Liberalisation. Dualization or integration? Evidence from a study of Working Poverty Neil Fraser, Rodolfo Gutierrez, Ramon Pena-Casas

Research questions 1.What is the extent of working poverty (IWP) in Europe, and what are the reasons for it? 2.What is the role of institutions and policies in shaping the different patterns of IWP in the EU countries? 3.Is IWP a persistent situation over time? What are the respective risks of women and men in IWP? Are migrants more exposed? Can ‘make-work pay’ policies alleviate working poverty?

The discovery of Working Poverty Considered an American phenomenon until the 1990s Expansion of low quality jobs in Europe brought issue to European Union policy agenda Working poverty (IWP) is a form of poverty which is an indicator of dualization and the problems of labour market participation

What is Working Poverty? Complex concept combining poverty (defined at household level) and employment (defined at individual level). A measure of individuals who are working (at least 7 out of last 12 months) but are members of a poor household (in low income terms).

Basic mechanisms leading to Working Poverty 1.Low Pay 2.Low work intensity (at individual and household level) 3.High household expenditure on dependents

Use of common data source (EU-SILC) Initial comparative analysis of 23 European countries based on 2007 data Five case-studies - France, Sweden, UK, Spain and Poland to show that national institutional arrangements influence the extent of IWP in countries Five special studies cutting across the five countries Design of the research

IWP and Low pay % of low pay IWP rate among workers IWP rate among Low wage workers FR SE UK ES PL

Low work intensity and IWP Strong factors in IWP are 1.Single earner households 2.Lower work intensity of secondary earners 3.Part-time work 4.Temporary contracts 5.Irregular work eg self-employment

Family benefits and IWP Spain and Poland both exemplify importance of weak family benefits (especially with prevalence of large families) in working poverty. Swedish family support is such that much of their IWP is young single workers. The availability of care there raises work intensity.

Does employment growth keep down IWP? Employment growth between 1996 and 2007 did not result in reduced working poverty - mainly atypical work expanded. Activation policies seem to integrate the workless into non-standard employment rather than reducing poverty. Have to improve quality of jobs for ‘activated’. Make work pay policies generally have a limited effect on employment - but may reduce IWP

Policies and IWP 1.Low pay: Minimum wage policies are not enough but keeping wage inequality down helps 2.Low work intensity: increase demand for unskilled, encourage labour supply, making work pay 3.Benefits and services for households

Conclusion The high level of IWP in Europe (similar to the level of unemployment) points to the low quality of much job growth, in terms of low pay and atypical conditions, fitting the notion of dualization. But we found institutional differences along welfare regime lines continue to show up in IWP differences. Integrative policies would mean improved job quality for existing workers and for ‘activated’ workers, with increasing labour supply.