1 Social exclusion: Analyzing multiple dimensions in Europe A B Atkinson, Nuffield College, Oxford and LSE World Bank 2010

1.Social Europe Broad conception of objectives Influence and indirect levers Development of EU poverty measure 2. Development of Laeken social indicators Principles of indicator design Multiple dimensions Why not combine into a single indicator? 3. Where next? The Europe 2020 targets Issues raised Evolving priorities

The timeline of Social Europe Social policy means to restructuring Ultimate goal of European Social Union Social Action Programmes; First estimates of poverty in the EU European agenda dominated by common internal market and euro Lisbon Agenda and Social Inclusion Process Kok report: priority to economic objectives Europe 2020 and social inclusion target 1. Social Europe

EU Council of Ministers Sets objectives Through Open Method of Coordination Member States National Action Plans EU Commission Monitoring

EU poverty measure at beginning of century Percentage of people living in households with equivalised disposable income below 60 per cent of national median. Implemented using European Community Household Panel, and now EU Statistics on Income and Living Conditions (EU-SILC). EU-SILC examined in: A B Atkinson and E Marlier, editors, Income and Living Conditions in Europe, Eurostat December 2010.

2. Development of Laeken social indicators Political salience; Academic input (report by Atkinson, Cantillon, Marlier and Nolan, 2001); Importance of underlying principles; Indicators Sub-Group of Social Protection Committee.

7 Principles of indicator design Principles for individual indicators: an indicator should 1.Identify the essence of the problem and have a clear normative interpretation; 2.Be robust and statistically validated; 3.Be responsive to effective policy interventions but not subject to manipulation; 4.Be measurable in a way that is comparable across countries (EU and globally); 5.Be comparable over time and available on a timely basis; 6.Not impose too great a burden on statistical offices and respondents. Principles for portfolio of indicators: 1.The portfolio should be balanced across dimensions 2.The indicators should be mutually consistent; 3.The weight of each component should be proportionate; 4.The portfolio as a whole should be as transparent as possible.

TABLE 1 Primary Indicators Agreed by European Union December Percentage of individuals living in households with low incomes (below 60% of the national median equivalised income); 2. Persistent financial poverty; 3. Depth of financial poverty; 4. Ratio of income of top 20% to that of bottom 20%; 5. Coefficient of variation of regional employment rates; 6. Long-term unemployment rate; 7. Percentage of people living in jobless households; 8. Early school leavers not in further education/training; 9. Life expectancy at birth: 10. Self perceived health status by income level.

9 Source: EU news release 18 January 2010 Note: income year for UK is 2008

Developments in indicators since 2001: Introduction of an indicator of material deprivation.

Why no composite indicator in Lisbon process? At a policy level, combining different indicators into a single number to arrive at a country ranking may serve to galvanise action, but it can be counterproductive. There is a risk that countries will pursue bang bang policies, concentrating on a single component of well-being, rather than a balanced approach to its different dimensions. The aim of policy should be to improve overall performance and, ideally, bring all countries to a high level of performance on all dimensions. If such a high level is obtained more or less uniformly, then rankings of countries have little meaning. Likewise, all countries may be performing equally badly, and a ranking would then give no indication of the need for action. In a situation where countries are improving their performance, but with no changes in ranking, then no change would be recorded. These reasons, which thus encompass considerations linked to both national policy and international comparisons (over time and at one point in time), may largely explain why composite indices are not used in the EU Social OMC. (Atkinson and Marlier, 2010).

3. Europe 2020 The Europe 2020 Agenda agreed at the June 2010 European Council represents a significant departure and a major challenge. The Agenda sets 5 Headline Targets for 2020: Employment (75% of year-olds employed); R+D/Innovation (3% GDP invested, public and private); Climate change/energy (20/20/20); Education (reducing early-school leaving below 10%, 40% completion of tertiary education); Social exclusion (20m people fewer in or at risk of poverty and social exclusion). Socially inclusive growth

Implementation Each EU Member State is in process of adapting the 5 EU- Headline Targets to their national circumstances. the 5 EU- level targets are being translated into national targets, to reflect the level of ambition each is able to make to the wider EU effort. Each country will set its national targets in its national reform programme. The targets do not imply burden-sharing – there are common goals, to be pursued through a mix of EU and national action. A key role will be played by monitoring.

Fifth target Reduce by 20 million union of People living in households at risk of poverty (below 60% of country median) after social transfers; People living in households suffering severe material deprivation (EU-wide scale); People living in households with very low work intensity.

Figure 5.9 Multiple indicators for Europe 2020 target At-risk-of-poverty Material deprivation 49.6 Joblessness All figures in million and relate to 2008 Survey Year; total is million

Raises issues: Monitoring; Freezing of social indicators (as US official poverty line); Multiple deprivation; Relation with international indicators; Evolving priorities.