Guide on Poverty Measurement: Chapter 2 – Monetary Poverty Richard Tonkin Assistant Director – Well-being, Inequalities, Sustainability & Environment UNECE Task Force on Poverty Measurement 15-15 July 2016

Introduction Chapter provides guidelines on measurement of monetary poverty Aim to help improve international comparability and coherence of statistics on monetary poverty Largest chapter in draft poverty measurement guidelines Currently over 37,000 words! Not intended to be comprehensive guide: Links into and references other sources as appropriate for detail on specific topics Drafting lead by ONS (UK), but with input from OECD, UNECE, UNDP, CISSTAT, Russia, Georgia, Italy & Germany Practical focus: Numerous text boxes highlighting current practice by international organisations & range of individual UNECE countries Gives readers concrete examples of how principles have been applied

2nd TF meeting – Feb 2016 (Istanbul) 1st draft of Chapter 2 circulated for comment 14 January 2016 Presented by UK at TF meeting 11-12 February 2016 Chapter well received – TF members happy with content/coverage/level of detail In response to questions in presentation, some suggestions for further topics to cover and additional case study examples Forward work plan agreed and actions allocated to TF members 2nd draft circulated to TF members 18 May 2016 Comments received from DWP (UK) Draft with minor revisions reflecting comments 28 June 2016 for Seminar & 3rd TF meeting

Agreed actions from 2nd TF meeting (i) Owner Status Provide example on use of admin data for Section B Italy Complete Example on transfers between households UNDP Overview of work by MS on STIK & imputed rent OECD Further detail on equivalence scales - different approaches: subjective / behavioural / arbitrary Add info on Ravallion weakly relative poverty line UK Add info on prices and PPP Add info on person equivalent poverty OPHI/ Example on measuring Roma population process of institutionalisations (children, old people not considered part of household) UNICEF Ongoing

Agreed actions from 2nd TF meeting (ii) Owner Status Add conclusions on approaches taken (stocktaking exercise) on comparability on monetary poverty measures (equivalence scales, NSI’s forms/templates, how to integrate NSI information with that from EUROSTAT, CISSTAT, OECD, etc.) Poland Ongoing Metadata recommendations and references (place in the Guide to be determined) UK Propose regional indicators Complete

Where do we go from here? Terms of Reference of TF: Define a coherent set of indicators to measure absolute and relative poverty in countries participating in the Conference of European Statisticians, taking into account the need to measure poverty among women, children and older persons; Develop guidelines on the definitions, methods and data sources of the defined poverty indicators; Provide recommendations on the documentation of metadata on poverty. Next stage is to define/agree a set of indicators Once draft indicators agreed in principle can offer more specific guidance on definitions, methods, metadata etc. In developing recommendations to improve international comparability and coherence, need to also consider comparability/coherence at national level (Very) Initial draft set of indicators circulated ahead of meeting: Based around Global SDG targets and indicators No supplementary indicators included (as yet)

Target 1.1) By 2030, eradicate extreme poverty for all people everywhere Global indicator 1.1.1: Proportion of population below international poverty line disaggregated by sex and age group and employment status (or: Proportion of employed people living below the international poverty line). Proposed regional indicator … Rationale: $1.25/$1.90 a day extreme poverty line is not the most appropriate measure for UNECE countries. It is unlikely to be feasible to determine a single absolute poverty line which would be appropriate for all UNECE countries. As target 1.1 is focussed on extreme poverty, arguable that an indicator under this target is unnecessary or that the welfare systems of many countries in the region mean that the number is effectively zero. If the overwhelming view is that an indicator is required for the UNECE region, severe material deprivation indicators or anchored poverty lines (possibly based on 2015 national poverty lines) could be appropriate.

Target 1.2) By 2030, reduce by at least half % living in poverty according to national definitions Global indicator 1.2.1: Proportion of population living below national poverty line, disaggregated by sex and age group. Proposed regional indicator Proportion of population living below national poverty line, disaggregated by sex and age group. Rationale: The global indicators are equally as appropriate as indicators at UNECE level. Indicators based on national poverty lines and definitions provide a challenge for comparability and coherence across the UNECE region. However, consideration also needs to be given to coherence with the global indicators, as well as within countries. It would be difficult to justify not using national poverty lines for this indicator at a regional level, where the same had been specified globally.

Target 1.2) By 2030, reduce by at least half % living in poverty according to national definitions Global indicator 1.2.2: Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions. Proposed regional indicator Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions. Rationale: The global indicators are equally as appropriate as indicators at UNECE level. Where individual UNECE countries do not have an existing multidimensional indicator of poverty, consider using either the Global MPI or the European Commission’s AROPE indicators where they exist for countries. This will help avoid confusion for users and ease burden on producers by avoiding introducing further new measures where they don’t already exist.

Target 10.2) By 2030, empower and promote the social, economic and political inclusion of all Global indicator 10.2.1: Proportion of people living below 50% of median income disaggregated by age and sex. Proposed regional indicator Proportion of people living below 50% of national median income, disaggregated by age and sex. Rationale: The global indicator is equally as appropriate as an indicator at UNECE level. Notes: As a significant number of UNECE countries will already be reporting on this indicator for the OECD IDD, it makes sense to apply the same definitions where feasible, to avoid confusion for users of statistics. In particular: Unit of observation = household Statistical unit = individual Income measure = equivalised disposable income Equivalence scale = square root scale Age groups: 0-17, 18-25, 26-40, 41-50, 51-65, 66-75 & over 75

What else needs doing with Chapter 2? Having draft set of indicators will allow drafting of concrete guidance on their measurement Recommendations on definitions, breakdowns (e.g. age, employment status), reporting of metadata In addition: Add comparison of national practices Consider inclusion of wealth (asset based poverty measures) Substantial editorial work needed Ensure reads as coherent document May need to return to chapter contributors for revisions