Working Poor in Europe

Transcription

1 Working Poor in Europe Georg Fischer Director for Analysis, Evaluation, External Relations DG Employment, social affairs and inclusion

2 Clarification of definitions and terms Overall social trends Poverty in working age Joblessness and in-work poverty The dynamics of poverty Who is most affected? What causes poverty in working age and what can help? Channels of in-work poverty Channels of labour market exclusion Both LM institutions and well designed social protection (incl. Services) matter What about Austria? Labour markets likely to continue to polarize and Welfare systems under pressure

3 Overall social trends

4 Striking North/South Divide Unemployment rates (%) EA: South & P =10 ppts Non EA: South & P Non EA: North EA: North

5 % of active population Rising long-term unemployment Evolution of long-term unemployment rates* across the EU between 2007 and (third quarter) 2012 (third quarter) LU AT SE FI NL DK DE UK CZ MT RO BE CY PL FR EU SI HU EE IT LT LV BG PT IE SK ES EL * People unemployed for more than 12 months as a % of the active population Source: European Commission

6 Poverty and social exclusion increased in half of EU countries between 2008 and 2011 At-risk-of poverty or social exclusion, total population

7 More timely data: Financial distress in Austria and Spain AUSTRIA SPAIN Source: ECFIN Monthly Consumer Surveys. - Share of people who declare that they had to draw on savings or go into debt in order keep up current expenses - The rise is especially stark in Spain (10 pp more over a year), especially for low income households. Moderate rise in Austria.

8 Impact of crisis not uniform across population subgroups, poverty

9 Poverty and social exclusion increased more for the working age population, only in 4 countries incl AT declining Source: Eurostat EU-SILC

10 Poverty in working age: refining the diagnosis by looking at the dynamics and who is affected? Factors that impact: - labour market exclusion: LTU, inactivity - work: intensity and wage level - benefits (UB, SA, child) level/design

11 The multiple facets of poverty and social exclusion working age EU-28 Risk of poverty or exclusion = 24.4% 30.5 Mio 46.5 Mio Romania Risk of poverty or exclusion = 39% 2.9 Mio 3.6 Mio Austria Risk of poverty or exclusion = 16% 0.4 Mio 0.5 Mio Netherlands Risk of poverty or exclusion = 17% 0.9 Mio 1 Mio 26 Mio 0.95 Mio 0.2 Mio 0.3 Mio Relative poverty prevails Material deprivation prevails Relative poverty prevails Jobless households larger

12 2 main forms of poverty in working age: jobless households and working poor Jobless households reflect severe forms of labour market exclusion. After 2008 it increased in all countries including in Austria and Germany. Sharp increase countries most hit by the crisis (Spain and Greece) Poverty of those in work also increased, including in Germany, and lately in Austria. Strong increase in Spain started before crisis. Structurally high levels in Greece (recent drop linked to relative position of those who stay in work compared to large number out of work)

13 Both those working and not working face poverty but... those not working stay longer in poverty UK Not Working Working CZ Working Not Working IT Working Not Working , EU-SILC, population

14 Channels of in-work poverty Work intensity how much does a household need to work to escape poverty? What is the impact of part-time or temporary work? Low wage what if household members work as much as they can? Household composition how does dependent household members like e.g. children influence the risk of poverty?

15 permanent temporary full-time part-time no dependent children with dependent children % in-work poverty General factors of in-work poverty in EU Type of contract Working time Household type Source: ESDE

16 Temporary work in selected countries: relevant impacts but they differ widly

17 Impact of work intensity and presence of children on the risk of poverty In Germany, having children reduces work intensity without increasing the risk of poverty Bars: % of people at different levels of WI Lines: Risk-of-poverty In Portugal, having children doesn't reduce work intensity, but increases risk of poverty even for those working full time Source: ESDE 2011

18 Channels of labour market exclusion High risk of becoming unemployed (high levels of unemployment, precarious working conditions,low skills, etc) Low chances to get back to work (lack of jobs, lack of skills, disincentives and lack of support services, etc)

19 Divergent impact of crisis on entry and exit rates to employment - Much variation in transition to and out of unemployment across EU member states (and much more differences than before the crisis) - Some good performers : NL, SE and CZ and FI - Unfavourable position of ES (very high inflows to unemployment) and LT, EL, (very low return to employment) - Low dynamic labour markets in RO, SK, BG, IT Chart 5: Transition rates to and out of unemployment from 2006 to 2011 Source: EU-LFS longitudinal data DG EMPL calculations

20 Labour market segmentation Temporary + part-time employment far more vulnerable leading to massive decline in total employment Source: DG EMPL calculation based on Eurostat, LFS, [lfsq_egan], [lfsq_etgaed], [lfsq_epgaed], [lfsa_etgar], [lfsa_etpgacob], [lfsa_eppgai] Note: TEMP refers to temporary employees, TOT refers to total employment, PT refers to part-time employment.

21 Austria and EU: Migrants and gender Having looked at facts and factors expkaining exclusion and in work poverty what is the outcome for Austria in relation to EU and comparable countries.

22 Migrants facing higher risk years old EU SILC 2011

23 Gender inequalities EU SILC 2011

24 Labour market and employment policies Promote labour market transitions: effective employment service, provide protection during job search, incentives, training; Stabilise employment: Kurzarbeit, manage hours, also about contractual arrangements and about career prospect; Wages have different impacts: competitvness, demand, inequality Fight discrimination in the labour market

25 Transition rates and institutions high return rate to E Generous UB + strong activation requirements Low & short UB + low activation Low dynamics Severely hit by the recession Low to average UB + low activation

26 Which policies help the unemployed back to work? Better macro-economic conditions and policies supporting job creation ACTIVATION: Participating in lifelong learning (LLL) PROTECTION: Receiving benefits % of unemployed returning to work % unemployed returning to work /to inactivity after 1y. Source: EU-LFS longitudinal data DG EMPL calculations.

27 The role of well designed welfare systems Combining income support and enabling services (childcare) Beyond replacement rates, improving the coverage of benefits is important for effectiveness in some countries

28 Similar budgets for social protection lead to very different poverty reduction

29 Structure of social spending (family and children) vs. Performance on multiple outcomes Sweden and Denmark spend more in-kind and combine low child poverty with high mothers' employment rate Source: Eurostat, ESSPROS, EU-SILC, EU-LFS, EMPL calculations. Germany and Austria spend more in cash and achieve similar child poverty outcomes at the cost of lower mothers' employment rate

30 More accessible childcare leads to greater female employment rates Share of children aged 0-3 in formal childcare and employment rates of women with young children (2010)

31 Make a case for social protection as investment Unemployment and social benefits in cash Social services; employment services Education early childhood Can be seen as productive in the short, medium and long term Reduce exclusion and in work poverty, avoid social tensions Strengthen employment potential Basis for sustainable growth in the long run

32 3 Main products 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 ) 113

33 Three Main products Annual Review Quarterly Review Working papers Employment & Social Developments in Europe ESDE Content: Key features + Thematics chapters Employment and Social Situation Quarterly Review Content: Recent trends + Special focuses Methodological papers (e.g. Social expenditure in the crisis, timely monitoring of social trends, etc )