Budget standards and (research on) social
inclusion
Intervention for Conference on
“Reference budgets for Social Inclusion”
Wien, 22 October 2009
Karel Van den Bosch
Herman Deleeck Centre for Social Policy
University of Antwerp (Belgium)
Overview
 Two points
 Budget standards and poverty measurement in the EU
 Budget standards and benefits ‘in kind’
1
Poverty measurement in the EU
 Why is measurement of poverty in the EU important?
 Lissabon process (march 2000),
“Making the EU "the most dynamic and competitive knowledgebased economy in the world capable of sustainable economic
growth with more and better jobs and greater social cohesion,
and respect for the environment by 2010" (emphasis added)
 ‘Mutual policy learning’ through the ‘Open Method of
Coördination
 Important role for ‘Laeken
Laeken Indicators
Indicators’ of social inclusion
 Of which the ‘at-risk-poverty’ rate is the primus-interpares
Poverty measurement in the EU
 Poverty line defined as 60% of median equivalent
income in each Member state
 Enormous differences between value of poverty line
across Europe (after adjusting for price differences)
 Especially between ‘Old’ and ‘New’ Member states
12.000,0
10.000,0
8.000,0
6.000,0
4.000,0
2.000,0
0,0
AT BE CY CZ DE DK EE
ES
FI
FR GR HU IE
IT
LT
LU LV NL PL PT
SE
SI
SK UK
2
Poverty measurement in the EU
 Pattern of ‘at-risk-of-poverty’ rate across Europe
unexpected (low in CZ, SK, SL)
 Alternative: ‘European
European poverty line’
line not workable
90
80
70
60
50
40
30
20
10
0
National poverty line
EU24a
EU24b
LT
LV
EE
SI
SK
PL
CZ
HU
IT
PT
ES
GR
CY
NL
FR
LU
BE
DE
AT
IE
UK
FI
SE
DK
European poverty line
Poverty measurement in the EU
 Eurostat poverty threshold ‘60% of median in Member
state’ gives only partial picture of poverty in the EU:
 Inequality between countries is factored out
 Unclear whether it allows real participation, esp. in
the new Member states
 Over time, general rise in living standard does not
(necessarily) result in drop in poverty
 General decline in living standard does not
(
(necessarily)
il ) resultlt iin rise
i iin poverty!
t !
 Budget standards could provide important
complementary information
3
Poverty measurement in the EU
 How can budget standards help?
 Ideal: comparable budget standard in all EU-countries
 Feasible at best only in the very long term.
term
 In the meantime how can we move forward?
 Adapt one particular (fully specified) budget to
circumstances of other countries
 Specify what a family can buy, if it has an income at
the ‘60% of the median’ threshold.
 In order to bring out differences and similarities in living
standards and circumstances between countries
 To show what it means to live in poverty in various
Member states
Budget standards and benefits ‘in kind’
 Due to different policies there are important differences
between countries
 In school costs
 In health costs (out-of-pocket payments)
 In housing costs (social housing, subsidies)
 Which are not taken into account in current poverty
measures
 Also (it is sometimes claimed), many households in
Eastern European countries enjoy income in kind from
gardening, small-scale farming and so on.
4
Budget standards and benefits ‘in kind’
 Budget standards (if fully specified) would show what
impact these costs / benefits / revenues have on the
incomes and living standards of households at the
minimum.
 by adding certain items
 by costing items differently
 or by taking out certain budget items
 Better (more comparable) measurement of poverty
 And also useful tool for the evaluation of such policies
within any country!
5