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1 Universidade de Lisboa ISEG Development Studies Seminar 2018 February 22, 2018 Human Needs and Income Adequacy in Portugal José António Pereirinha (ISEG, Universidade Lisboa) 1
2 Adequacy of living standard is a human right. Universal Declaration of Human Rights, 1948, art. 25 th Article 25 Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. Economic Security Income Adequacy 2
3 Adequacy of living standard implies income adequacy : sufficiency of disposable income to assure human dignity, in a society where the satisfaction of needs is very much dependent on private expenditure on consumption of economic goods. European Pillar of Social Rights (April 2017) (adequate income for living in dignity) 6. Wages Workers have the right to fair wages that provide for a decent standard of living. Adequate minimum wages shall be ensured, in a way that provide for the satisfaction of the needs of the worker and his / her family in the light of national economic and social conditions, whilst safeguarding access to employment and incentives to seek work. In-work poverty shall be prevented. 3
4 14. Minimum income Everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring a life in dignity at all stages of life, and effective access to enabling goods and services. For those who can work, minimum income benefits should be combined with incentives to (re)integrate into the labour market. 15. Old age income and pensions Workers and the self-employed in retirement have the right to a pension commensurate to their contributions and ensuring an adequate income. Women and men shall have equal opportunities to acquire pension rights. Everyone in old age has the right to resources that ensure living in dignity. 4
5 relevance of such issues for the Portuguese population low amount of the minimum wage (is it adequate?); fragile Welfare State in Portugal: weak economic support of social rights + low redistributive efficiency of social transfers + high risk of financial unsustainability; permanent austerity since 2006 (Social Security Reform), reducing the risks of financial unsustainability but also reducing income adequacy of pensioners; Solidarity Supplement for the Elderly (non-contributory income support), created in 2006, intending income support of the elderly poor; austerity packages of economic and social policies since mid-2010 (internal social devaluations); 5
6 The need of widely accepted Reference Budgets as a normative guideline for the decision on minimum incomes (minimum wages, minimum pensions, minimum social benefits, etc) Reference Budgets: patterns of expenditure for different types of households to live at an acceptable level of well-being in the society; normative income threshold monetary reference for citizenship rights to identify poor people and to measure poverty in a society to assess adequacy of social transfers 6
7 Some relevant policy issues who has legitimacy to say what is human dignity in some society? what is a dignified living standard in that society? how to calculate a consumption budget that corresponds to such a living standard and, therefore, may be considered as a reference budget, with normative content? how does it compare with the real consumption budget, how does it deviate from the reference budget, and how to interpret such deviation? how can this comparison help the design of social policies? 7
8 Portugal Human Needs and Income Adequacy in Portugal reference income thresholds EUROSTAT poverty threshold (60% median adult equivalent disposable income) IAS (Index of Social Support), originally linked to minimum wage Minimum wage created in 1974 reference budget 1965, updated for 1969 (Ministry of Labor), following the concept of living wage (influence of ILO) and the the concept of vital minimum (influence of French sociologists and experience of the creation of SMIG) before Minimum Wage CRGE (1951; 1960) and CUF (1960) (big private firms, for their employees) 8
9 two different methods to respond to some of these questions rap project (Adequate Income for Portugal/Rendimento Adequado em Portugal), following method MIS, UK (CRSP, University Loughborough, UK), for Portugal , with reference to 2014, updated to 2017 (using CPI) EU Reference Budget (Portuguese participation in the Reference Budgets Network), following method IMPROVE (University Antwerp), for Lisbon comparison of methods comparison of (some) results (EU Reference Budget only for food baskets; not for the same family types) 9
10 reference budgets priced basket of goods and services that represent a given living standard Sec. XVII: William Petty: cost of a food budget required for urban survival in Ireland. end sec. XIX/middle sec. XX: reference budgets built by Rowntree (1901, 1941, 1951), which were later used by W. Beveridge to estimate the amount of the social benefits; supported on experts opinions (physical survival according to doctors opinions); this method would last until the 1980s 1985: creation of the Family Budget Unit (FBU), a research centre of the York University; In Family Budget Unit (FBU), J. Bradshaw has built reference budgets for the UK (for 1990) 10
11 Family Budget Unit (FBU) John Bradshaw low cost but acceptable (LCA), very cheap reference budgets modest but adequate (MBA), according to the current living standards, enough for health care, to take care of the children and participation in the society reference budgets supported on surveys and, for some items (food, housing), although supported on experts opinions 1990s: the Centre for Research on Social Policy (CRSP), University of Loughborough (UK) used the method of FBU but, instead of experts, the method consisted on using the dialogue among researchers and population (focus groups): the consensual approach: the Consensual Budget Standard (CBS) Veit-Wilson, J. H. (1987). Consensual Approaches to Poverty Lines and Social Security. Journal of Social Policy, 16(2), pp
12 Centre for Research on Social Policy (CRSP), University of Loughborough FBU was extinguished in 2011, and its scientific heritage was transferred to the CRSP project MIS (minimum income standard) it makes use of two methods: what population think to be required to live with dignity in the society (needs, not wants), by the participation of selected people into focus groups and supported on consensual opinions got there; experts opinions in some relevant areas (food, housing, health). 12
13 Reference Budgets (RBs) the methodological approaches to these questions fall into 4 major categories (my proposal, inspired on Bradshaw, 1994): top-down methods (based on expert s knowledge and supported on science) bottom-up methods (what people think, on focus-groups ) mixed methods (a mixture of top-down and bottom-up methods) statistical methods (large scale survey approach method) In the history of research methods on RBs there are examples of these categories: Rowntree ( top-down methods); MIS ( bottom-up methods); Bradshaw (statistical methods); IMPROVE (mixed methods). 13
14 rap project 14
15 rap (MIS) and EU-RB (IMPROVE): different approaches and methods objective and scope rap (MIS): focused on national-level living standard; EU-RB (IMPROVE): intended to serve cross-country comparative purposes. legitmacy for decision on what is dignity rap(mis): the concept of dignity is that consensually defined by ordinary people in the context of Focus Groups ( what people think ); EU-RB (IMPROVE): dignity means an adequate participation in society, a concept supported in scientific literature (theories of human needs) and experts knowledge ( what science says ), with some FG discussion. remark: does what science says provide grounded legitimacy for a wide generalization in the EU about what is an adequate living standard without further discussion in FG, accounting for local (national) specificities? 15
16 dignity in the rap (MIS) "A dignified standard of living today, in Portugal, includes, in addition to food, housing and clothing, everything that is required for a person to be healthy, feel secure, relate with others and feel respected and included in society. It enables free and informed choices about practical things of life and ways of personal fulfilment, including access to education and work, culture and leisure." assumption that human needs are best translated into a basket of goods and services socially perceived as needed by using ordinary people common knowledge (from the relevant family types) about what is required to have a dignified standard of living in the society, in a context enabling discussion and negotiation. FG: which goods, quantity, duration, where are bought, etc FG crucial role of negotiated consensus 16
17 dignity in the RB-EU (IMPROVE) dignity means to have adequate social participation in the society, which content is supported on human needs theory, with some FG discussion on social positions that correspond to such adequate participation; health and autonomy of agency as universal human needs required for social participation in order to play their social roles in the society (Doyal and Gough, 1991) there are ten intermediate needs that must be fulfilled to assure full participation in the society (healthy food, suitable clothing, ) in the case of healthy food, there are international and national recommendations and the judgments and opinions of experts on the economic goods that satisfy those needs. FG a confirmatory role (not consensus). It is justified to examine whether the baskets are perceived as fair and purchasable and, if not, how they should be 17 adapted (Storms et al., 2013).
18 18
19 EU-RB (on the food basket) 3 FGs with the same socioeconomic composition and aiming at the same results (to gain data saturation) a reference household for discussion discussion on social participation (what means an adequate social participation in the society) (list of social position that should be able to take in the society) list of things people should be able to do or to have to function well to play such social positions to compare with the intermediate needs by Doyal and Gough to discuss the acceptability of a previously made food basket (acc recommendations) to discuss social functions of food (acc to social functions) discussion of purchasing patterns, choice of shops and pricing after FG, the experts amend the food basket 19
20 rap elderly people (age 65+), living alone or as a couple working age adults (age 18-64), no children, living alone or as a couple workig age adults (age 18-64) with children (age 2, 12, 24) EU-RB single man (age 40) single woman (age 40) couple (age 40). no children single woman (age 40), two children (age 10, 14) couple (age 40), two children (age 10, 14) 20
21 some results adequate income in 2017 (rap method) and some minimum incomes the consensual equivalence scales and comparison with OECD equivalence scales some (possible?) comparison rap and EU-RB income 21
22 22
23 23
24 24
25 25
26 some conclusive notes both methods aim to obtain a reference budget that originates a minimum acceptable (adequate) living standard in the society (rap/national; EU-RB/intending comparative purposes differences on the kinds of legitimacy for decision of what is acceptable, or adequate, as a living standard in the society (rap/consensually defined by ordinary people; EU-RB/scientific literature and experts for an adequate participation in the society) the role of negotiated consensus for obtaining a consensual standard of social adequacy (rap/yes; EU-RB/confirmatory role of the people s opinion) the policy relevance of obtaining comparable reference budgets in the EU involves to accept some analytical costs, what requires a deeper national research on human needs (cultural, social, economic and institutional diversity among countries in the EU) 26
27 The case of the elderly population 27
28 the procedures human dignity => satisfaction of human needs => satisfiers => economic goods to identify human needs (FG) for those needs, which are the satisfiers (individual or collective forms of being, of having, of doing and of interacting) to list the corresponding economic goods (the satisfiers require economic goods, depending on the culture in the society and the available resources in that society) focus groups (FG) Correia, A., Pereira, E., Costa, D. (2016), De que necessitam as pessoas idosas para viver com dignidade em Portugal. Análise Social, 219, LI (2º), FG: which goods, quantity, duration, where are bought, etc FG crucial role of negotiated consensus 28
29 29
30 30
31 how to read these figures the highest values of expenditure required for living in dignity (food and housing, i.e, subsistence, but also leisure and culture) annual amount less than for working age population (but higher for health care, for communication and also for domestic and personal goods) comparing expenditure for couple with expenditure for single (economies of scale if the ratio < 2.0) to compare adequate income with EUROSTAT poverty threshold to compare actual income with adequate income (welfare gap) to compare adequate income with minimum incomes in economic and social policy 31
32 economies of scale (consensual) ratio expenditure couple/expenditure single housing = 1.28 domestic goods and services = 1.22 communication = 1.26 transportation = 1.50 food = 1.77 some economic goods have some characteristics of public goods the average cost of consumption reduces with the size of the household reducing price effect of buying larger quantities of goods dressing and footwear = 2.00 health care =
33 33
34 Poverty threshold in /month Adequate income for a single person age 65 and over, in /month 422 = 617 *
35 35
36 further research on the elderly population to estimate poverty of the elderly using new poverty thresholds (using rap income), and the corresponding amount of social deficit for the elderly to analyse the adequacy of social minima in Portugal (lack of harmonization of criteria of minima in the various areas of social policy) to improve the research on economic security (in the sense of Jacob Hacker) of the elderly population, meaning to study the degree to which the elderly are protected against economic losses or unexpected expenses 36
37 Thank you! 37
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