• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Minimum income provisions in the EU: importance, adequacy and prospects for improvement
 

Minimum income provisions in the EU: importance, adequacy and prospects for improvement

on

  • 654 views

Presentation by Ive Marx (*/**) and Sarah Marchal (*) [(*) Centre for Social Policy, University of Antwerp (**) IZA, Bonn] on the occasion of the EESC hearing on European minimum income and poverty ...

Presentation by Ive Marx (*/**) and Sarah Marchal (*) [(*) Centre for Social Policy, University of Antwerp (**) IZA, Bonn] on the occasion of the EESC hearing on European minimum income and poverty indicators (Brussels, 28 May 2013)

Statistics

Views

Total Views
654
Views on SlideShare
602
Embed Views
52

Actions

Likes
0
Downloads
0
Comments
0

2 Embeds 52

http://www.eesc.europa.eu 51
http://unjobs.org 1

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • update Sarah: IE zonder housing allowance
  • Voor social assistance  met housing related part of social assistance included (lijkt me het meest logische) Maar in elk geval is een bruto getal redelijk bizar voor SA (per gezinstype verschilt bruto, hangt sterk af van onze assumpties voor housing costs)
  • Titel aangepast, stond eerst monthly Of is het de bedoeling dat deze grafiek monthly waarden weergeeft?
  • Niet duidelijk in hoeverre bruikbaar  voor single valt dit wss nog mee, maar afhankelijk van hoe verschillende means tests op elkaar inwerken ga je andere verhoudingen krijgen
  • Niet duidelijk in hoeverre bruikbaar  voor single valt dit wss nog mee, maar afhankelijk van hoe verschillende means tests op elkaar inwerken ga je andere verhoudingen krijgen
  • Niet duidelijk in hoeverre bruikbaar  voor single valt dit wss nog mee, maar afhankelijk van hoe verschillende means tests op elkaar inwerken ga je andere verhoudingen krijgen

Minimum income provisions in the EU: importance, adequacy and prospects for improvement Minimum income provisions in the EU: importance, adequacy and prospects for improvement Presentation Transcript

  • Minimum income provisions in theEU: importance, adequacy andprospects for improvementEuropean Employment and Social Committee"European minimum income and poverty indicators“ public hearingBrussels, 28 May 2013Ive Marx (*/**) and Sarah Marchal (*)(*) Centre for Social Policy, University of Antwerp(**)IZA, Bonn
  • Why minimum income protectionmatters
  • 3One slide summary to social policy thinkingduring the 1990s-2000s…• Late 90s: “Third Way”, “Active Welfare state” and associateddoctrines came to the fore• EU: European Employment Strategy (EES), Lisbon Agenda, KokReport ‘Jobs, jobs, jobs’, OMC Social Inclusion,• M. Barrosso: ‘A job is the best protection against poverty’• EU: clear employment targets, no social inclusion targets, onlymonitoring of outcomes (including income inequality)• Core idea: more people in work is key to social inclusion andpoverty reduction
  • 4Strong pre-crisis employment gains,but poverty did not decline…Source: Marx and Nelson (2012)
  • 5Europe 2020• Employment target of 75%• But also new “poverty” target: 20 million fewer people sociallyexcluded on one of three indicators (poverty, hh work intensity,deprivation)• Subsidiarity remains the guiding principle and the OMC remainsprincipal EU governance instrument• But minimum income protection has regained prominence inCommission documents (reference to ’92 Recommendation) +European Parliament Resolution ‘10• Integrated Guidelines call for ‘modern and adequate socialprotection’
  • 6The Europe 2020 uphill struggle…
  • 7Why are jobs not enough?• The poor do not tend to be the first beneficiaries from job growth• Having/getting a job does not always mean a life free from the riskof financial poverty: in-work poverty• (Many other factors: socio-demographic shifts, wage trends,poverty line dynamics,…)
  • 8Minimum income protection (MIP) matters• Thus provisions to guarantee a minimum income floor matter toworkers and non-workers alike, as well as to children growing upin those households• Adequate MIP is not a matter of ‘getting right’ one type of provision(say social assistance)• It is a matter of getting right the whole welfare state architectureand committing enough resources
  • 9Why we need good indicatorson (minimum) income protection• OMC: mostly reporting on outcomes, plus spending indicators• But these depend on contextual and compositional factors- Labour market conditions (unemployment, employment patterns, wages)- Household composition (patterns of marriage, divorce, childbirth, …)- Policies that influence these dynamics (e.g. ALMPs, child care,..)• Institutional indicators which are directly reflective of policy intent,are essential for the OMC to function effectively as a tool for policylearning
  • 10Existing data sources on MIP• Several data bases available compiling cross-country comparableindicators of MIP, building on standard family type simulations,including:- Indicators of Minimum Income Security Schemes (EuMin)- The Social Policy Indicators Database (SPIN)- OECD database- CSB-Minimum Income Protection Indicators dataset (CSB-MIPI)
  • 11Methods issues and limitations• Limited number of family types and situations• Non-standard (part-time, temporary) workers• Measurement of additional (discretionary) allowances/benefits• Enforcement of minimum wages; take-up of benefits (stigma) andtime lags (administrative efficiency)• Impact of sanctions• Regional variation• Treatment of housing costs• …
  • 12Data base used here• CSB Minimum Income Protection Indicators (MIPI) database- Minimum wages (including net incomes at minimum wage)- Social safety net provisions for able bodied working aged- Old age minimum income provisions- Conditionality/sanctioning/support• Standard family type simulations• National experts in 25 EU Member States + 3 US States• Period (1992)-2001-2009-2012
  • Minimum income protection forthose out of work at active age
  • 14Net minimum income package comprises• Gross social assistance benefit- Minus income and local taxes• Plus:- child benefits- non-discr.housing allowances- non-discr. social assistance top-ups
  • 15Minimum income provisions fall well short of povertythresholds almost everywhere in the EU (2012)PovertythresholdSource: CSB-MIPI database
  • 16While dependence on final safety nets has increased…
  • 17Some governments took additional steps during the crisis(2008-2012)Source: CSB MIPI
  • 18Is more adequate minimum income protectionpossible?• Two principal perceived impediments (among others):- “Adequate minimum income protection is tooexpensive”- “Adequate minimum income protection isincompatible with sufficient work incentives”
  • 19• Indicative first-round calculations have been made of theredistributive effort required to lift all household incomes to the60% level threshold, i.e. to eradicate relative poverty completely• While such calculations should be treated with much caution, theysuggest that in most European countries, this expenditure wouldamounts to less than 5 per cent of aggregate equivalent householdincome in each Member state; nowhere is it higher than 9 per cent• Required effort in GDP terms smaller• But strongest efforts required in the poorest countries in GDP percapita terms…Is adequate minimum income protection tooexpensive?
  • 20Is adequate minimum income protection compatiblewith a well-functioning labour market?• Some countries (e.g. Denmark and the Netherlands) combinecomparatively high levels of MIP with relatively well functioninglabour markets and low chronic benefit dependency => muchscope for peer learning (OMC)• Minimum income protection provisions in these countries comeattached with intensive monitoring (and sanctioning), empoweringpolicies (training) and active labour market policies• This comes at signifcant additional cost and need foradministrative capacity
  • Minimum income protection forworkers
  • 22In-work poverty• The poverty risk facing European workers is relatively low in mostcountries (EU27 9% in 2010; ranging from lows of 4% to 18+%)• But among those living in poverty at working age a sizable shareare already in work• In some countries upwards of 30 per cent of poor people atworking age live in high work intensity households• Most poor children in the EU grow up in households that dependmainly on earned income• => this points to the importance of supporting families mainlyrelying on earned income
  • 23MIP for workers• Minimum wages and collective wage setting are essential pillarsbut are not enough• For households with dependent children and otherssupplementary transfers are essential• These can come in the form of child benefits or in-work benefits• EITC/WTC type tax-channeled low earnings supplements areinteresting and worth further exploration but do not offer a modelfor wholesale emulation throughout Europe
  • 24Main points• While giving more people access to work is important for a widerange of reasons, increasing the proportion of people in work doesnot automatically translate into fewer people in relative poverty;• This points to the importance of adequate MIP for workers andnon-workers alike (and their children)• Very few EU countries have social safety nets that provideadequate protection against poverty (60% median); MIP levels forfull-time workers tend to be more adequate but only for workerswithout dependent children
  • 25Main points• Relatively high levels of minimum income protection are notnecessarily prohibitively expensive and potentially compatible withwell-functioning labour markets and low structural dependency; yetthere may be important contextual constraints to implementation• While there is ample scope for the implementation and expansionof MIP provisions in many EU countries, there appear to be limitsto incremental expansion of traditional schemes to levels ofadequacy for some at-risk-of-poverty population segments• Innovative paths to more adequate minimum income protectionrequire further analysis
  • Additional graphs for reference
  • 27The distribution of household work intensity in the working-age population (20-59)living in relative income poverty (SILC 2010)Source: Analysis of EU-SILC 2010 microdata
  • 28Source: Marchal, Marx and Van Mechelen (2012), IZA DP6510
  • 29Gross monthly Social Assistance benefit in 2012,PPS, euro and relative to average wagesSource: CSB-MIPI database. Note: Gross average wages for a 35 year old male worker. No gross male average wage available for the US states. For IT, DK, DEand FI, data refer to the minimum wage applicable within a low wage sector. In AT, non-statutory national minimum wage.
  • 30Net incomes at MW• Gross Minimum Wage minus- employee social security contributions- income and local taxes• Plus:- child benefits- non-discr.housing allowances- social assistance top-ups
  • 31Gross annual minimum wage level in 2012,PPS, euro and relative to average wagesSource: CSB-MIPI database. Note: Gross average wages for a 35 year old male worker. Gross minimum wages for a 35 year old worker. For some countries(BG, EL) this differs with commonly presented minimum wage levels, due to experience premiums. No gross male average wage available for the US states. ForIT, DK, DE and FI, data refer to the minimum wage applicable within a low wage sector. In AT, non-statutory national minimum wage.
  • 32PovertythresholdNet incomes of minimum wages workers relativeto the poverty line, 2012: single personsSource, CSB-MIPI database
  • 33PovertythresholdNet incomes of minimum wages workers relativeto the poverty line, 2012: lone parent, 2 childrenSource, CSB-MIPI database
  • 34PovertythresholdNet incomes of minimum wages workers relative tothe poverty line: single earner couple, 2 children,2012Source, CSB-MIPI database
  • 35PovertythresholdNet incomes of single social assistancebeneficiary relative to the poverty line, 2012Source, CSB-MIPI database
  • 36PovertythresholdNet incomes of a couple with two children relyingon social assistance relative to the poverty line,2012Source, CSB-MIPI database
  • 37PovertythresholdNet incomes of lone parent with 2 children relyingon social assistance relative to the poverty line,2012Source, CSB-MIPI database
  • References
  • 39Presentation draws mainly onI. Marx and K. Nelson eds. (2013),Minimum Income Protection in Flux,Palgrave MacMillan• Social assistance: Van Mechelenand Marchal ‘Struggle for Life’• MIP for workers: Marx, Marchal andNolan ‘Net incomes for workers’• Child benefits: Van Mechelen andBradshaw• Vandenbroucke, Cantillon et al.‘Policy prospects’
  • 40Additional references• Cantillon, B. (2011), ‘The Paradox of the Social Investment State: Growth, Employment and Poverty in theLisbon Era’, Journal of European Social Policy 21(5), 432-449..• Corluy, V and Vandenbroucke, F. (2013), ‘Household joblessness’, In B. Cantillon and F. Vandenbroucke(eds), For Better For Worse. For Richer For Poorer. Labour market participation, social redistribution andincome poverty in the EU. Oxford: Oxford University Press.• Figari, F. (2011) Can in-work benefits improve social inclusion in the southern European countries? Journal ofEuropean Social Policy 20: 301-315• Immervoll, H. (2012), ‘Minimum-Income Benefits in OECD Countries: Policy Design, Effectiveness andChallenges’. In D. Besharov, and K. Couch (eds.), Measuring Poverty, Income Inequality, and Social Exclusion.Lessons from Europe. Oxford University Press.• Kenworthy, L. (2011) Progress for the Poor (Oxford: Oxford University Press).• Marchal,S. Marx, I. and N Van Mechelen Do Europes Minimum Income Schemes Provide Adequate Shelteragainst the Economic Crisis and How, If at All, Have Governments Responded?; IZA DP 6264• Marchal, S. and Van Mechelen, N. (2013), Activation Regimes of European Minimum Income Schemes, GINIDP• Marx, I., P. Vandenbroucke, and G. Verbist (2012), ‘Will rising employment levels bring lower relative incomepoverty? Regression based simulations of the Europe 2020 target’, Journal of European Social Policy 22.• Marx, I. and Nolan B.(2012), In-work poverty, GINI DP51• Marx, I., Vanhille, J., Verbist, G. (2012) ‘Combating in-work poverty in Continental Europe: an investigationusing the Belgian case’, in Journal of Social Policy• Nelson, K. 2011 "Social Assistance and EU Poverty Thresholds 1990-2008. Are European Welfare SystemsProviding Just and Fair Protection Against Low Income?", European Sociological Review