Public policy and European society University of Castellanza Session 3(b) Poverty and social exclusion 9 March 2017

Outline Measuring poverty: Key concepts: Poverty rate, poverty threshold, severe material deprivation European or national standards? Poverty and the crisis Conclusion: welfare states matter

Poverty rates in the EU 2008 & 2015 At risk of poverty = income below 60% of the national equivalised income. Source: Employment and Social Developments in Europe 2016 derived from Chart 46

Severe Material Deprivation Material deprivation covers indicators relating to economic strain and durables. Severely materially deprived (SMD) persons have living conditions severely constrained by a lack of resources, i.e. they experience at least 4 out of the following 9 deprivations: they cannot afford i) to pay rent or utility bills, ii) to keep their home warm enough, iii) to face unexpected expenses, iv) to eat meat, fish or a protein equivalent every second day, v) a week’s holiday away from home, vi) a car, vii) a washing machine, viii) a colour TV or ix) a telephone. Source: Employment and Social Developments in Europe 2016

Material deprivation 2008, 2012 & 2015 Severe material deprivation: at least 4 from list of 9 deprivations. From ESDE2016 Chart 48

Other poverty measures Objective Material deprivation Cannot afford to: keep house warm, have holidays once a year; replace old furniture, new clothes; eat fish or meat every other day; have friends/family to dinner once a week (2 or more of 6) Housing defects Shortage of space, rot in windows/doors, damp/leaks, no indoor toilet (2 or more from 4) Financial problems In arrears with utility bills in last month; could not pay for food at any time in last year (1 of 2) Subjective Subjective economic strain How easy to make ends meet (scale 1 to 6) (5 or higher) Satisfaction with standard of living (scale 1 to 10 – 1 very dissatisfied) (score 5 or lower) Global life satisfaction Overall satisfaction with life (1 very dissatisfied) (score 5 or lower) From Fahey (2007)

National or European standards? The median income in Romania is far less than the poverty threshold in most EU states Source: Fahey (2007) using 2001 EU indicators

Europe 2020 European Platform Against Poverty Aim to lift 20 million people out of poverty! But what does this actually mean…?

Poverty in Europe2020 (1) At risk of poverty (2) Material deprivation Percentage below national poverty threshold 60% of national median income (2) Material deprivation Number lacking 3 or more items on material deprivation index (3) ‘Work poor’ households Number of households where total amount of hours worked is less than 10 per adult member So (1) is specific to each member state; (2) and (3) apply across EU.

European welfare states Three (or perhaps four) worlds of welfare Liberal Universal Conservative Mediterranean Despite variety everywhere inequality less than USA Changes since c2000 Major change: Germany – erosion of insurance principle, more inequality, more working poor Elsewhere NO big changes in system BUT impact of crisis Worst where welfare state incomplete (Greece!) In most member states poverty still worse than before crisis Conclusion Traditional welfare state remains crucial: and the defining feature of Europe today especially compared to USA