic downturn and poverty
(measurement)
• In 1995 professor Olli Kangas and Veli-Matti Ritakallio
started Finnish poverty and social exclusion survey
project, which still continues. During the project has been
done in Finnish conditions large survey data collections
at 1995, 2000, 2005 and 2010. This allows reliable
analysis of trends of poverty in Finland.
• Surveys have approached multidimensionally poverty
related issues.
• Starting point of the project was the strange results
produced by income poverty measures during the 1990s
economic crisis. See next figure
25
Income differentials, GDP, Low income poverty, Unemployed
with minimum compensation and Social assistance recipiency
in Finland 1990-1995
Gini
20
15
GDP
10
Income pov.
Soc.ass.
5
Unempl with min compensation
+bankruptcies, overindebtedness, soup-kitchens etc.
0
1990
1991
1992
1993
1994
1995
Gini-coefficient, GDP in Finland 1990-2009 tens of billons €, 2009 prices, Income poverty (60% Md Poverty line),
Basic unemployment allowance/labour market subsidy beneficiaries during the year % of persons aged 17-64,
Social assistance recipients (during a calendar year) % of population
Four national representative surveys
1995, 2000, 2005 and 2010
•
•
•
•
•
•
•
To study poverty in Finland by several parallel measures
University of Turku
Effective sample sizes and response rates:
1995
1858
65%
2000
2400
61%
2005
2391
60%
2010
2068
52%
Parallel indicators of poverty
• RELINC: Relative income poverty: current oecd equivalent selfreported DPI is less than 50% of the national median income
• SCARCITY: Economic hardship: respondent’s subjective
evaluation of problems in making ends met (feeling that its
highly difficult to make ends meet) together with continuous
troubles in paying bills (rent etc.).
• CONSE: Cumulative deprivation: all those who lack at least
three commodities regarded as necessary by the majority of the
whole population are poor.
• DEBTS: Subjectively felt overindebtedness
• SOC.ASS.: Recipiency of last resort social assistance
• CUMULATIVE/RELIABLE/DUAL CONDITION: Poor according
to at least two of the five indicators presented above.
Poverty by Different Indicators in Finland
1995, 2000, 2005 and 2010, %
20
18
16
14
12
1995
2000
10
2005
2010
8
6
4
2
0
Relinc
Scarsity
Conse
Debts
Soc.ass
Cumulative
Poverty by Different Indicators in Finland
1995, 2000, 2005 and 2010, %
16
14
12
10
8
6
4
2
0
Relinc
Conce
Scarsity
1995
2000
2005
Reliable
2010
Income differentials, GDP, Low income poverty, Unemployed
with minimum compensation and Social assistance recipiency
in Finland 1995-2009
Gini
30
25
GDP
20
15
Income pov.
Unempl with min compensation
10
Soc.ass.
5
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Gini-coefficient, GDP in Finland 1990-2009 tens of billons €, 2009 prices, Income poverty (60% Md Poverty line),
Basic unemployment allowance/labour market subsidy beneficiaries during the year % of persons aged 17-64,
Social assistance recipients (during a calendar year) % of population
Poverty risks by the source of income 2010, %
Wage-earner
Self empl.
Farmer
Pension
Student
Series1
Earnings rel. unempl. compens.
Min unempl. compensation
Income support
All
0
Indicator: Reliable poverty
10
20
30
40
50
60
Poverty profile by the source of income 2010, %
Wage-earner
Self empl.
Farmer
Pension
Reliable
Student
Earnings rel. unempl. compens.
Min unempl. compensation
0
5
10
15
(Income support 40% of all poor)
20
25
30
35
40
45
50
Poverty risks by household type in Finland 2010, %
One adult
One adult w ith children
Tw o adults, no children
Reliable
Tw o adults, w ith children
Other
Total
0
10
20
30
40
50
60
70
80
Poverty risk by age 2010, %
19-24
25-34
35-44
45-54
55-64
above 65
All
0
2
4
6
8
10
12
Conclusions so far
• Huge increase in income differentials
• Extent of poverty 1990-2010 has rather decreased than increased
• Who are in the highest risk?
–
–
–
–
–
Long-term unemployed
Single parent families
Those relying on minimum social security
Students
Renters
• Employed and those on earnings-related benefits are not likely to
live in poverty
• Latest 2008 recession didn’t hit Finns very badly
• Relative position of those on minimum benefits has deteriorated
(next slide!)
Basic amount of social assistance 1991-2009
vs. 60% Md poverty line, in euros (2009 prices)
1400
Pov. line
1200
€ per month, 2009 prices
1000
800
600
Soc. ass.
14€/day!
400
200
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Income poverty (60%) and Economic Hardship (Great difficulties to make ends meet)
in European countries at 2005, %
Sweden
Iceland
Czech republik
Netherlands
Norway
Finland
Denmark
Slovenia
Austria
France
Lux.
Germany
Slovakia
Economic hardship
Hungary
Income poverty
Belgium
Cyprus
UK
Estonia
Italy
Latvia
Creece
Spain
Ireland
Portugal
Lith.
Poland
0
10
20
30
%
Source: EU-SILC, own analysis
40
50
60
Peter Townsend 1979, p. 31
• "Individuals, families and groups in the population can be said
to be in poverty when they lack the resources to obtain the
amenities which are customary, or are at least widely
encouraced or approved, in the societies to which they belong.
Their resources are so seriously below those commanded by
the average individual or family that they are, in effect, excluded
from ordinary living patterns, customs and activities."
Several choices and choices matter!
• How to operationalize the following:
– Lack the resources
• Incomes
• Enforced expenditures (housing costs, health care costs, child care
costs etc.)?
• Equivalence scale (oecd, mod-oecd, square root, concensual)?!
– Resources are so seriously below the average
• 40%/50%/60%?!
– Societies to which they belong
•
•
•
•
Nation state!
Province they live?!
EU?!
Age standardizations?!
– Excluded from ordinary living patterns, customs and activities
• Cumulative enforced lack of necessities (how to define?)
– Dual/triple condition:
• Low economic resources+ subjective statement+ (cumulative) lack of
necessities?
Thank you!
19.5.2004
Turku New's
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The State of Poverty in Finland in 2010