Managing Social Imbalances: competitiveness at the price of more working poverty?

Transcription

1 Managing Social Imbalances: competitiveness at the price of more working poverty? Bea Cantillon Herman Deleeck Centre for Social Policy, University of Antwerp London, 17 April 2012

2 B.Cantillon, F. Vandenbroucke, For Better For Worse, For Richer For Poorer. Labour market participation, social redistribution and income poverty in the EU, OUP, forthcoming

3 -I. Marx, B. Nolan, In work poverty -F. Vandenbroucke, V. Corluy, Household work intensity -B. Cantillon, N. Van Mechelen, O. Pintelon, A. Vandenheede, Household work intensity and the poverty reduction capacity of social protection in the EU

4 -in work poverty : definitional issues -has in work poverty increased? -understanding in work poverty -broadening the scope : household work intensity -the importance of the welfare state -conclusions

5 Section 1: Definitionalissues

6 Definition SPC «The working poor are those individuals whohave mainlybeen employed duringthe reference year(either in wage and salary employment or as self-employed) and whose household equivalised disposable income is below 60% of national median equivalised income» OECD, academic literature employ similar definitions ( Marx, Nolan )

7 Definitional issues Mixingtwolevelsof analysis(individuallabour market status and household income adjusted for household size) inherently complicates interpretation Widereferenceperiod labour marketand income position during the course of an entire year- equally complicates interpretation (Marx, Nolan)

8 Section 2: Has in-workpoverty increased?

9 Percentage of Those in Work At Risk of Poverty, EU % with annual equivalised incomes below 60% median Austria Belgium Denmark 3* 4 5 Germany Spain Finland France Greece Hungary Ireland Italy The Netherlands Poland Portugal Sweden 5* 7 7 UK Source: EU Social Inclusion Indicators website, I. Marx, B. Nolan, In work poverty in B. Cantillon and F. Vandenbroucke, For Better For Worse, OUP, forthcoming.

10 Section 3: Understandingin-work poverty

11 Income Poverty Risk for Low Paid Earners, EU 2007 Austria 14 Belgium 8 Germany 16 Denmark 19 Spain 15 Finland 14 Greece 13 Hungary 14 Ireland 5 Italy 22 The Netherlands 8 Norway 14 Poland 16 Portugal 19 Romania 17 Sweden 20 UK 11 Source: Analysis of EU-SILC microdata, (I. Marx, B. Nolan, In work poverty in B. Cantillon and F. Vandenbroucke, For Better For Worse, OUP, forthcoming)

12 single person Income Poverty Risk for Low Paid Earners, by household position, EU 2007 single parent single earner couple Dual earner, 1st earner Dual earner, 2nd earner other FTFY worker Austria Belgium Germany Denmark Spain Finland Greece Hungary Ireland Italy The Netherlands Norway Poland Portugal Romania Sweden UK Source: Analysis of EU-SILC microdata, (I. Marx, B. Nolan, In work poverty in B. Cantillon and F. Vandenbroucke, For Better For Worse, OUP, forthcoming) Total

13 Understanding in-work poverty: The (vast) majority of relatively low-paid workers do not live in poor households Manyrelativelyhighup the incomedistribution as theytend to live in multi-earner households Low-paidjobs play to an extent-a rolein reducingthe poverty riskin the double earnerera (I. Marx, B. Nolan, In work poverty in B. Cantillon and F. Vandenbroucke, For Better For Worse, OUP, forthcoming)

14 Understanding in-work poverty But low earnings severely problematic if there are no other incomes(earnedor transfers); the povertyriskriseswiththe number of dependent persons, children or others The core of the working poor consists of sole earners with a family to support. Single parents are relatively overrepresented but the majority are two adult households with children (I. Marx, B. Nolan, In work poverty in B. Cantillon and F. Vandenbroucke, For Better For Worse, OUP, forthcoming)

15 Understanding in-work poverty What matters is the combined labour market position of household members Hence, cross-country differencesare not onlyreflectiveof the extent of low-paid empoyment or job precarity In-work poverty is equally if not more strongly associated with institutional factors affecting household employment patterns, e.g. child care cost and availability, breadwinner bias in labour market institutions...and with inadequacy of welfare state ( e.g. child benefits )

16 Section 4: Broadeningthe scope

17 Section 4: Broadeningthe scope Household workintensity: the aggregateof individual work intensities in a household 0= no-oneat activeageworkedduringthe preceding year 1=averyone at active age was full-time full-year employed

18 Section 4: Broadeningthe scope -work intensity < 0,5 -work intensity > 0,5 Distribution of jobs? Pre transfer poverty? Welfare state?

19 8.00 Decomposition of actual change hh joblessness, , EU es ie nl it gr uk be pt fr at lu due to non-employment due to household shares between households within households actual change

20 Figure 5-8. Evolution AROP rate (pre and post transfers) active age population (20-59 y.o.), work intensity 0.5 in the nineties Source: own calculations ECHP ( ) and SOEP

21 Figure 5-8. Evolution AROP rate (pre and post transfers) active age population (20-59 y.o.), work intensity 0.5, Source: own calculations EU-SILC ( ) and SOEP

22 Figure 5-7. Evolution AROP rate (pre and post transfers) active age population (20-59 y.o.), work intensity < 0.5 Source: own calculations ECHP ( ), EU-SILC ( ) and SOEP

23 Figure 5-1. Evolution of size cash benefits (% of total disposable income, left axis) and SILC 2008 point estimate of cash benefits (right axis) Note: ppc = percentage point change Source: own calculations ECHP ( ) and EU-SILC ( )

24 conclusion in the years before the crisis in work poverty was not on the rise in most countries, so probably no unavoidable trade off between in work poverty and competiviness in work poverty is strongly associated with low work intensity at the household level, linking in turn to tax and benefit system

25 conclusion where in work poverty was on the rise the poverty reducing capacity of social transfers seems to have declined.likewise, more adequate social transfers accounted at least partly for decreasing in work poverty in Hungary and in the UK ( in the nineties ).

26 conclusion Equally important is the issue of work poor households In many of the rich countries they benefited only partially from expanding labor markets Significant and substantial decreases in poverty reduction through social transfers occurred in many of the rich welfare states but also in some of the new Member States In many countries poverty increased reaching extremely high levels, ranging from 70% in Latvia over 55% in Germany to more than 40% in Finland, Belgium and Sweden.

27 conclusion Enormous differences in distributional effort Thinking about EU wide solidarity presupposes a definition of good fiscal and behaviour and of effective social redistribution