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The Working Poor of the Post-Recession EU

Since the onset of the economic crisis in 2008, a new class has emerged in Europe: the working poor. Those who belong to this group are employed, but their income isn’t high enough to maintain the typical standard of living in their society (in other words, they live below the relative poverty line, earning less than 60% of the median national income). In order to reduce social exclusion and ameliorate the standard of living of the working poor, the EU should take drastic measures and design policies both at institutional and individual levels.

The growth of this phenomenon coincided with a rapid rise in unemployment, an increase in part-time work and the implementation of austerity measures imposed in response to the crisis. Undoubtedly, the working poor phenomenon deserves particular attention not only for the improvement of living standards but also for the fight against social exclusion in the long-term.

Although unemployment rates increased sharply after the crisis, peaking at 10.9% for the EU-28 and 12% for the Eurozone in 2013, they have been declining in recent years. June 2018 saw the lowest unemployment rates in the 9 years since the crisis, at 6.9% for the Eu and 8.3% for the Eurozone. But the working poor statistics tell another story.

In 2008, the working poor made up 8% of the EU’s workforce, while in 2017 it amounted to 9.6%. According to Eurofound the countries of Southern Europe and the Balkans have the largest proportion of the working poor, with Romania exceeding 18%, Greece at 13%, Spain at 12.5%, while the lowest percentage is recorded in Finland as it reaches just 2.8%.

Low wages and unstable working conditions are the biggest problems of the working poor. Women are more vulnerable to in-work poverty, although their risk of poverty is reduced if they are the second employee in their household. Women work more often in part-time or temporary employment than men, and their wages are lower. In 2010, 14% of women, compared to 2% of men, living as couples did not have any personal income.

The type of employment also makes a difference. In particular, those who work full time account for 5% of the working poor, while part-time employees make up 29% and temporary workers, 16%. The latter two categories have grown particularly since the 2008 financial crisis and are in the most vulnerable situation.

Education plays an important role, according to Eurostat statistics, which show that the lower one’s level of education is, the more likely they are to have a lower salary. Specifically, in 2014, 28.2% of employees with low educational attainment had a fairly low salary, compared to 20.9% of those with a secondary education level and 7% of those with a high level of education.

One of the repercussions of in-work poverty is social exclusion, as poor workers are unable to partake in social activities. It also affects mental well-being and satisfaction in daily life. Characteristically, 18% of them report feeling constantly angry and 10% suffer from depression or frustration. According to a Eurofound study, workers experiencing poverty have slightly better mental health than the unemployed who are out of work or training.

Within this context, there is a sense of lack of help from the social environment, which also affects interpersonal relationships as confidence declines. Working poor are less likely to have people with common interests to talk to or to spend time with, so they are more isolated. Material deprivation, which is a common characteristic of in-work poverty, creates a sense of lacking recognition by society and social marginalization.

The EU has set an objective, through the Europe 2020 Strategy, to reduce the number of poor by 20 million, paying particular attention to employment, education and training. Both the European Social Fund and the European Strategic Investment Fund seek to create new jobs and reintegrate young people into either education or training programs.

However, a series of tailor-made measures and initiatives for the working poor are needed to improve the standard of living of those in this group. In terms of education, there should be a focus on access to lifelong learning and vocational education programs based on the needs of the labor market, with emphasis on digital skills, to enhance the ability and skills of employees to adapt to more and different working environments.

Strengthening the welfare state should be another priority, with the protection of mini-mum wage, working conditions, social benefits and the protection of part-time or temporary workers. Institutional-level strategies for fighting in-work poverty should be built into the framework of the EU’s European Social Rights Pillar, which aims to build a fairer and more socially inclusive union, through three main areas: equal opportunities and access to employment, fair working conditions, social protection, and inclusion.

In addition, single parents or single-income earning households with children are at risk of poverty. In these cases, a proper work-life balance plan is needed (including childcare services) to facilitate access to work for parents. In some cases, the lack of childcare services reduces a single parent’s ability to search for employment or work full-time.

Consequently, it seems job creation is not the only solution to reduce the poverty or unemployment rate as the working poor indicates that a series of measures and policies are needed to ensure quality and stable work. In order to reduce social exclusion and improve the standard of living of the working poor, the EU must take drastic measures and design policies both at institutional (such as minimum wage, social benefits, work-life balance) and individual levels (by providing training programs, vocational education, lifelong learning).