Presentation by Isabelle Engsted-Maquet (Policy officer, European Commission, DG EMPL A.2) on the occasion of the EESC hearing on European minimum income and poverty indicators (Brussels, 28 May 2013)

1. Social Europe
Poverty indicators
supporting the coordination of
social policies at EU level
28 May 2013
Isabelle Engsted-Maquet
DG Employment, Social affairs and inclusion

2. Social Europe
Structure of presentation
1. The Europe 2020 target for reduction of poverty
and social exclusion
2. Improving the measurement of poverty and
social exclusion
3. Improving analysis in support of policy making

3. Social Europe
The target adopted on June 2010
• Results from intense negotiations between MS
• Builds on existing work on indicators at EU level
• EU level target
• “Lifting 20 millions people out of poverty or exclusion by 2020”
• Based on 3 existing EU social inclusion indicators:
- At-risk-of-poverty,
- Severe material deprivation (adopted in February 2009),
- People living in jobless households (agreement on new definition)
• National targets
• Member States are free to chose the most appropriate indicator to set
their national target
• Member States to show how they will contribute to meeting the EU
level target, in dialogue with the Commission

4. 4
The number of Europeans living at risk of poverty or social
remains stable – 120 million or 24.2% in 2011
Population at risk of poverty
or social exclusion*, 2011
At risk of poverty
84 Mio
Severely materially
deprived
43 Mio
Jobless households
38 Mio
At Risk of Poverty Severe Material Deprivation Jobless Households
Various facets of poverty and
social exclusion*
Source: European Commission
* People at risk of poverty or social exclusion are at least in one of the following three conditions: at-risk-of-
poverty, severely material deprivation or living in a jobless household.
19%
Latvia
Risk of poverty or
Social exclusion 40%
Italy
Risk of poverty or
Social exclusion 28%
Ireland
Risk of poverty or
Social exclusion 30%
Deprivation
prevails
Relative poverty
prevails
Benefit
dependancy
issues
31%
13%
20%
11%
10%
16%
23%
8%

5. Social Europe
The reasons of low income countries…
•The risk-of-poverty rate is a measure of inequality rather than a poverty
measure
•It underestimates poverty in low income countries. When the poverty line is
less than 100 € being above the poverty line is not enough to be out of poverty
•The relation with GDP growth is weak and sometimes problematic
•It doesn’t reflect differences of living standards across Europe and produces a
rather implausible picture of the distribution of poverty across EU
The reasons of high income countries…
•The risk of poverty, focused on monetary income, does not take into account
in kind benefits and access to universal services
•The risk of poverty only refers to one dimension of poverty and not necessarily
the most relevant one, that is, social exclusion
•Participation in the labour market is the most significant indicator of social
inclusion
•Benefits can lift people above the poverty line, but may create benefit
dependency and new forms of exclusion

6. 6
EU not on track to reach the target
Source: Eurostat (EU-SILC) Extraction date: 16.05.2013

7. 7
The situation is very different across Member States
People living in poverty or social exclusion (in %)
* People at risk of poverty or social exclusion are at least in one of the following three conditions: at-risk-of-
poverty, severely material deprivation or living in a jobless household.
** Member States without a marked national 2020 target have chosen to use a different monitoring indicator
which does not directly translate into a comparable indicator at the EU level.
Population at risk of poverty or social exlusion* in 2011 2020 target**
Source: European Commission

8. 8
Some groups at higher risk of monetary poverty
Source: European Commission
* Monetary poverty refers to people living in a household with an equivalised
income below the national poverty line (defined as 60% of the median income).

9. 9
During the crisis, the number of children in jobless
households increased
Children living in jobless households*
Source: European Commission
* Children in jobless households refer to children living in a
household where none of the parents are a work.

10. 10
The number of working poors is increasing
in more than half of EU countries
Share of working poors*
* Working poors are people that are employed
but live with an income under the poverty threshold.
Source: European Commission

11. Social Europe
IMPROVING DATA AVAILABILITYIMPROVING DATA AVAILABILITY
TimelinessTimeliness
SILC and other sourcesSILC and other sources
Data on social protection systemsData on social protection systems
Modelling (Euromod)Modelling (Euromod)

12. Social Europe
Statistical Priorities and modelling (1)
Improving timeliness
• Improving SILC delivery, especially for material deprivation
• Adding auxiliary data in LFS (monthly income)
• Use models to produce nowcasts
• Use alternative sources: e.g. consumer surveys (financial distress
indicator)
Upcoming SILC revision (with European Statistical systems)
• Improving the measurement of material deprivation,
• Improving the longitudinal component of SILC to better analyse the
dynamics of poverty and exclusion
• Improve data on access to services to better measure the redistributive
impact of in-kind benefits
• Better documentation of indicators

13. Social Europe
Statistical Priorities and modelling (2)
Data on social protection systems
•ESSPROS: Good identification of in-kind benefits, means-tested benefits, net
expenditure
•Data on benefit recipients (Coverage rates, Take-up rates, Characteristics of
the beneficiaries)
Alternative sources
•Special data collection efforts « extreme » poverty (homelessness, Roma):
Poverty maps and Roma with World Bank and FRA
Modelling
•Euromod microsimulation to illustrate impact of reforms on poverty, budgets,
labour market incentives or economic stabilisation
•OECD/EC tax benefit model

14. Social Europe
Better analysis in support of Europe 2020 and
the European semester
• Europe 2020: an integrated strategy
Combined employment and social analysis:
•EMPL directorate in charge of analysis in both areas,
•merged publications (ESDE, Quarterly Review)
•merged monitoring tools (JAF, EPM, SPPM)
• European semester
•identify challenges for AGS (ESDE Key Features)
•country specific diagnosis in view of CSR (Joint
Assessment Framework)

15. Social Europe
Analysis in support of policy making
Example of themes relevant for social inclusion
a. Multiple facets of poverty (ESDE 2011)
b. Drivers of in-work poverty (ESDE 2011)
c. The dynamics of poverty (ESDE 2012 & 2013)
d. Efficiency and effectiveness of social protection
(ESDE 2012 & 2013)
e. Distributional impact of fiscal consolidation
(ESSQR March 2013, Working paper)

16. Social Europe
3 Main products
http://ec.europa.eu/social/main.jsp?langId=en&catId=113
ESDE: Employment and Social
Developments in Europe (Annual
Review)
Content: Key features + Thematics chapters
ESSQR: Employment and Social Situation
Quarterly Review
Content: Recent trends + Special focuses
Working papers
Methodological papers
(e.g. Social expenditure in the crisis,
timely monitoring of social trends, etc )

17. Social Europe
ANNEX

18. Social Europe
"Looking at entries and exits separately
rather than at poverty itself"
High turnover of
poverty
 framework favourable
does not exclude risks
of recurrence
risk of 'core bulk
permanently poor'
High entry & low exit
rates
 Risk of massive poverty
trap.
Low entry & low exit rates
 framework favourable
Risk of social polarisation
2006-2009, EU-SILC, 18-64 population

19. Social Europe
Who is facing poverty?... and for how long?
2006-2009, EU-SILC, 18-64 population
UK
ITCZ

20. Social Europe
Negative impact of fiscal consolidation on
household incomes
Contribution of different austerity measures to change
in households incomes, overall (below) and at
different points of the income distribution in selected
Member States (right)
Source: EUROMOD (cumulated impact of austerity
measures on households disposable incomes).