1. Policies Against Poverty in the Eu Countries: A Comparative Analysis
Michele Raitano (Sapienza University of Rome)
Training Programme “Effects and Tendency of Income Redistribution Policy”
Italy, October 14th-28th, 2018

2. Outline Definition of poverty
Redistributive policies affecting risks of being poor
Social spending in EU countries
Minimum income schemes (MIS) in EU countries
The role of the pension system in protecting against poverty

3. Who are the poor? A brief reminder
Poverty related to households’ resources and needs.
Poverty requires to identify poor => a threshold has to be identified.
Usually, absolute vs relative poverty concepts.
Poverty measured looking at both incidence and intensity (not only the headcount).
Redistributive policies may reduce poverty intensity also when the incidence is not affected.

4. Absolute poverty: a reminder
The threshold is defined outside from the income distribution.
A basket of basic needs is identified => the threshold is the cost of such basket.
Daily caloric requirements? Two dollars per day?
How to define such basket? Does the basket include absolute or relative needs?
How do needs change? Between countries and in the long term
Are basket goods indexed only to prices? Which are the consequences?

5. Relative poverty (a): a reminder
Poverty is a social norm: individuals very far from the others are poor. The threshold is by definition a relative concept.
As a main social norm is poor who is far from the others => if the GDP changes also the threshold has to change.
Reference to living standards of the whole population => the threshold is identified according to some points of the income distribution, i.e. 60% of median income or 50% of mean income.
Poverty does not change if income change in the same proportion.
But “income paradox”, when the growth is not “pro poor”.

6. Relative poverty (b): a reminder
How to make international comparisons of relative poverty? Is a country with a higher poverty a poorer country?
It is a sort of inequality index in the lower tail than a mere measure of material deprivation.
Keeping constant the threshold to make comparisons overtime (especially during a crisis)?
When analysing policy changes (e.g. an increase in welfare transfers), the relative thresholds has to be changed too.
Note that absolute poverty does not necessarily mean extreme poverty and it is not necessarily lower than relative poverty (thresholds can be built on different logics).

7. Redistributive policies against poverty
Citizenship incomes
Social insurance schemes
Contributory based social insurances (e.g., pensions and UB)
Means tested social insurance benefits (e.g., ASDI in Italy)
Social assistance schemes (safety nets), based on means testing
Categorical (e.g., the unemployed, the elderly, those with children)
MIS (independent on households’ categories)
In kind services (housing, health care; targeted or non targeted)
Specific universal or targeted measures towards children and family
Are these policies based on households or individuals’ conditions?
What is the duration of these policies?
How binding are eligibility requirements?
How much do these policies affect incidence and intensity of poverty (absolute or relative)?

8. Spending for social protection benefits in EU15 in 2015 (% of GDP)

9. Composition of social protection spending

10. Cash and in-kind benefits

11. Means and non means tested benefits

12. Decrease in the incidence of relative poverty due to welfare transfers in EU15

13. Historical Evolution of Anti-Poverty Policies (a)
«First generation»: anti-poverty policies
«Second generation»: minimum income schemes
Act for the Relief of the Poor (1601): Discretional, residual and ad hoc support for the poor, frequently implying that recipients lost their civil and (to the extent they had any) political rights => Function: social control and repression of marginality
Guarantee of a minimum of resources for those (few) people who needed a safety net in a period in which "full employment" and social insurances guaranteed support to all workers and their families =>Function: income support and prevention of marginality

14. The introduction of MIS in Europe (1945 – 1990)
Country
Scheme
Year of Introduction
Austria
Sozialhilfe
1971 (Varies in different Land until 2009)
Belgium
Minimex
1974
Denmark
Social Bistand
(1891) 1974
Finland
Toimeentulotuki
1971
France
Revenu Minimum d’Insertion
1988
Germany
1961
Ireland
Supplementary Welfare Allowance
1975
Sweden
Socialbidrag
(1918), 1956
Luxembourg
Revenu Minimum Garanti
1986
Netherlands
Algemeene Bijstand (Social Bijstand)
1963 (1996) UK
Income Support
1948, 1978
Greece
Italy
Spain
Portugal

15. Historical Evolution of Anti-Poverty Policies (b)
«Third generation»: active inclusion strategies
Towards an universal basic income?
Law proposals in France - Referendum in Switzerland
Pilot schemes in Finlands and in the Netherlands
Guarantee of a minimum income
Access to social services
Right/duty to be «active» in job-search activities
Active inclusion strategies supported by the EU
Function: income support plus empowerment and promotion of social inclusion to break the vicious circle of inactivity, obsolete skills and competences, and demotivation

16. Definition of MIS
Monetary benefit paid regularly to all households with an income below the poverty line, associated with social and labour market services aimed at “re-integrating the beneficiaries in the society”
Various types of means testing
Provision of benefit: independent from contributory requirements
Funding: general taxation
Addressed to working age individuals (elderly have often different and more generous schemes, with different eligibility requirements), not eligible for social insurance payments or whose entitlement to these payments has expired

17. The three pillars of MIS
A means-tested income support benefit (means testing at the household level => benefits based on equivalence scales)
Access to social services Analysis of households skills / competences / social and individual problems; drafting personalized social inclusion plans; psychological and / or health and / or financial support
«Active Inclusion policies» Active (and preventive) labour market policies, training, human capital investment, introduction of specific “job incentives”, including conditionality of income support benefits and/or specific tax deduction
In some countries (AT, ES, GR, FI, FR, PT, SE) MIS as last resort safety net when means testing unemployment benefits have expired.

18. Generosity of MIS in EU Country
Basic amount % of relative poverty threshold
Amount for couples with two children % of relative pov. threshold
Latvia
17.1%
32.50%
Slovakia
17.8%
22%
Bulgaria
19.9%
33%
Estonia
22.8%
41.3%
Italy (2018)
23.7%
30.8%
Romania
27,6%
41,1%
Sweden
33.4%
49.4%
Czech Republic
33.9%
49.6%
United Kingdom
37.7%
36.7%
Germany
39.1%
60.1%
Lithuania
39.4%
60%
Croatia
39.6%
45.2%
Finland
40.9%
60.9%
Portugal
42.2%
Slovenia
43.9%
64.8%
France
48.9%
Greece
53.2%
50.7%
Spain
65.3%
43.3%
Ireland
69.3%
65.4%
Austria
72%
63.8%
Belgium
77%
Netherlands
85.1%
Denmark
102.50%
138%

19. Duration of MIS Country Unlimited
BG CH CZ DE DK HR LI MT NL NO PL SE UK
Unlimited, but periodical assessment of eligilibility requirements
AT BE CY EE FI FR HU IE IS LU LV MK PT RO RS SI SK, Some ES regions
Time Limit
LT, IT (18 months),
Some ES regions

20. MIS beneficiaires Country % of individuals aged at most 65
and in absolute poverty
Bulgaria
11.7%
Spain
16.2%
Italy (2018)
19.5%
Latvia
21.8%
Portugal
36.8%
United Kingdom
48.6%
Lithuania
53%
Greece (2017)
69.8%
Denmark
85.6%
Sweden
93.4%
Netherlands
96.7%
Estonia
99.9%
Austria
103%
Germany
174.6%
Ireland
188.2%
France
244.6%
Finland
342.1%

21. Spending for MIS in EU Country % of GDP % of Social Spending Latvia
0.03%
0.22%
Bulgaria
0.06%
0.35%
Estonia
0.08%
0.47%
Italy (2018)
0.11%
Spain
0.13%
0.51%
Croatia
0.15%
0.70%
Czech Republic
0.16%
0.83%
Portugal
0.62%
Lithuania
0.21%
1.33%
Austria
0.24%
0.79%
United Kingdom
0.84%
Sweden
0.25%
0.86%
Belgium
0.30%
0.99%
Luxembourg
0.32%
1.44%
Finland
1.12%
Greece (2017)
0.43%
1.63%
France
1.37%
Netherlands
0.73%
2.44%
Denmark
2.66%
Ireland
1.05%
6.42%
Germany
1.39%
4.75%

22. Active Inclusion Regimes Type of programs
MIS: active inclusion
Active Inclusion Regimes
Type of programs
Workfare
Stringent active job-search requirements
Broad definition of a ‘suitable’ job offer
Sanctions
Time limits
«Inclusion» limited to ALMP
Enabling Activation
Limited conditionality
Job-search assistance programmes (counselling, job-search support and training)
Training courses
Privileged access to non-working related social services (childcare, etc.)

23. Limited Conditional ity
MIS: conditionality
Very Strict
Limited Conditional ity
No Conditional ity
Germany, Italy, Lithuania, Latvia, Luxembour g, Netherlands , Portugal, United Kingdom
Austria, Belgium, Bulgaria, Czech Republic, Denmark, Greece, Ireland, Spain, Finland, France, Sweden

24. Role of the regional level
MIS: the territorial dimension
Model
Role of the regional level
Countries
Centralised
Implementation
Active Inclusion Policies
Ireland – UK- France – Belgium – Portugal
Integrated /
Decentralised
Regulatory (except basic framework law and minima)
Sweden – Denmark – Finland -Germany – Austria- Netherlands
Uncordinated Decentralization
Financing
Legislative
Austria (until 2012)
Spain Italy (in transformation)

25. Pension scheme and poverty protection
Different possible components of a pension system redistribute incomes and protect against poverty (incidence or intensity). These components might interact.
Social assistance pensions (SA): means tested, independent on contribution records
Means tested (minimum) pensions (MT): supplements to low value pensions, sometimes not contributory, or paid according to contribution records or to years of residence
Flat rate (basic) pensions (FR): non means tested, related to contribution records or to years of residence
Contributory pensions: non means tested, related to contribution records, benefit depends on the pension formula, e.g, earnings related or NDC
What is the effect on income redistribution of the various schemes?

26. Anti-poverty schemes in EU15 pension systems
Continental
Southern
Northern
Anglo-Saxon AT
MT/SA GR
MT/FR DK IE
MT/SA/FR BE IT FI MT UK FR PT SE DE ES LU NL
SA/FR

27. Incidence of relative poverty in EU15:
all vs elderly

28. Intensity of relative poverty in EU15:
all vs elderly

29. Incidence of relative poverty in EU15:
all vs young

30. Intensity of relative poverty in EU15:
all vs young