The number of minor children in households below the poverty threshold has also fallen over the last few years. Nonetheless, the proportion of minors

Transcription

1 SUMMARY Poverty measurement As in previous editions of the Poverty Monitor, poverty is determined according to two income thresholds. The low-income threshold represents the same welfare level for all households. The level of the social assistance for a single person in 1979 is the point of departure. In that year, purchasing power for this benefit was at its highest. For other types of household, the low-income threshold is determined by applying an equivalence factor, based on the actual additional costs relating to different household compositions. For the years after 1979, the low-income threshold has been corrected for price inflation, as a result of which it is well-suited for comparisons over time. The second criterion is the policy threshold, which has been set at 105% of the standards applicable in social legislation (social assistance, child benefit, Old Age Pensions Act, etc.). This threshold is politically determined, and is important for assessing the size of the target groups for government policy. For comparisons over time, however, this threshold is less usable, because correction for inflation has not been implemented in a consistent manner. Besides these two thresholds, a number of additional indicators for poverty are employed, such as the length of time spent below the income threshold, fixed costs, and the evaluation of income. The information used in this edition generally covers the period up to and including 1999, the last year on which fiscal data is available. The developments up to and including 2001 are charted out on the basis of estimates. Fall in poverty amongst households Measured according to the income thresholds, over the last few years, poverty has fallen. The percentage of households with a low income remained stable for a long period in the 1990s (between15% and 16%). However, a major fall in numbers occurred in 1998, which was followed by a limited reduction in As a result, the percentage of households with an income below the low-income threshold, in 1999, totalled The fall in 1998 was to a considerable extent due to the increase in the tax exemptions for the elderly, as a result of which many singles with a small pension rose above the low-income threshold. For the year 2001, an estimate has been made of the share of households with a low income. The review of the tax system is accompanied by considerable effects on purchasing power, for As a consequence, it is predicted that the percentage of low incomes will fall further, from 13.2% in 1999, to 11% in If the policy threshold is employed, a fall has also occurred over the last few years, but on a more limited scale. This is because an increase in the social minimum does not result in a reduction in the number of households having to survive on the social minimum level, or less. In 1999, 9.7% of all households received income at or around the social minimum level. 209

2 The number of minor children in households below the poverty threshold has also fallen over the last few years. Nonetheless, the proportion of minors is still higher than numbers of all persons taken together. In 1999, 15% of all children lived in a household with a low income. One in nineteen children grows up in a household with a long-term (for four or more consecutive years) low income. Additional indicators Long-term poverty has also fallen. The number of households with an income below the low-income threshold for a period of four years or longer fell between 1997 and 1999 by approximately 60,000, to 373,000. Amongst households with a long-term income below the policy threshold, the fall was less pronounced. In 1999, their numbers totalled 235,000, meaning that one in 28 households belongs to this group. Fixed costs are expenditure resulting from contractual obligations (such as rent, water, energy, insurance and consumer taxes). These costs impose a considerable demand on the budget of households with a low income, even after housing subsidies have been taken into account. The proportion of fixed costs for this group increased considerably in the first half of the nineteen nineties, from 36% to 42%. This was followed by a modest fall, to 40% in 1998/1999. The percentage of households with a low income stating they had trouble in making ends meet fell considerably between 1996 and 1998, from 42 to 29%. In 1999, the fall was very limited (28%). Purchasing power developments Households below the low-income threshold and the policy threshold saw a less than average improvement in their purchasing power during the 1990s. Their income rose by more than 2% between 1990 and 1999, whilst the median disposable income of all households rose during the same period by more than 7%. However, these purchasing power changes do not include the effects of special social assistance benefit payments and the remission of local charges. In this edition of the Poverty Monitor, these factors are reported on, based on new information. In 1999, more than 180,000 households with a low income received on average 600 euro in special social assistance. If these benefit payments are added to the income, the number of households below the low-income threshold falls by more than 25,000 (0.4 percentage points). In 1999, 440,000 households with a minimum income received a remission on local charges worth on average 325 euro. For the period , a calculation has been made of the total purchasing power effects of the generic and specific income developments. Changes in the level of wages and benefit payments cause the generic developments, whilst changes to individual subsidy schemes (above all housing subsidies), remission of local charges and special benefits determine specific developments. During this period, the purchasing power of all households with an income below the policy minimum increased on average by 5 1 / 4 %. Amongst the low-income group, the average purchasing power improvement was 3 1 / 4 %. For benefit recipients, the purchasing power effect was greater: 8 1 / 2 % for the group below the policy minimum, 6 1 / 2 % for the low-income group. The purchasing power 210 SUMMARY

3 improvements are therefore substantial, but considerably lower than the figures contained in the National Action Plan against poverty and social exclusion, published earlier this year by the Cabinet. This is, among other things, due to the fact that in these calculations the less favourable purchasing power development of employees and the self-employed and the lower income group was not taken into consideration. In the National Action Plan, the effects of local policy are also entirely attributed to individuals with a minimum income, whilst in practice households with a somewhat higher income are also able to apply for these provisions. Dynamics Every year, approximately one in three poor people achieve an income above the lowincome threshold. The elderly, benefit receivers (above all those on income support and those receiving a disability benefit), single persons and single-parent families have a relatively low chance of escaping from poverty. During the 1990s, these opportunities for escaping poverty have somewhat increased, across the board, whilst the likelihood of entering poverty have fallen slightly. Generally speaking, the changes are not considerable, with the exception of the possibility of escaping poverty amongst the elderly which above all increased considerably in 1998 and the risk of falling into poverty amongst the unemployed, which was almost halved, during the 1990s. For those receiving a disability benefit, the risk of falling into poverty has increased (from 16% in 1992 to 23% in 1998), which goes against the overall general trend. Less poor, more segregation In the previous edition of the Poverty Monitor, reference was made to the fact that the percentage of households with low incomes may have fallen over the last few years, but that this smaller group lives in greater segregation. A closer analysis indicates that this is due to a number of different causes. The fall in the proportion of low incomes above all relates to income improvements (for example amongst pensioners), and the reduction in the proportion of unemployed and social assistance recipients. The increased segregation relates to (selective) migration movements, but also the fall in the proportion of unemployed and social assistance recipients. Groups at risk In accordance with the general development, over the last few years, the proportion of low incomes has fallen amongst the groups with a high risk of poverty. This is also the case amongst the group with the greatest likelihood of receiving a low income, single parent families. The percentage of low incomes fell from 61% in 1995, to 47% in However, the risk is still considerable: almost half of all single parent families receive a low income, and the likelihood of this situation is more than three times as great as the national average. The percentage of low incomes amongst single parent families is also clearly above the level of the next high risk group, single women aged 65 and older. In this group, the proportion of low incomes fell between 1995 and 1999 from 35% to 27%. SUMMARY 211

4 If viewed over a longer period, the groups at risk have changed fundamentally, as demonstrated by a comparison between 1981 and In both years, the total poverty percentage was the same (approximately 13%), but this stability does not show within the subgroups. In the intervening period of almost twenty years, the risk of poverty for single parent families, social assistance recipients, the unemployed and disability benefits receivers rose considerably. For couples, the employed, the self-employed and pensioners, the risk of receiving a low income has fallen. Amongst pensioners, this does not however apply for single persons, for whom the risk of a low income is slightly higher in 1999 than was the case in One group where poverty is highly concentrated is the ethnic minorities. Almost 40% of foreign households of non-western origin receive a low income, as opposed to 12% of the native Dutch households. Amongst Turkish and Moroccan households, above all, poverty is common. Long-term poverty is also not unusual: of the non-western ethnic minority households with a low income, more than half have been in this situation for longer than four years. The high poverty percentages broadly reflect the unfavourable labour market position of ethnic minorities: relatively high unemployment, considerable disablement for work (above all amongst elderly Turkish and Moroccan men), limited labour market participation by Turkish and Moroccan women, and the high proportion of Suriname and Antillian mothers receiving social assistance. In addition, the pensions of the relatively limited group of non-western ethnic minorities are on average low. It could be expected that amongst the second generation, people who have grown up in the Netherlands, the poverty percentage would be lower than amongst the first generation. However, for the time being, the figures available do not point towards any reduction in poverty. Amongst the second generation, the proportion with a low income is still very high, and generally speaking does not deviate substantially from the poverty rate amongst the first generation. A footnote should however be added: a large number of the second generation ethnic minorities are still attending school, and so have not been taken into account in the analysis. If this relatively better educated group does enter the labour market, the overall picture for the group may improve considerably, and poverty amongst the second generation may well prove to be lower than amongst the first. The risk of poverty amongst the self-employed and freelancers is slightly above the national average: almost 16% of them receive a low income. Their poverty risk is thus far lower than that for those receiving a benefit, but is almost four times as high as that for people in paid employment. Typical for the self-employed is the fluctuation between periods of low and of non-low incomes. Approximately half of all self-employed people with a low income found themselves above the poverty threshold, in the previous year. One in seven poor self-employed households received a low income over the last four consecutive years, which equates to more than 2% of all self-employed persons. For certain groups of self-employed people, the risk of a low income is greater: non-western ethnic minorities, single persons and the self-employed with minor children. Farmers and market gardeners and start-up business operators also have an increased risk of poverty (21 to 22%). 212 SUMMARY

5 There are no indications that the (fiscal) measures aimed at promoting self-employment are having any major effect. The proportion of benefit receivers exchanging the benefit either entirely or partially for profit as the main source of income has only risen by 0.3 percentage points since Annually, approximately 12% of the self-employed cease business. Almost half of them subsequently end up with salary as their primary means of income, whilst more than 10% receive a benefit. The findings suggest that the majority of the businesses in question was no longer viable. Poverty trap The poverty trap refers to the fact that there may be little financial incentive for those on benefit to start working, if as a result they partially or entirely loose their entitlements to subsidised housing, remission of local charges, special social assistance, etc. The number of households affected by the poverty trap has been estimated for 1999 at almost 270,000. Above all single parent families run the risk of falling into the poverty trap. The question, however, is to what extent do minimal financial incentives in practice lead to people not going into paid employment. After all, other factors also play a role in deciding whether or not to start work, such as having to care for children, the nature of the work, age, level of education, and earning capacity in the longer term. The relative weight of the poverty trap and other characteristics has been investigated for the most important income-dependent scheme, housing subsidies. This investigation suggests that people whose income would suffer due to the loss of housing subsidies if they were to start work, do in practice accept employment less often, even once account has been taken of the other relevant factors. This is particularly the case amongst those on social assistance. The analysis suggests that the poverty trap does indeed have consequences for labour market behaviour. However, the footnote should be added that the information used is not perfect in all respects. It is for example possible that the labour market is not a realistic prospect for certain groups of benefit receivers (e.g. fully disabled persons), which could (in part) explain the link between subsidised housing and the accepting of paid employment. Effect on educational performance If parents receive a low income, the school performance of the children at the start of secondary education is poorer, both in terms of language and mathematics, and information processing. This ties in with previous findings in respect of primary education. On the other hand, the level of education of the parents has a greater effect on the school performance than the level of income. Social exclusion A person is said to be socially excluded if they have no access to certain social goods, and are therefore severely hindered in their social functioning. For an analysis of the effects of the National Action Plan against poverty and social exclusion it is important that good indicators be available. Six areas can be identified: education, the labour market, social contacts, spatial exclusion, institutional exclusion (the inability to use the facilities of the welfare state) and cultural exclusion (being cut off from dominant SUMMARY 213

6 values and behaviour patterns, such as the work ethos). For each area, indicators have been selected, in ascending order of their necessity for full participation in society. For example, in education: literacy and functional learning; mastery of Dutch; achieving a minimum educational qualification. The individual indicators point to a relatively low level of social exclusion (less than 15%). 214 SUMMARY