European Approaches to Poverty and Social Exclusion

1. European Approaches to Poverty and Social Exclusion Anne Bakilana World Bank

2. Social Exclusion and the EU’s Social Inclusion Agenda • The European Union embraced the social inclusion concept in the mid 1990s as a way of tackling poverty and other social challenges facing its member states. • The EU agenda has resulted in common objectives to respond to social exclusion as described in National Action Plans against poverty and social exclusion. • Other countries and international organizations have also adopted the concepts of social exclusion and inclusion.

3. What is social exclusion?The EU’s Definition: “a process whereby certain individuals are pushed to the edge of society and prevented from participating fully by virtue of their poverty, or lack of basic competencies and life long learning opportunities, or as a result of discrimination. This distances them from job, income and education and training opportunities, as well as social and community networks and activities. They have little access to power and decision making bodies and thus feel powerless and unable to take control over the decisions that affect their day to day lives” (European Commission 2004).

4. UK government’s definition of social exclusion ‘social exclusion happens when people or places suffer from a series of problems such as unemployment, discrimination, poor skills, low incomes, poor housing, high crime, ill health and family breakdown. When such problems combine they can create a vicious cycle. Social exclusion can happen as a result of problems that face one person in their life. But it can also start from birth. Being born into poverty or to parents with low skills has a major influence on future life chances.’

5. UK’s Department for International Development (DFID)’ s definition a process by which certain groups are systematically disadvantaged because they are discriminated against on the basis of their ethnicity, race, religion, sexual orientation, caste, descent, gender, age, disability, HIV status, migrant status or where they live. Discrimination occurs in public institutions, such as the legal system or education and health services, as well as social institutions like the household. People are excluded by institutions and behavior that reflect, enforce and reproduce prevailing social attitudes and values, particularly those of powerful groups in society.

6. Main features of the various definitions of social exclusion • the various concepts of exclusion imply a process, • individuals are excluded from what other members of a society are participating in, • there is no clear definition or defined measures of social exclusion, • social exclusion is still a contested term; and despite its wide use in European research, debates and policies, its definition and usage varies significantly from person to person and has continually evolved over time.

7. From Poverty to Poverty and Social Exclusion • The social exclusion concept originated in France about 30 years ago; • The term was mostly used to describe individuals who were not covered by the social security systems of the time (these included single mothers, substance abusers and drug addicts; and people with physical and mental disabilities); • Over time this grew to also include the unemployed, the homeless, dissatisfied youth, the old, immigrants, etc. • In the late 1990s, the UK’s Labor government put a spotlight on the terms social exclusion and social inclusion. • UK Govt established a Social Exclusion Unit whose main task is to implement government policies on inclusion and regeneration activities.

8. The UK Government’s Social Exclusion Unit • Initially set up in 1997 first under the Cabinet Unit; and then later moved to the Office of the Deputy Prime Minister in 2002. • There is a Minister for Social Exclusion who is a Minister under the Cabinet Office. • Consultations between the Prime Minister, Deputy Prime Minister, various government departments and other stakeholders decide on work program. The Unit’s work includes: i) Policy Reports: Based on consultations with people who have the experience of being excluded; and also includes wide participation beyond government departments including local authorities, business representatives and the NGO sector; ii) Research and Strategy: To understand drivers of social exclusion so that policies can not only tackle the problems but also prevent future exclusion; and iii) Implementing Policy and Supporting Best Practices: promotes best practices from undertaken projects.

9. Why deal with social exclusion?Social exclusion experts argue that: • social exclusion is wider than the traditional concept of poverty; • it is about processes that lead to non-participation in societies’ activities; • it is multidimensional; • it embraces concepts of vulnerability to poverty; • one does not have to be poor to be socially excluded; • non participation in societies’ activities is as critical as poverty.

10. Who are the socially excluded?Examples from new EU states’ analyses • Those on low incomes; • The unemployed; • Individuals with disability; • Non citizens; ethnicity minorities; immigrants; • Families with many children; • The homeless and those in poor housing; • The young; the old; children; • Women.

11. Examples of socially excluded groups

12. Manifesto to eradicate poverty and to fight social exclusion in member states by 2010. (The European Council of Lisbon, March 2000) • A consensus to eradicate poverty and to fight social exclusion in member states by 2010; • The following policy objectives were adopted: 1) To facilitate participation in employment and access by all to the resources, rights, goods and services; 2) To prevent the risks of exclusion; 3) To help the most vulnerable; 4) To mobilize all relevant bodies.

13. What is Social Inclusion? the process that will enable every person in society to participate in normal activities of societies they live in.

14. National Action Plans for Social Inclusion • individual country’s analyses of what groups were socially excluded; • describe specific actions to be taken in order to become more inclusive.

15. Counting the Socially Excluded: The Laeken European Council (December 2001) endorsed common statistical indicators of social exclusion and poverty that will serve as key elements in monitoring progress in the fight against poverty and social exclusion (Laeken Indicators) • At-risk-of-poverty rate by gender and various age groups • At-risk-of-poverty rate by most frequent activity and by gender and selected age groups  • At-risk-of-poverty rate by household type  • At-risk-of-poverty rate by accommodation tenure status and by gender and selected age groups  • At-risk-of-poverty rate by work intensity of the household  • At-risk-of-poverty threshold illustrative values  • Inequality of income distribution s80/s20 income quintile share ratio • Persistent at-risk-of-poverty rate by gender and selected age groups  • Relative median at-risk-of-poverty gap by gender and selected age groups • Regional cohesion by gender (variation in regional employment rates) • Long term unemployment rate by gender and selected age groups  • Persons living in jobless households by gender and selected age groups  • Early school leavers not in education or training by gender  • Life expectancy at birth by gender  • Self defined health status by income level by gender and age  • Dispersion around the at-risk-of-poverty threshold by gender and selected age groups  • At-risk-of-poverty rate anchored at one moment in time by gender and selected age groups  • At-risk-of-poverty rate before cash social transfers by gender and selected age groups  • Inequality of income distribution Gini coefficient  • Persistent at-risk-of-poverty rate (alternative threshold) by gender and selected age groups • Long term unemployment share by gender and age  • Very long term unemployment rate by gender and age  • In-work at risk of poverty rate by gender and age

16. From counting the excluded to measuring exclusion: If social exclusion is a process, can we measure it? • How can we capture the processes that leads to exclusion? • Given its multidimensional focus, can this be done in one discipline of study? • Given the very generous definition of exclusion, what should we focus on? • Given the lack of a single definition of exclusion, what should we be analyzing?

17. The EU Social Inclusion Study:An attempt to measure determinants of social exclusion • extending the debate outside discussions about monetary deprivation and poverty • adopted the capability deprivation which says that due to social and economic factors certain individuals in society may never reach their full potential • individuals who are deprived of certain capabilities could be excluded from participating in the labor force, consumption, wealth accumulation and from social functions

18. Recognize that jobs and income; education and training opportunities; social, community networks and activities are central to the process of inclusion. Go beyond quantifying the percent of people that lack financial means (or that do not consume enough) as a proportion of the total population.Social exclusion encompasses more than poverty, but, poverty is a component of Social exclusion Profile the proportion of the population that is not included in society’s production, consumption, political engagement and social interaction. Excluded from Financial Capital Those who are excluded from access to earnings and wealth Excluded from Human Capital Those with no or very limited Education, skills Excluded from Physical Capital Do not own any Housing or Land Excluded from Social Capital Those with limited friends, family, community interactions and little political empowerment

19. Three Forms of Capital • Financial Capital For this exercise, all those with the means to earn financial capital through employment, farms, rental income were grouped as having financial capital. • Physical Capital An individual was defined as having physical capital if they privately own land or property. • Human Capital An individual has human capital from their education and years of schooling and training. For this exercise, those lacking education capital were defined as those who did not reach the compulsory level of education in their country.

20. What data did we have?

21. What data was used to compile capitals?

22. What did we find? • The percent of the population that lacked financial capital was at least 20%, rising to as high as 42% in Poland. • in Poland where those who had not worked in the last seven days formed 70% of those excluded from financial capital. • Youth aged 15-24 formed the largest proportion of those excluded from financial capital, for e.g. in Hungary 70% of those excluded from financial capital are from this age group. • In all countries, the larger proportion of those excluded from financial capital were women: 58% in Latvia and Lithuania. • Quite large proportions of those excluded from financial capital were those with secondary levels of education. • Urban residents formed the largest proportion of those excluded from financial capital.

23. What did we find? • The largest proportion of those that lacked human capital was of individuals in the 40-64 age groups. • Without exception, the largest proportion of those that lacked human capital was of individuals in the 40-64 age groups. • Women formed the largest proportion of those that lacked human capital in Poland, Hungary and Lithuania. • The majority of those who lacked human capital did have some years of education. • Except for Hungary, the largest proportion of those lacking human capital were rural residents [in Estonia the distribution is close: 49 vs. 51]. • Unlike what was the case for exclusion from financial capital, a larger proportion of those that lacked human capital were individuals with disabilities, around a quarter of those with no human capital were disabled in Poland Estonia and Hungary and a third in Lithuania.

24. Poverty and social exclusion • Results show that not all those who are excluded from the various forms of capitals are poor; in fact the majority of those who are excluded from the various forms of capital were not in the bottom consumption quintile.

25. Lessons for methodology and data requirements • The data available were all from cross sectional surveys making it impossible to analyze the dynamics of exclusion • Since the data come from household surveys, by definition, those who do not live in households are not included • Because of a limited number of variables available in such household budget surveys, it was not possible to quantify ownership of social capital

26. Lessons for methodology and data requirements • Analyses focused on the 15-64 age groups; because available variables were more relevant for working adults and not for children or the elderly (even Eurostat has no indicators for children’s exclusion) • It was not possible to assess the contribution of community and national level capitals that do contribute to individuals’ possession of the various forms of capitals. Community and national capitals could include social infrastructure such as schools, hospitals, roads, and other forms of collective physical capital. • Country data are not directly comparable because variables used to compile the various forms of capitals are not identical across countries.

27. Lessons for methodology and data requirements • It is not possible to assess or compare how lack of access to a form of capital is associated with a level of deprivation. That is, is someone who lacks financial capital as worse off as someone who lacks human capital? Does an individual who lacks human and financial capital worse off than the individual that lacks just one of these? • Bivariate rather than multivariate analysis for the probability of being both poor and lacking in capitals might not be sufficient to explain the very complex interaction between socio-economic characteristics on one hand and lack of capitals and poverty on the other.