Reforms in the Public Sector Spring 2017 • • • The many dimensions of poverty • •Martin Guzi martin.guzi@econ.muni.cz • World-Poverty-Since-1820 • • end-of-absolute-poverty-in-rich-countries • At-risk-of-poverty thresholds (monthly income in EUR per person) • Poverty indicators in the EU •(Severe) Material deprivation (9% of EU in 2014) –Living conditions are severely constrained by a lack of resources. People cannot afford at least 3 (4) out of the 9 following items: i. to pay rent or utility bills, ii. keep home adequately warm, iii. Face unexpected expenses, iv. eat meat, fish or a protein equivalent every second day, v. a week holiday away from home, vi. a car, vii. a washing machine, viii. a colour TV, or ix. a telephone. •At-risk-of-income poverty (17% of EU) –Peple who have an equivalised disposable income below the risk-of-poverty threshold, set at 60 % of the national median equivalised disposable income (after social transfers). •Social exclusion - low work intensity (11% of EU) –People 0-59 who live in households where on average the adults (aged 18-59) worked less than 20% of their total work potential during the past year •At-risk-of-poverty or social exclusion (24% of EU) • • • Poverty indicators in the EU •(Severe) Material deprivation (9% of EU in 2014) –Living conditions are severely constrained by a lack of resources. People cannot afford at least 3 (4) out of the 9 following items: i. to pay rent or utility bills, ii. keep home adequately warm, iii. Face unexpected expenses, iv. eat meat, fish or a protein equivalent every second day, v. a week holiday away from home, vi. a car, vii. a washing machine, viii. a color TV, or ix. a telephone. •At-risk-of-income poverty (17% of EU) –People who have an equalized disposable income below the risk-of-poverty threshold, set at 60 % of the national median equalized disposable income (after social transfers). •Social exclusion – low work intensity (11% of EU) –People 0-59 who live in households where on average the adults (aged 18-59) worked less than 20% of their total work potential during the past year •At-risk-of-poverty or social exclusion (24%=122mil) • • • http://ec.europa.eu/eurostat/documents/2995521/7034688/3-16102015-CP-EN.pdf People at risk of poverty or social exclusion • http://ec.europa.eu/eurostat/statistics-explained/images/4/43/People_at_risk_of_poverty_or_social_e xclusion%2C_EU-27_and_EU-28%2C_2005-14.JPG http://ec.europa.eu/eurostat/statistics-explained/images/2/24/Aggregation_of_sub-indicators_of_%27P eople_at_risk_of_poverty_or_social_exclusion%27%2C_EU-28%2C_2014.JPG People at risk of poverty or social exclusion', EU-28, 2014 (122 mil) http://ec.europa.eu/eurostat/statistics-explained/index.php/People_at_risk_of_poverty_or_social_exc lusion The case of Czech Republic •Any member of a household that falls below the defined threshold in at least one of these indicators is identified as at risk of poverty or social exclusion. • Almost every fourth person in the EU27 is at risk of poverty or social exclusion, 2014 • • At risk of poverty or social exclusion, selected countries [% population] • Source: http://ec.europa.eu/eurostat/web/europe-2020-indicators http://ec.europa.eu/eurostat/web/europe-2020-indicators At risk of poverty or social exclusion, selected countries [% population] • Source: http://ec.europa.eu/eurostat/web/europe-2020-indicators http://ec.europa.eu/eurostat/web/europe-2020-indicators Poverty rates differ between groups • Limitations of poverty measures •Cut-off point is a rather arbitrary process •Poverty gap (or Depth of poverty) measures the intensity of poverty. It gives the total resources needed to bring all the poor to the level of the poverty line (under perfect targeting). •The length of time people have been poor i.e. the duration and persistence of poverty. •Multi-dimensional nature of poverty: indebtedness, joblessness, poor health, inadequate housing or access to public services. •Social benefits can drastically reduce poverty. • • • • •Table shows how at-the-risk of poverty rate increases when the income poverty threshold increase from 60% to 65%. Income threshold matters http://www.statistikaamy.cz/2015/07/proc-chudoba-roste-kdyz-rostou-prijmy/ Persistent poverty •Persistent poverty rates measure the percentage of the population that are at-risk-of-poverty in the current year and at least 2 out of the 3 preceding years. This is the definition used by the European Commission as part of their indicators to monitor poverty and social exclusion across the EU. Poverty rates across EU, 2014 % of population Persistent poverty rates across EU, 2014 % of population How long do people stay in poverty? • CZ • Years in poverty in the UK in a 4 year period (% population) Years in poverty in the UK by household type, % individuals Years in poverty in the UK by education level, % individuals Other poverty indicators: Minimal acceptable living standards •Real value of the (relative) poverty threshold, 3EUR/day in RO, 7-8EUR in CEE but 50EUR in LU. •Budget Standard Approach, basic standard of living is calculated based on the cost of a specific basket of goods and services – necessities largely differ between regions. i.e. covering things like food, clothing, personal care, health related costs, household goods and services, educational costs, housing , transport, fuel. Used in UK, IE and developed in the EU www.referencebudgets.eu/ •Poverty measurement by the consumption approach, the poor are distinguished from the non-poor by how much of their income they spend on basic necessities . e.g. Housing Cost Overburden (11% in the EU in 2013) • • • • Subjective indicators of poverty • Story of alternative poverty indicators • Other difficulties •Is income equally distributed within the household? Women have lower income but responsibility for the expenditure on children. •Difficult-to-reach groups are also at very high risk e.g. Roma and immigrants are not captured in data. • • What people in poverty experience? •Lack of basic necessities •Isolation from family and friends •Lack information about the supports and services available to them due to bureaucracy •Lack of decent work •Fear for one's children •Being unable to afford to buy medicines •Unable to participate in normal social • Being poor = being unhappy •Figures illustrate the situation in the Czech Republic. Conclusions •Instant indicators of poverty are essential for identifying social risks in the society and for preparing public policy. •The very equal societies in Europe tend to have the lowest levels of poverty. •Adequate minimum income levels and good access to services are essential. •