How to tackle in-work poverty and labour market segmentation in the EU: heighten awareness, improve data, monitor and increase mainstreaming
Newsletter 2010-5
Publication date : 2011-02-08
On October 3, 2008, the European Commission adopted a Recommendation (2008/867/ EC) on the active inclusion of people excluded from the labour market. For the most part, it is assumed that getting unemployed and inactive people into work is the most effective means of counteracting poverty. However, being in employment does not guarantee an escape from poverty and the working poor constitute a significant share of all those in poverty around Europe. Measures to combat in-work poverty and tackle labour market segmentation are therefore important and are explicitly mentioned in the labour market pillar of the Recommendation. In 2009, 8.4% of people in work in the EU were below the at-risk-of-poverty threshold. Put differently, this means that out of the 81 million income poor in the EU 17 million are actually employed. Notwithstanding huge variation across countries, the overall picture emphasises the extent of in-work poverty and, combined with the effects of the economic crisis points to the need to tackle labour market segmentation leading to in-work poverty across Europe. A new report on in-work poverty and labour market segmentation based on individual country reports by members of the EU Network of Independent Experts on Social Inclusion finds that most countries do not give the issue any special attention in political debates or in academic research, despite the evidence of its significance. There is a tendency to focus solely on measures to protect employment and to create employment opportunities without at the same time addressing the issue of low wages and inwork poverty. The overview of the expert reports prepared by the Network Core Team (NCT) concludes that progress needs to be made in four main areas: raising public awareness and political priority; enhancing data and analysis; improving monitoring and reporting; and the mainstreaming of social inclusion goals in economic and employment policies. In terms of the main factors which cause in-work poverty, the NCT report hones in on structural issues in the economy/ labour market (which may mean that there is poor quality work, low upward mobility, precarious or low paid work and so on), the importance of family/ household composition and low work intensity (for example, if carers cannot work long hours this restricts their earning potential), individual characteristics (the likelihood of in-work poverty is higher among the young, workers from abroad, and less-well educated) and institutional factors (such as relatively high tax for low earners, for example). Policy responses have been different across the Member States but overall they can be grouped into two categories: first, there are policies to increase low net wages and secondly there are policies to increase work intensity and reduce labour market segmentation. There is a clear need to create comprehensive policies which take into account the multidimensional nature of the problems leading to in-work poverty. Regarding the causes of labour market segmentation the NCT report identifies three related factors: exploitation and discrimination, the promotion of insecure employment and irregular work, and low levels of education and skills. It points to the need to develop policies to promote job retention and advancement; policies to promote better working conditions and employee friendly flexibility; lifelong learning policies, in particular specific on-the-job schemes for the low-skilled; and policies to promote non-discrimination and inclusive work environments. The overview makes twelve explicit suggestions for improvements, which include the following: In-work poverty should be made a key issue for the European Platform Against Poverty to ensure that it is considered in future measures to promote active inclusion (including the development of work on establishing criteria in relation to an adequate minimum income) and also in work developed around the theme of child poverty and well-being. Making it a required focus of National Reform Programmes (NRPs) would ensure that it receives more attention in the Europe 2020 Strategy. The EU Social Protection Committee (SPC) and its Indicators Sub-Group, in conjunction with Eurostat (the Statistical Office of the EU) and the EU Employment Committee (EMCO) could develop indicators/data for monitoring low pay and promote further analysis in this field. They could also complete static data with information on dynamics and duration. The same bodies could explore ways of improving the timeliness of data on in-work poverty and labour market segmentation and the coverage of the different sub-populations that need to be more closely monitored in this context. This may be best addressed by a combination of different statistical instruments including both survey data and administrative/register data. In the context of the on-going implementation of the European Commission Recommendation on active inclusion and the annual reporting mechanisms that will be established as part of the European Platform Against Poverty, the Commission and the SPC could ensure that a section of their Joint Report to the Spring European Council specifically covers the progress being made in addressing in-work poverty and labour market segmentation. Closer attention could be given, in the monitoring of the social impact of the economic and financial crisis and in the monitoring of Member States’ responses to the crisis, to in-work poverty and labour market segmentation. The issues of in-work poverty and labour market segmentation could be given a high priority in efforts to ensure that social inclusion goals are mainstreamed across all EU, national and sub-national policy areas and that there are greater synergies between economic, employment and social policies. Much more use could be made of the EU Structural Funds to systematically support Member States’ efforts to counter in-work poverty and labour market segmentation. This would be an important way of ensuring that the EU’s social inclusion objectives are mainstreamed into Structural Funds’ allocations. http://www.peer-review-social-inclusion.eu/network-of-independent-experts/2010/second-semester-2010
* Individuals classified as employed according to their most frequent activity status, which is defined as the status they declare to have occupied for more than half the number of months in the income reference year;
** the poverty risk threshold is set at 60% of the national household equivalised median income.Raising public awareness and political priority
Enhancing data and analysis
Improving monitoring and reporting
Enhancing social inclusion mainstreaming
