Causes of in-work poverty in Europe

Country-level labour market institutions and welfare state polices have a 'small but highly significant' role in explaining how in-work poverty varies between European countries, according to a paper from an EU-funded research project.

Key points

  • In the EU in 2010 almost 6 per cent of all full-time employed people lived in households with a disposable income below the poverty threshold – clearly demonstrating, according to the report, that employment is no longer a sufficient guarantee for preventing poverty.
  • So-called 'micro-level' factors explain by far the largest share of the risk an employed person has of living in a poor household. These include individual factors such as low levels of educational achievement, and household factors such as a relatively large number of household members dependent on the household income.
  • Nonetheless the prevalence of in-work poverty varies markedly across different countries, and the influence of country-level factors is 'small but highly significant'. These factors include the share of low-skilled workers in the labour force, and policies to promote female employment.
  • In the future it is particularly important for policy-makers to foster not only the quantity of jobs available but also job quality, if employment is to continue to play a part in protecting against poverty.

Source: Dorothee Spannagel, In-Work Poverty in Europe: Extent, Structure and Causal Mechanisms, Combating Poverty in Europe project (European Commission)

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