The Working Poor in Europe

The Working Poor in Europe

Employment, Poverty and Globalization

Edited by Hans-Jürgen Andreß and Henning Lohmann

For a long time in-work poverty was not associated with European welfare states. Recently, the topic has gained relevance as welfare state retrenchment and international competition in globalized economies has put increasing pressures on individuals and families. This book provides explanations as to why in-work poverty is high in certain countries and low in others.

Chapter 6: In-Work Poverty in a Transitional Labour Market: Sweden, 1988–2003

Björn Halleröd and Daniel Larsson

Subjects: development studies, development studies, economics and finance, labour economics, social policy and sociology, comparative social policy, economics of social policy, labour policy


Björn Halleröd and Daniel Larsson INTRODUCTION The labour market is a society’s main provider of economic resources, and the link between poverty and such factors as unemployment, early retirement, and so on is indisputable. Employment is therefore naturally seen as the main cure for poverty, while family and income transfer systems constitute an alternative support network in cases where employment fails. However, the working poor challenge this view, since their very existence implies that the labour market creates jobs with wages that are too low and/or employment contracts that are not secure enough to keep people out of poverty. Thus, if a substantial share of the poor are working poor, we need to reconsider the traditional view of the relationship between employment and poverty. In this chapter, we examine the relationship between labour market position and in-work poverty in Sweden. We look at the period from 1988 to 2003 with special emphasis on three time periods: the late 1980s, the mid1990s and the early years of the second millennium. These periods of time represent three distinctive situations. In the late 1980s, the Swedish labour market was characterized by a high employment rate and an extremely low unemployment rate. At the beginning of the 1990s, this situation changed radically, with skyrocketing unemployment and a shrinking employment rate. By the turn of the millennium, the economy was solidly back on track. However, at this point, the country’s economic policy was focused on low inflation rather than on full employment....

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