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Economic and Social Policies, PUBLICATIONS

In-work poverty in the EU

© M. Schuppich / Fotalia.com

© M. Schuppich / Fotalia.com

Having a job yet still being unable to make a living: In-work poverty is a phenomenon that affected 9,1 percent of the working age EU population in 2012. The rate of those in work and at risk of poverty has been on the rise since 2005. It applies to those with an income below 60% of the national median. In the aftermath of the crisis, wage polarisation and an increase of part-time work have led to higher rates of in-work poverty in Europe. At the same time, nearly a quarter of the overall EU population is facing the risk of poverty or exclusion.

Employment does not always protect from poverty. Whether a person is becoming “working poor” is decided by working status and household income. Analysts often see a combination of low pay, high needs and weak ties to the labour market as root causes. In general the risk is higher for single households (sole earners, especially women with dependent children), young workers and temporarily employed people as well as those with low levels of education. Paradoxically, men face a higher risk than women, even though women are more often in part-time employment with a lower salary. Yet women are more often secondary earners, meaning that the household income does not depend only on them.

At EU level, the Europe 2020 strategy aims to lift 20 Mio. people out of poverty and social exclusion by creating more and better jobs, especially for young people. In its 2013 Annual Review on Social Developments in the EU the European Commission clearly pointed out the need to address the increase and risks of in-work poverty. During the 2009-2014 term, the European Parliament raised awareness of the issue in several resolutions such as Strengthening the social dimension to the EMU or Role and operations of the Troika.

This keysource presents a selection of reports and studies in the field. Most publications analyse the relationship between of economic vulnerability and disposable income. Others shed light on the impact of social benefits, minimum wage and household composition on in-work poverty.

Overview

In-work poverty. Ive Marx, Brian Nolan, GINI Discussion paper 51, July 2012, 48 p. This paper explains what the issues at stake are and gives an overview of the current debate. It analyses the factors that lead to in-work poverty and investigates the link between low pay and low work intensity at household level, concluding that this is where work intensity needs to be increased.

EU institutions

Employment and Social Developments in Europe 2013. European Commission, 21 January 2014, 504 p. Chapter 2 (p. 129ff) provides an analysis of working age poverty by looking into its causes and by describing the profile of those affected and policies needed to reduce the poverty risk. Moreover, the report compares the performance of different national policies in EU Member States.

Working poor in the EU. Eurofound, 2010, 41 p. This study compares the extent of in-work poverty in 27 EU countries and concludes that in-work poverty has not been a policy priority in all but six EU countries. It further presents views of social partners and investigates to what extent the economic crisis has deteriorated the situation of “working poor”.

In-work poverty and labour market segmentation in the EU: Key lessons. Hugh Frazer, Eric Marlier, Synthesis Report, EU Network of Independent Experts on Social Inclusion, December 2010, 64 p. This report analyses structural factors that lead to in-work poverty such as a high segmentation of the labour market. It highlights that there was little debate in Member States on the topic and that national policies were often either lacking or not far reaching enough. It concludes that national policies should focus more on improving the quality of jobs and on raising pay levels.

EU countries in comparison

Working poverty in Europe : a comparative approach. Neil Fraser, Rodolfo Gutierrez, Ramon Pena-Casa, Basingstoke: Palgrave Macmillian, 2011, 342 p. Available in the Library, Shelfmark S 28.12.44 EUR WOR 11. This book provides a comprehensive comparative analysis of in-work poverty in Europe. It presents different case studies from countries such as France, Spain, the United Kingdom and Poland and identifies the various dimensions of in-work poverty.

Low pay, in-work poverty and economic vulnerability: A comparative analysis using EU-SILC. Bertrand Maitre, Brian Nolan, Christopher T. Whelan, The Manchester School, Volume 80, January 2012. Based on EU-SILC data, this study demonstrates the impact of low pay on in-work poverty. It finds that low pay rates for full-time jobs are substantially higher for women whilst income poverty rates are much higher for men than women. It assumes that low pay is a question of age in many EU countries with young people being stronger affected.

Why are some workers poor? The Mechanisms that Produce Working Poverty in a Comparative Perspective. Eric Crettaz, Giuliano Bonoli, REC-WP 12/2010, 31 p. This article explains the role welfare regimes play in increasing or decreasing in-work poverty through national policies and takes a very close look on the impact of family policies.

Income and in-work poverty

Mind the Gap: Net Incomes of Minimum Wage Workers in the EU and the US. Ive Marx, Sarah Marchal, Brian Nolan, ETUI Working Paper 2012.05, University of Antwerp and Economic and Social Research Institute, 2013, 36 p. Based on their findings the authors argue that minimum wage has a limited impact on preventing financial poverty and that new policy solutions such as negative income taxes (receiving instead of paying taxes) need to be explored. The study is based on a comparison of 20 European countries and three US states.

The working poor: Too low wage or too many kids? Daniele Meulders, Sile O’Dorchai, American International Journal of Contemporary Research, Vol. 3, Issue 7, July 2013, 17 p. This study looks deeper into the “in-work at-risk-of-poverty-rate” indicator introduced by the EU in 2003 and discusses its shortcomings, especially when it comes to the assessment of women’s poverty.

Work, family or state? From wage inequalities and in-work poverty in a European cross-country perspective, April 2012. This paper investigates the role of wage inequalities on living standards in a cross-country comparison of six EU countries.
Temporary, part-time work and in-work poverty

In-work poverty in times of crisis: do part-timers far worse? Jeroen Horemans, Ive Marx, ImPRovE discussion paper No. 13/14, August 2013, 37 p. With the onset of the crisis, part-time work has increased throughout Europe. This paper looks into the impact of part-time work on in-work poverty rates across the EU15 and the role of welfare regimes.

It’s all about the money? Temporary employment, gender, poverty and the role of regulations from a broad European perspective. Wim van Lancker, CSB working paper No 11/02, March 2011, 34 p. This article looks into the risk of in-work poverty for people with temporary work contracts. At the same it evaluates the gender dimension of temporary employment and poverty. Findings suggest that not the type of employment contract but rather the household composition define the risk of poverty.

Statistics

Eurostat collects various data such as the “in-work at-risk-of-poverty rate” by education level, full/part-time work, type of contract, and work intensity of the household. Data is based on the results from the EU Statistics on Income and Living Conditions (EU-SILC). Moreover, Eurostat published several statistical working papers on income inequality, household employment and in-work poverty:

In-work poverty in the EU. Eurostat, 2010, 52 p. This paper looks deeper into the statistical approach towards in-work poverty and thereby describes what makes measurement difficult: the definition of workers and the combination of individual and collective (household) indicators.

Individual employment, household employment and risk of poverty in the EU – A decomposition analysis – 2013 edition. Eurostat, 10 June 2013, 70 p.

Household composition, poverty and hardship across Europe. Eurostat, 10 December 2013, 40 p.
This paper analyses the link between household composition and poverty risk and its variation among different EU countries and regions.

Income inequality statistics Eurostat, Statistics in focus, 2014.

About Verena Kern

Information Specialist for Employment & Social Affairs

Discussion

2 thoughts on “In-work poverty in the EU

  1. It is a question of supply & demand. The EU’s broken model of free movement has flooded the market with cheap labour which hits those at the keenest edge of the knife, they cant grow their income levels because more EU migrants will come along & work for the rates that we find too difficult to live on. They live like battery hens so their meagre wages aren’t consumed on the basics of life such as heating, lighting & food while the rest who have bedrooms matching the number of occupants can only afford to live an existence that see’s then scrape through to their next wage cheque.

    If EU migrants on the low pay scale were ended the existing workers value to their employer would increase as would their wages money would recirculate in the real economy & the benefits would be felt across the wider population.

    Like

    Posted by Joe Thorpe | August 13, 2014, 15:20

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  1. Pingback: Out and In-work poverty plus Mini jobs, Maxi-poverty | Marcus' s Space - August 23, 2014

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