The EU approach
Measuring poverty and social
exclusion in support of policy making
Social Europe
Outline of the presentation
1.
How did the EU concept of poverty and social exclusion develop?
2.
Europe 2020 and the EU target to reduce poverty and social
exclusion
3.
Implementing Europe 2020
4.
•
Governance and monitoring framework
•
Implementing Europe 2020: More country specific analysis
A new impetus to measurement and analysis: building up the
evidence base
•
Improving the measurement of poverty and exclusion
•
Identifying the drivers and assessing the impact of policies
Social Europe
1. How did the EU concept of poverty
and social exclusion develop?
Social Europe
Social policy: a shared competence
• Social policy is still and will remain a Member State’s
competence
• Policy coordination process between Member States
• based on common objectives, indicators, regular reporting, joint
assessment and mutual learning
(Social Open Method of Coordination)
• EU laws and tools that can contribute to poverty reduction
•
•
•
•
•
Charter of fundamental rights (1989)
Anti-discrimination directives
Laws on social and employment standards
EU Funds (ESF, European Globalisation Adjustment Fund, PROGRESS)
Food aid programme (1987)
• Europe 2020 provides an integrated framework and aims to
bring together all available instruments
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Poverty and social exclusion
How did the concept develop in the EU?
• in support of a policy coordination process
• in a diverse and changing Europe
• through social policy statements, activities and
agreements at EU level (Commission, Council)
• drawing on developments in academia
• through the way they are measured
• in connexion with EU level statistical developments
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An increasingly diverse EU
Variations in
1975
2000
GDP per capita
(PPS)
92(56) to 113
70 to 116 (212) 45 to 131 (271)
Unemployment
2.9% to 9.6%
2.3% to 13.8%
4.3% to 20.4%
Gini coefficient
24 to 36
22 to 36
24 to 37
Social spending
(% of GDP)
21% to 29%
22% to 31%
(IE, IT missing)
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Today
11% to 30%
Statements by the Council
1975: Common definition of poverty
the poor are "individuals or families whose resources are so small as to
exclude them from the minimal acceptable way of life of the member
state where they live".
2000: “Laeken” indicators for the EU social inclusion strategy
18 indicators of social inclusion including headline indicator “at-risk-of
poverty” rate => focus on relative poverty
2010: Europe 2020 strategy: smart, sustainable and inclusive
growth.
•Ensuring that the "benefits of growth are widely shared and that people
experiencing poverty and social exclusion are enabled to live in dignity
and take an active part in society".
•New definition of people "at-risk-of poverty or social exclusion" based
on 3 indicators
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Poverty and “social exclusion”
Warning!
•
R. Walker (1995): “Social exclusion means different things to different
people” and this ambiguity permits “a continuing dialogue about matters
that some would equate with, or at least include within, the concept of
poverty”
National variations of the concept (R. Atkinson – 2000):
•
•
•
•
France: Societal solidarity ensuring participation of all in a common moral
and social order (incl. social and cultural dim)
Germany, Netherlands: reintegration on the labour market of the welfare
dependant
Scandinavian: reintegration on the labour market + deviant behaviour
UK: Labour government’s agenda: Opportunities for all and welfare to
work agenda (T. Blair’s definition)
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A multi-dimensional concept
• beyond the satisfaction of basic needs, having command over the
resources needed to live in dignity, to access rights, to ensure
full participation in society and the economy.
• beyond the lack of income, it covers the areas of work, health,
education, or social and cultural participation.
• a temporal and dynamic phenomenon requiring solutions to
durably escape poverty (labour market integration, equal
opportunities and anti-discrimination)
• Poverty is graduated; the most severe forms of poverty and
exclusion also need to be taken into account.
• There is also a need to reflect “absolute” differences in living
standards across the EU, as well as changes over time.
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Indicators of social inclusion (2001-2010)
Dimension
Indicators
Income
At risk of poverty rate (60% of median) + thresholds
Persistent at risk of poverty rate (2 out of 3 years in poverty)
Poverty gap: Distance between median income of the poor
and the poverty threshold
Anchored poverty risk
Material
deprivation
Severe material deprivation rate: missing 4 out of 9 items
Material deprivation depth
Housing deprivation, cost, overcrowding
Labour
Long term unemployment rate
Population living in jobless households
In-work poverty
Education
Early school leavers
Low educational attainment
Low reading literacy performance
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Indicators of social inclusion
(Continued)
Dimension
Indicators
Health
Healthy life expectancy by Socio-economic status
Unmet need for health care
Social
protection
Social protection expenditure, current and projected
Social protection expenditure, by function
Risk of poverty before social transfers (poverty reduction
impact of social transfers)
Specific
groups
Child deprivation
Employment gap of migrants
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Statistics: EU-SILC, HBS, ESSPROS
EU harmonised Survey on Income and Living Conditions
•
•
•
•
•
•
Yearly
EU Regulation: legally binding since 2005
Output based harmonisation: detailed definition of variables
Quality criteria (achieved sample size)
Panel dimension (rotating panel)
Modules on specific topics (housing, social participation, etc)
Household budget surveys (every five years)
• Gentleman agreements
ESSPROS
• Social protection expenditure and receipts, yearly
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Methods used at national level
• Relative income poverty: at-risk-of poverty rate at 60% (or
other level)
• Anchored poverty
• Relative poverty based on consumption threshold
• Material deprivation and consistent poverty
• Regulatory thresholds: set by law (subsistence level,
minimum income, etc) – with embedded uprating
mechanisms or not
• Budget standards
• Food-ratio poverty lines
• (Subjective poverty)
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2. Europe 2020 and the EU target to
reduce poverty and social exclusion
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The Europe 2020 strategy
Three overarching objectives
- Smart, sustainable and inclusive growth
Five headline targets
- Employment (75 %);
- R&D (3% of GDP);
- Climate/energy ("20/20/20“);
- Education (ESL < 10% and TD > 40%);
- Poverty and social exclusion (- 20 million)
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3 indicators to describe poverty
and social exclusion
Risk of poverty
•
•
•
People living in households with very low
work intensity (“jobless households”)
People living with less than 60% of
•
the national median income
Poverty lines vary from 200€/month
to more than 3000€
•
« resources so low as to exclude them
from the way of life of the MS »
long-term exclusion from the labour market
for workers and dependant family members
Households where people aged 18-59, not
students have no work or worked less than 1
day / week on average during the year
Severe material deprivation
•
•
•
A non monetary measure of living
conditions
at least 4 out of 9 deprivations: pay the
rent, keep home warm, eat meat or
protein every second day, enforced lack
of a car, a washing machine...
Single European threshold, reflecting
different living standards across the EU
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JLH
10%
SMD
8%
AROP
Risk of
poverty or
social
exclusion
16%
115 million
23%16
Source: Eurostat EU SILC 2010
Facets of poverty and social exclusion
Latvia
Italy
Ireland
AROPE 38 %
AROPE 24%
AROPE 26%
JLH
12%
SMD
27%
AROP
21%
Deprivation prevails
At Risk of Poverty
Source: Eurostat EU SILC 2010
SMD
6%
JLH
10%
AROP
18%
SMD
7%
Relative poverty prevails
Severe Material Deprivation
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AROP
15%
JLH
20%
Labour market exclusion
prevails
Jobless Households17
17
Dynamics of the components also vary
Italy
EU27
30.0
30.0
Risk of poverty or social exclusion
Risk of poverty or social exclusion
20.0
20.0
Risk of poverty
Risk of poverty
Jobless households
Jobless households
10.0
10.0
Severe material deprivation
Severe material deprivation
0.0
0.0
2005
2006
2007
2008
2009
2010
2005
2006
2007
2008
2009
2010
Bulgaria
Ireland
30.0
Risk of poverty or social exclusion
Risk of poverty or social exclusion
60
50
Jobless households
20.0
40
Severe material deprivation
Risk of poverty
30
20
10.0
Risk of poverty
10
Severe material deprivation
2005
2006
2007
2008
2009
Jobless households
0
0.0
2010
Source: Eurostat EU SILC
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2005
2006
2007
2008
2009
2010
Poverty or exclusion targets estimates
People living in poverty or social exclusion (in %)
Population at risk of poverty or social exlusion* in 2010
2020 target**
45
40
35
30
25
20
15
10
5
0
CZ SE NL AT FI LU DK SI FR DE MT SK BE EE UK EU CY IT PT ES EL PL IE HU LT LV RO BG
* 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.
** Member States without a marked national 2020 target have chosen to use a different monitoring indicator
which does not directly translate into a comparable indicator at the EU level.
Source: European Commission
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3. Implementing Europe 2020
3a. Governance and monitoring framework
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1) The European
Semester
Annual
Growth
Survey
Social
Protection
Committee
Draft Joint
Employment
Report
SPC Annual
Report
Employment
Committee
Joint
Employment
Report
MS
EPSCO
In-depth
review
Country
examination
Discussion/
adoption CSR
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June
EPSCO
Recommendations
Policy
guidance
May
National
Reform
Programs
+ National
Social
Submits
Reports Country Specific
Debate /
orientations
Spring
European
Council
March
(IG 10)
January
MS
Commission
2) Europe 2020
priorities
2011 AGS priorities
2012 AGS priorities
Prerequisites for Growth:
Pursuing growth-friendly fiscal
consolidation
• A rigorous fiscal consolidation
Restoring normal lending to the
• Correcting macro economic imbalanceseconomy
• Stability of the financial sector
Promoting growth and
competitiveness
Mobilising Labour Markets:
Modernising public
administration
• Making work more attractive
• Reforming pensions systems
Tackling unemployment and the
• Getting the unemployed back to work social consequences of the crisis
• Balancing security and flexibility
• Mobilising labour for growth
Frontloading Growth:
•
• Tapping the potential of the Single
Market
Support employment, esp of
the young
•
Protect the vulnerable
• Attracting private capital
• Cost-effective access to energy
22
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3) Europe 2020
priorities
2012 in detail: … protecting the vulnerable
• Further improve the effectiveness of social
protection systems
• Implement active inclusion policies
• Ensure access to services to support integration
to the labour market and society
• Monitor distributional impact of reforms
• Pay attention to the needs of the most vulnerable
in any tax shift
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4) Reporting
• National Social Reports (At the same time as NRPs)
• More detailed strategies for poverty targets
• Cover all social OMC strands (inclusion,
pensions and health)
• SPC Annual Report
Council)
•
•
•
•
(Mid - January head of spring
Monitoring of target + Reporting on indicators
Analysing NSR
Crisis monitoring
Thematic focus (2013: Child poverty and
Pensions)
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5) Monitoring and
assessment
Monitoring Europe 2020 and the social OMC
• Joint Assessment Framework (JAF)
• Diagnosis tool based on key indictaors (see example)
• Shared by MS and Commission analysts
• Supports the work on Country Specific
Recommandations
• Social performance monitor
• Summary of MS progress towards their national
targets
• And of key challenges identified through the JAF
• Target: remaining issues
• national ambitions do not match EU ambition
• How to monitor targets based on national indicators/sources?
• OMC indicators covering inclusion, pensions and
health used in thematic reporting by SPC
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3. Implementing Europe 2020
3b. More country specific analysis
Social Europe
Joint Assessment Framework identifying
country specific challenges
Poor labour market
performance,
especially for the
weakest workers:
e.g. segmentation,
long-term
unemployment
Inactivity due to care
responsibility
Poverty and exclusion
Jobless households
Very low impact of
social transfers
Child poverty
Social Europe
Child poverty drivers by country
United Kingdom:
•generous benefits but
•many children in jobless
households
•high inactivity due to
care responsibility
-=> design of benefits
-=> lack of child care
Bulgaria
•High poverty and
material deprivation
•In-work poverty
•Low impact of transfers
-=> improve economic and
labour market conditions
-=> improve family support
Diagnosis of main drivers by country
High impact of social transfers
CZ EE AT

Few children in jobless households
NL SI FI
FR (BE)

Children in working households face
low risk of poverty
DK SE
DE(CY)

HU

UK


Impact of social transfers is high
Many children in jobless households
Low impact of social transfers
In-work poverty: children are poor
even though parents are working
Source: ESSPROSS 2009, EU-SILC 2010, DG EMPL calculations.
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IE
PL PT SK
IT RO
EL ES LT
LV BG



Extracts from the Commission CSRs for Bulgaria
and the UK (not yet adopted by Council)
BULGARIA
To alleviate poverty,
improve the
effectiveness of social
transfers and the access
to quality social services
for children and the
elderly and implement the
National Roma Inclusion
Strategy.
UNITED KINGDOM
Step up measures to
facilitate the labour market
integration of people from
jobless households.
Ensure that planned
welfare reforms do not
translate into increased
child poverty. Fully
implement measures
aiming at facilitating access
to childcare services.
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4. A new impetus to measurement and
analysis: building up the evidence
base
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Building up the evidence base
Poverty and social exclusion
• measurement of POVERTY AND SOCIAL EXCLUSION:
material deprivation, « extreme » poverty (homelessness,
Roma), regional dimension (Poverty maps and Roma with World
Bank and FRA)
• DYNAMICS of poverty and exclusion (longitudinal component)
• Mid-term review of targets in 2015 (e.g. mat. dep. Comp.)
• TIMELINESS
Poverty drivers and impact of policies
• Do growth and jobs help reducing poverty and exclusion?
• REDISTRIBUTIVE IMPACT OF SOCIAL SPENDING, (incl. in-kind
benefits) – identify efficiency gains
• What is the impact of fiscal consolidation?
Social spending vs. Economic efficiency
• Illustrating the working of automatic stabilizers
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Understanding
poverty
Who is in the poverty target?
Focus on the working age population (18-59), by activity status
DK
EU27
100%
100%
(other Inactive)
(other Inactive)
80%
80%
(other Inactive)
(other Inactive)
60%
60%
40%
At work
At work
20%
20%
Unemployed
0%
0%
at risk of poverty or social
exclusion
whole population
At work
Unemployed
at risk of poverty or social
exclusion
whole population
RO
ES
100%
100%
(other Inactive)
80%
At work
40%
(other Inactive)
(other Inactive)
At work
At work
Retired
Unemployed
Retired
at risk of poverty or social exclusion
whole population
80%
(other Inactive)
60%
60%
40%
At work
At work
40%
20%
20%
Une mploye d
0%
0%
at risk of poverty or social exclusion
whole population
Sources: DG EMPL calculation from EU-SILC (2009) -
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Understanding
poverty
What are the jobless households living on?
Gross income composition
Share of jobless households
by income quintile
by work intensity of the household
140
120
100
Social exclusion / housing
Family and education
35
80
Social exclusion/ housing
30
Earnings
from work
60
25
20
Unemployment benefits
40
Old age
15
20
10
Earnings
from work
5
0
0
poorest
2nd
3rd
4th
richest
Income
taxes
-20
-40
Not in very low
work intensity
Sources: DG EMPL calculation from EU-SILC (2009)
Social Europe
Very low work
intensity
Understanding
poverty
New indicator of material deprivation
for mid-term review of EU target
Items being discussed (not adopted yet) being able to afford:
•
•
•
•
•
•
•
•
•
•
•
•
•
some new clothes,
two pairs of shoes,
a meal with meat, chicken or fish every second day,
to keep home adequately warm,
to pay for arrears (mortgage/rent, utility bills, hire purchase instalments),
to face unexpected expenses,
a personal car if needed,
a computer with an internet connection,
to replace worn-out furniture,
some money for oneself,
regular leisure activity,
getting-together with friends/relatives for a drink/meal monthly,
one week annual holiday away from home.
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Timeliness
Financial distress in lower income households
23
17
15
long term trend
13
11
9
long term trend
long term trend
7
richest income quartile
5
ju
il06
ja
nv
-0
7
ju
il07
ja
nv
-0
8
ju
il08
ja
nv
-0
9
ju
il09
ja
nv
-1
0
ju
il10
ja
nv
-1
1
ju
il11
 Upper quartile:
financial stress remains
below long term
average
long term trend
19
% of responses
 Two lowest income
quartiles: from mid
2008 financial stress is
well above long term
average
poorest income quartile
21
ja
nv
-0
6
 Share of households
experiencing financial
difficulties steadily
increasing since
beginning of 2011
Reported financial distress in households by income
quartile of household
Source: Joint harmonised EU consumer surveys & DG EMPL calculations.
Note: 3 month centred moving average figures.
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Timeliness
Are people covered, by what benefit?
Number of benefit recipients (unemployment insurance and social assistance) vs number of unemployed
NL Disability benefits Recipients (left axis)
NL Number of unemployed ILO (1000)
NL U Benefits recipients (WW)
Number of
unemployed ILO
NL
350
250
7000
5000
4000
4000
Number of unemployed
3000
ILO
3000
Social assistance
recipients
2000
2006
2007
2008
2009
1
3
6
2010
9
1
3
150
0
0
6
2006
2011
2007
2008
2009
PT Number of unemployed ILO (1000)
2011
PT (Unemployment + social unemployment) benefits
PT Disability (social + pension) benefits
in 1000
PT
800
Substitution: decrease in unemployment
benefits increase in social assistance: NL, SE,
HU, EE, CZ
2010
9
9
6
6
1
3
3
9
1
6
9
1
3
6
9
3
6
1
1
3
9
9
6
6
3
1
3
1
1000
Short time work
9
800
2000
1000
6
Disability recipients
(left axis)
1
3
825
6000
5000
850
9
DE
Benefits recipients (UB I +
UB II)
3
875
6
DE Social Assistance recipients
1
persons (1000)
900
3
DE Benefit recipients (UB I + UB II)
DE short term w ork
6000
persons (1000)
Social assistance
recip
U benef
recip
1
DE Number of unemployed ILO (1000)
7000
925
9
950
in 1000
NL Social Assistance Recipients
6
in 1000
PT Social (assistance/integration income) beneficiaries
800
Number of unemployed
ILO
700
700
400
500
?
400
Disability benefits
300
300
(Unempl+social u)
benefits
2007
2008
2009
2010
6
3
1
9
6
1
3
9
6
3
1
9
6
3
1
9
6
3
1
200
2006
9
200
6
PT: Number of recipients UB/SA decreasing
even through unemployment continue to
increase – gap in coverage rising
Social
assistance/integr
ation income
beneficiaries
500
3
Downward trends in social benefit recipients in
line with unemployment trend in DE
600
1
Combined pressure on safety nets in SI, IE
persons (1000)
600
2011
36through
Sources: data on number of unemployed from Eurostat (ILO definition; thousands of persons, seasonally adjusted); data on number of benefit recipients collected
the SPC questionnaire.
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Inclusive
growth?
Economic and employment growth, jobless
households and in-work poverty
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Inclusive
growth?
Declining wage share
Germany, France,
Italy and Spain
EU-15 and the US
38
Social Europe
Inclusive labour
market?
Labour market polarisation
Net job creation 1998-2007
Net job creation 2008q2-2010q2
9000
6000
8000
5000
7000
4000
6000
3000
5000
2000
4000
1000
3000
0
2000
-1000
1000
-2000
0
-3000
Source: Eurostat EU LFS, Fernández-Macías (2010)
Low
wages
High
wages
Before the crisis
More jobs created in low
and high wages segments
Source: Eurofound, ESDE
Source: Eurostat EU LFS, Fernández-Macías (2010)
Low
wages
High
wages
During the crisis
More jobs lost in the
middle wages segments
Social Europe
Inclusive labour
market?
Segmentation: are temporary contract
stepping stones or dead ends?
Austria
60
•Mainly voluntary
•Stepping stones
20
•Low wage penalty
%
40
0
Spain and Poland
-20
•Mainly involuntary
-40
EU27
Austria
Spain
Poland
Wage-penalty adjusted
Transition rate from temporary to permanent contracts
Share of temporary workers (dark blue - involuntary)
•Low probability to
move to a better job
•High wage penalty
Source: Eurostat EU LFS 2010, RWI study based on SILC, DG EMPL calculations on
SES 2006
Social Europe
40
Inclusive labour
market?
Drivers of in-work poverty
Relative importance of factors for
in-work poverty
Labour market reasons
for in-work poverty:
- Low participation, low
work intensity (DE)
- Low wages (LV)
Redistribution also
matters:
- benefits do not always
compensate for cost of a
child (ES)
Source: DG EMPL calculations based on EU SILC 2009
Social Europe
Policy
response?
Redistributive role of social transfers: room for
efficiency gains
Social protection benefits expenditure (excluding pensions)
and poverty reduction impact of social transfers
• Poverty reduction
impact of social
transfers depends
on size and design
• Potential for
efficiency gains
• Efficiency not a
direct function of
the level of
targeting of cash
transfers
Source: Eurostat, EU-SILC 2010 (income year 2009) and ESSPROS 2009
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Policy
response?
Modeling: Redistributive impact of in-kind
services
Distribution of in-kind benefits by quintiles
• Beyond disposable
income inequality:
in-kind benefits
reduce inequality
further by one-fifth
• Education,
training,
healthcare is also
investment
• Source: ESDE (2011)
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Policy
response?
Microsimulation: Impact of austerity
measures
Estimated impact of austerity measures on households by income
quintile: changes to income components and VAT increases
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
-10%
-11%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
-10%
-11%
Greece
poorest
2
3
4
richest
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
-10%
-11%
Portugal
poorest
2
3
4
richest
Estonia
poorest
2
3
4
richest
• Measures affecting disposable income of households have been progressive in
Greece, regressive in Portugal and relatively neutral in Estonia
• Taking VAT increase into account, the picture especially changes for Greece,
making austerity measures less progressive
• The effect of the crisis itself on household income, potentially very significant
and regressive, is not represented in the graphs
• Source: Sutherland et al, 2011
Social Europe
Stabilizing the
economy
Automatic stabilizers and stimulus helped sustaining gross
household disposable income – but not in all countries
Changes in gross household disposable income (GHDI) and in social spending
% changes over 2 periods (2007/2009 and 2009/2012 – projections)
Despite large
economic shocks
automatic stabilisers
helped sustaining
household incomes
in Denmark and
Germany
Social
spending
GHDI
Social
spending
GHDI
Social
spending
GHDI
Social
GHDI spending
Source: European National Accounts
Social Europe
But not in Italy and
Greece, where the
impact of budgetary
cuts after 2010 is
also visible
Stabilizing the
economy
What would have happened with constant social
benefits and taxes
Impact of automatic stabilizers and stimulus measures –
% changes in GDHI (household income) 2007-2009
8.0
6.0
4.0
2.0
0.0
-2.0
-4.0
GDP
-6.0
-8.0
-10.0
GHDI
GHDI holding social benefits + taxes at 2007 value
-12.0
DE
FR
NL
ES
EL
UK
SE
IT
IE
Source: Jenkins, Bardolini et al., 2011
Estimates for Greece refer to one year change, 2007-8, only.
Social Europe
46
Social spending vs.
Economic efficiency?
Employment vs. size of the welfare state
Countries with relatively high social protection expenditure are not necessarily those with the lowest
employment rates (data: average 1995 – 2010)
47
Source: Eurostat
Social Europe
Social spending vs.
Economic efficiency?
Deficit vs. size of the welfare state
Countries with relatively high social protection expenditure are not necessarily those with the highest
budget deficits (data: average 1995 – 2010)
48
Source: Eurostat
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