Defining and Measuring Poverty, Social
Exclusion and Inequality – in the EU
EAPN Induction Training for New Members of
Statutory and Working Groups
Leuven 19-21 May 2011
Sian Jones
EAPN Policy Coordinator
Outline of Presentation
Defining poverty and social exclusion
Social and Economic Inequality
Measuring Poverty, Exclusion and
Inequality – the OMC indicators
Europe 2020 – the new poverty target
Relative and Absolute Poverty – What is the
difference?
 Absolute or Extreme Poverty: refers to severe deprivation
of basic human needs – housing, water, sanitation.. (World
Summit on Social Development 1995/Millenium Development
Goals).
 Relative Poverty: “when people’s income and resources are
so inadequate as to preclude them from having a standard of
living acceptable in the society in which they live’’ (European
Council 1975)…economic, political and cultural participation..
 Measures different aspects of poverty
– Absolute poverty: lack of access to specific rights,
goods or services.
– Relative Poverty: measures the capacity to participate
on equal terms in the society in which we live
Social exclusion is used as a multi-dimensional concept
that refers to a process of loss of integration or
participation from the individual in society, in one or more
of these fields:
EU prefers mixed approach: Poverty and Social Exclusion
Inequality
Economic inequality – disparities in the
distribution of monetary resources (assets and
income) – gap between rich and poor
Social Inequality – lack of equal social status
and access to rights to basic services (education,
health, housing etc) and power.
Inequality is a key structural cause of poverty
Growing evidence that “more equal societies
not only benefit the poor, but provide a better life
for all” (Wilkinson R, Pickett K 2008)
Measuring Poverty, Exclusion and Inequality
EU Indicators
 2000 Open Method of Coordination on Social Inclusion Social
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OMC) – a voluntary process of cooperation between MS to
achieve common objectives, to make a decisive impact on the
eradication of poverty (2000)
Key elements: common objectives, common indicators,
national and joint reporting, mutual learning and funding
In 2001, 18 Common EU Indicators were adopted by the Laeken
European Council in December 2001 adopted
In 2006, the Social OMC was ‘streamlined’ bringing together
social inclusion, pensions, health and long-term care – with 1
overarching set of indicators and one set for each pillar.
In 2009, updated and new indicators added
Looking in detail at the Indicators:
Overarching Portfolio
1a Risk of Poverty
1b Intensity of Poverty Risk – Relative
median poverty risk
2
Income inequalities: EU S80/S20
3
Health inequalities: Healthy life
expectancy
4
Education inequalities: Early school
leavers
5
Access to Labour Market:
6
Financial sustainability of social
protection systems: total public
social expenditures
7
Adequacy of Pensions: Median
relative income of elderly people
and aggregate replacement ratio
8. Inequalities in access to health care:
self reported unmet need and care
utilisation
9 Improved standards of living from
growth: at risk of poverty rate
anchored at a fixed point in time
(2005)
10 Employment of older workers:
Employment rate
11 In-work poverty: In-work poverty risk
12 Participation in the labour market:
activity rate
13 Regional cohesion: regional
disparities coefficient of variation in
employment rates
14 Per capita health expenditure: total
health expenditure per capita
EU OMC indicators covers key aspects of
poverty, exclusion and inequality
 The "at-risk-of poverty rate"
measures relative poverty at a
point in time in a country;
 The "poverty thresholds"
illustrate the variations in living
standards of the poor across
the EU and
 The "anchored poverty rate"
illustrates the variation in the
living standards of the poor
across time.
 In-work poverty shows
people in poor jobs
 The "at-risk-of poverty gap" measures
how poor are the poor (graduation).
 The "persistent at risk-of poverty rate"
measures the extent to which individuals
have been in poverty for a long period of
time, or temporarily.
 The poverty rates at different
thresholds (40%, 50%, 60%) help
illustrating the depth of poverty by
measuring the percentage of people on
very low income.
 Inequality is measured by the Gini coefficient or the 20/80% quintile.
Continuing to develop new indicators to
reflect multidimensionality of poverty
Early school leavers
Employment Gap of immigrants
Material Deprivation rate
Housing: high housing costs( 40% of disposable
income and % living in overcrowded conditions.
Health: Self reported unmet need for medical
care
Care utilisation
Child well-being – to be developed
OMC indicators – a major achievement but..
 An impressive list of robust, useful indicators capturing the
multidimensionality of poverty
 But little visibility of results, little use made of data
 Not all MS adopted EU indicators at national level
 Increasing challenges to relative poverty indicator,
– it measures inequality more than access to rights and
resources
– It doesn’t adequately reflect the low living standards in
newer MS
– Political concern- no progress on poverty since 2000
 Indicators are a useful instrument, but can’t replace
political will to defend social rights and standards.
OMC Data: Poverty, social exclusion and
inequality (2008 data)
RISK OF POVERTY THRESHOLD: < 60% MEDIAN INCOME
 84 million Europeans (16%)
 But strong differences across countries:
• 10-12 % in CZ, NL, SE, AT, HU, SL
• 19-21% in RO, UK, EL, PT, ES, LV
 Value of the threshold ie 1546 EU a month in LU to 98 in BU
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19% of children, 20% older people, 20% youth (18-24)
34% of single parents
8% of working population (in-work poverty)
Social protection reduces poverty by over 1/3
Lack of strong progress in poverty eradication over last decade
Increase in income inequality (between top and bottom 20%), from 4.5 to 4.8%
from 2000 to 2007
Europe 2020 and the Poverty Target
 Poverty Target to reduce at least 20 million
people in poverty and social exclusion by 2020.
 Initial Commission proposal – 25% of at risk
of poverty (relative poverty), but not agreed
 Final agreement (June Council) – a
compromise with a new definition of poverty and
social exclusion based on 3 indicators:
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At risk of poverty
Severe material deprivation
Jobless households (low work intensity).
Key Definitions
 Risk of Poverty (Relative poverty)
Share of persons with disposable income below 60% of
national household income
 Severe Material Deprivation (more absolute)
Share of population living in households lacking at least 4 of
following 9 items: Household can’t afford: 1) unexpected
expenses 2) one week annual holiday away from home 3) to pay
for arrears 4) a meal with meat, chicken or fish every second day
5) to keep home adequately warm, 6) a washing machine 7) a
colour TV 8) a personal car.
 Jobless – Low work intensity households
Proportion of people living in households with low work intensity
(low number of people in the household working) (18-59)
AROPE: People at risk of poverty and social
exclusion (Europe 2020) – the new data
113, 752,000 people (At risk of poverty and
exclusion) (23.1%)
– At risk of poverty – 80.199 (16.5%) – highest
rates in ES, GR, LI, BU, RO,LA
– Severe Material Deprivation – 39.802 (8%)
highest rates in BU and RO (30%)
– Low work intensity – 34.213 (9%) – but some
countries with high employment also high jobless
households (DK, IE, UK)
Conclusion
Poverty and social exclusion are a
multidimensional phenomena
Measuring absolute and relative poverty, as
well as inequality is essential
OMC has built a good common indicator
system - but not known and used.
New Europe 2020 multiple indicators - risk
undermining full set of OMC indicators and
focus on relative poverty and inequality
Indicators – a support, not a substitute for
political will and action to combat poverty
Group Exercise
 Aim: To practice analysing together EU comparative data on
poverty based on OMC indicators.
 Activity:
– Divide into groups of 4-5 groups
– Choose a note taker who can report back.
– Analyse the tables given looking at:
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• At risk of poverty before and after social transfers – how much
difference do social transfers make?
• Material deprivation
• In-work poverty
Find the data for your own country
In the group, rank the data (worst to best)
Discuss the conclusions? What surprises you? What do you
think the reasons are for the differences? How can you use this
data at national level?
Report back to plenary.
A Year when everybody renewed their
commitment to make a difference
For more info: Contact [email protected]