Potential of EU-wide research in
tackling key societal challenges
of EU countries
08 July 2014
Isabelle Engsted-Maquet
DG Employment, Social affairs and Inclusion
Social Europe
How can EU-wide comparative research
support a job rich and inclusive growth?
1. Debunking myths and bringing new ideas
2. Increasing visibility accountability
3. Bringing social monitoring to a par with
macro-economic monitoring
4. Improving the diagnosis and identifying
the policies that work
5. How can research help?
Social Europe
1.a Debunking myths
What we may think
(Empirical) research shows that
(largely based on theory)…
"Inequality is inevitable or
even good for growth"
"Too high inequalities may
undermine growth"
"Focus on growth and jobs…"
"There is no trickle down…"
"Generous benefits discourage
people from working" (making
work pay)
"higher coverage and adequacy of
benefits are associated with higher
returns to employment… if well
designed and linked to activation"
"More targeted benefits means "Efficiency of spending depends on
more efficient spending…"
how you spend it and on what"
(social investment)
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1.b New ideas: after decades of rising inequality
the policy debate took off recently
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2. Robust Indicators: accountability
• "What is not counted doesn't count"
• Agreeing on concepts and measures and the need for
comparable statistics
• Monitoring
Three examples:
• Europe 2020 target on poverty
• EMU scoreboard of employment and social
imbalances
• Poverty mapping and small area estimation
• Vulnerable groups (homeless, vulnerable children)
Social Europe
124 million Europeans living at risk of poverty
or social exclusion 25% in 2012
At Risk of Poverty
EU-28
Severe Material Deprivation
Latvia
Italy
Ireland
Risk of poverty or
Social exclusion 40%
Risk of poverty or
Social exclusion 28%
Risk of poverty or
Social exclusion 30%
13%
Jobless
households
23%
10%
At risk of poverty
85 Mio
20%
19%
38 Mio
31%
Severely materially
deprived
50 Mio
Jobless Households
16%
11%
Deprivation
prevails
Relative poverty
prevails
8%
Benefit
dependency
issues
* People at risk of poverty or social exclusion are at least in one of the following three conditions: at-risk-ofpoverty, severely material deprivation or living in a jobless household.
Social Europe
ETHOS classification to measure
homelessness
Housing situations
Roofless
1. Living rough
2. In emergency accomodation
Houseless
3. In accomodation for the homeless
4. In women's shelters
…
Insecure
8. Insecure accomodation
9. Risk of eviction
…
Inadequate
11. Temporary or unconventional accomodation
12. Unfit accomodation
Social Europe
Poverty mapping:
SILC vs. Small Area Estimation
Romania: estimating poverty at the local level to improve the
targetting of EU funds
At-risk-of-poverty rate, 2011 (direct estimates)
Romania: At-risk-of-poverty rate, 2011
(% of total population below 60% of median income per a.e.)
(% of total population below 60% of median income per a.e.)
0.0 - 17.4
17.4 - 25.1
25.1 - 27.9
27.9 - 31.4
31.4 - 49.6
3.4 - 19.1
19.1 - 21.4
21.4 - 28.2
28.2 - 32.4
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3. Bringing social monitoring to a par
with macro-economic monitoring
• Timeliness of social indicators
• Social impacts of economic developments and policies
• Economic impacts of social developments and policies
Two examples:
• Nowcatsing poverty and inequality measures
• Social EMU
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Micro-simulation:
Nowcasting at-risk of poverty to 2014
Nowcast estimates of at risk of poverty rates, selected Member States, 2011-13
•
RED: Eurostat
BLUE: Euromod nowcasts
Source: Euromod – Employment and Social Situation Quarterly Review – March 2014
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3b. Social EMU
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Social EMU Communication (2/10/2013)
 Improve governance to anticipate & address serious
employment & social problems in the EMU, taking account of
• Social impacts of economic developments and policies
 (in macro-economic imbalance procedure: MIP scoreboard now
includes poverty indicators)
• Spill overs of serious social problems, also beyond borders
 In European Semester: the scoreboard (UR, NEETs, GHDI,
AROP, S80/S20)
 EU level instruments
 Better use of EU Funds, Labour mobility, Steps towards a "fiscal
capacity" for more solidarity and financial support… (EMU-UBS?)
 Involvement of social partners in EMU governance
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Growth, employment and household income
Real growth in GDP, GDHI and employment growth (y-on-y), EU28
• - Gradual economic
recovery
• - GDP, employment and
household incomes
together on the rise first
time since 2011
Source: Eurostat, National Accounts in Employment and Social Situation Quarterly Review – March 2014
Social Europe
Gross household income started declining, automatic
stabilisation only in the early phase of crisis
Real change in Gross Disposable Household Income by component in the Euro area (year on year; 2000 – 2013)
Market incomes
(from work and capital)
Benefits and taxes
GDP
growth
GHDI
growth
Source: Eurostat and ECB in Employment and Social Situation Quarterly Review – March 2014
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Real growth in GHDI – by components
• Germany
• Spain
Source: Eurostat and ECB in Employment and Social Situation Quarterly Review – March 2014
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Micro-simulation: impact of fiscal
consolidation on household incomes
Contribution of different austerity measures to change
in households incomes, overall (below) and at
different points of the income distribution in selected
Member States (right)
Source: EUROMOD (cumulated impact of austerity measures on
households disposable incomes). In Employment and Social Situation
Quarterly Review – March 2014
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Economic impacts of social problems
• Unemployment, poverty and inequality undermine
growth in the short to long term by
• Lower consumption (aggravated by deleveraging need) depresses
aggregate demand
• Under-utilisation and erosion of human capital affects productivity
and competitiveness
• Political and confidence effects
• Across borders
• Through trade
• "Contamination"
Undermine the legitimacy of the European project (Vandenbroucke) and
capacity of governments to run the necessary reforms to strengthen EU
Undermine confidence and investment
Source: Employment and Social Developments in Europe 2013
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4. Improving the diagnosis and
identifying policies that work
EXAMPLE OF ISSUES
• Helping people back to work and escaping poverty
• Child poverty: assessing the effectiveness and efficiency of
social transfers
MAIN ANALYTICAL TOOLS
• Comparative analysis based on macro indicators
• Longitudinal analysis: analysing transitions
• Models (micro-simulation, typical cases) help assessing the
theoretical performance of systems
• Counterfactual evaluation methods
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4a. What helps people back to
work and escape poverty?
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Taking up a job helps to get out of
poverty… only in half of the cases
Source: EU SILC, DG EMPL calculations Transitions 2008-2009 in Employment and Social
Developments in Europe 2013
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Unemployment benefits: better coverage &
adequacy associated to higher returns to work
Coverage
Adequacy
Source: Employment and Social Developments in Europe 2013
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Unemployment Benefit recipients have greater
chances to be working the year after,
(propensity score matching)
Source: Employment and Social Developments in Europe 2013
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Country Specific Recommendations 2014
Italy
Lithuania
CSR 5
"Work towards a
comprehensive social
protection for the
unemployed, […].
Strengthen the link between
active and passive labour
market policies. […] scale-up
the pilot social assistance
scheme, […] and strengthen
the link with activation
measures"
CSR 3
"Improve coverage and
adequacy of unemployment
benefits and link them to
activation."
CSR 4
"Ensure adequate coverage of
those most in need and
continue to strengthen the links
between cash social assistance
and activation measures."
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Counterfactual impact evaluation in Lithuania
Average earnings per year
(Litas)
Project "Integration of people with disabilities into the labour market in order to avoid their
social exclusion" in action
6000
5000
4000
3000
2000
1000
0
2005
Treatment group
2006
2007
Control group
2008
2009
2010
What would have happened in the absence of the intervention
Average earnings per year
(Litas)
Project "Implementation of active labour market measures for ex-offenders" in action
6000
5000
4000
3000
2000
1000
0
2005
Treatment group
2006
Control group
2007
2008
2009
2010
What would have happened in the absence of the intervention
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4b. Child poverty, effective and
efficient social spending
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What drives child poverty?
-25.4 million children at
Profiles of child poverty drivers
risk of poverty or social
exclusion
-Greater risk than adults
-Main drivers:
o - in-work poverty of
-
parents
- insufficient LM
participation of parents
- ineffective benefits
Source: ESSPROSS 2009, EU-SILC 2010, DG EMPL calculations. In ESSQR – June 2012
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Assessing the efficiency of social spending:
one dimensional approach
Source: Employment and Social Developments in Europe 2012
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Family benefits: An example of a broadened approach
of effectiveness and efficiency
Source: Employment and Social Developments in Europe 2013
Social Europe
Micro-simulation: policy swapping on family
support
Applying policy rules of 4 countries to Lithuania; design effects matter as
much as size effects.
Family Benefits & Tax Advantages from EE, HU, SI or CZ applied to Lithuania
Risk of poverty
headcounts (%)
Budget neutral
LT
baseline
EE
HU
SI
CZ
Total
20.3
20.3
19.6
18.9
19.6
Children
26.2
26.8
24.4
23.0
25.4
Large families (3+)
44.3
42.6
34.4
31.1
45.0
Lone parent
45.1
49.8
45.3
45.2
44.7
Source: Salanauskaitė L. and Verbist G.; Euromod working paper series Dec.2011
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4. What do we need?
•
•
•
•
•
Robust and more timely statistics
Comparable indicators based on common definitions
Monitoring framework and policy models
Reporting and visualisation tools
Link to macro-economic monitoring
• Nowcasting
• Distributional impacts of economic developments and policies
• Better document economic impacts of social developments and
policies
• Methods and models to assess the effectiveness of policies
(micro-simulation, evaluation methods, etc… )
Social Europe
3 Main products
http://ec.europa.eu/social/main.jsp?langId=en&catId=113
ESDE:
Employment and Social
Developments in Europe (Annual
Review)
Content: Key features + Thematics chapters
ESSQR:
Employment and Social Situation
Quarterly Review
Content: Recent trends + Special focuses
Working papers
Methodological papers
(e.g. Social expenditure in the crisis,
timely monitoring of social trends, etc )
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ANNEX: IMPROVING STATISTICS &
MODELS
Timeliness
SILC and other sources
Data on social protection systems
Modelling (Euromod)
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Statistical Priorities and modelling (1)
Improving timeliness
•
•
•
•
Improving SILC delivery, especially for material deprivation
Adding auxiliary data in LFS (monthly income)
Use models to produce nowcasts
Use alternative sources: e.g. consumer surveys (financial distress
indicator)
Upcoming SILC revision (with European Statistical systems)
• Improving the measurement of material deprivation,
• Improving the longitudinal component of SILC to better analyse the
dynamics of poverty and exclusion
• Improve data on access to services to better measure the redistributive
impact of in-kind benefits
• Better documentation of indicators
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Statistical Priorities and modelling (2)
Data on social protection systems
• ESSPROS: Good identification of in-kind benefits, means-tested
benefits, net expenditure
• Data on benefit recipients (Coverage rates, Take-up rates,
Characteristics of the beneficiaries)
Alternative sources
• Special data collection efforts « extreme » poverty (homelessness,
Roma): Poverty maps and Roma with World Bank and FRA
Modelling
• Euromod microsimulation to illustrate impact of reforms on poverty,
budgets, labour market incentives or economic stabilisation
• OECD/EC tax benefit model
• Small area estimation
• Evaluation methods
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