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Edited by Henning Lohmann and Ive Marx
Amy Horton and Jane Wills
As low pay and in-work poverty have proliferated, demands for a higher, ‘living wage’, have gathered strength, particularly in the United States (US) and the United Kingdom (UK). Two decades since the first modern living wage campaign succeeded in Baltimore, a vibrant movement is challenging low pay across the US. In the UK, the government announced a ‘National Living Wage’ in 2015. This chapter reviews the efficacy of the living wage as a means of tackling in-work poverty. It begins by examining the extent to which low pay is a cause of household poverty, before explaining how living wages are calculated, and briefly outlining the history of the movement. It then summarizes existing research on the impact of living wages on poverty and employment, as well the potential consequences of scaling up the living wage. The politics of the living wage are explored. The concept has served to mobilize broad coalitions of labour and community groups to challenge the marginalization of low-paid workers. However, the living wage also raises questions about where responsibility lies for tackling in-work poverty. Lastly, the chapter considers what future direction the living wage movement might take in order to make a greater impact on in-work poverty.
Whereas the importance of having a migration background or of being a foreign national is sometimes analysed in European publications dealing with in-work poverty (IWP), the inclusion of these factors in quantitative analyses is not central. The goal of this chapter is twofold. First, starting from the model presented in Chapter 4 of this Handbook, theoretical considerations pertaining to the specific situation of workers who have a migration background or belong to another minority are presented. Second, the link between these factors and the risk of in-work poverty are measured in European Union (EU) countries and in three associated countries (Norway, Iceland and Switzerland). Results based on EU Statistics on Income and Living Conditions (EU-SILC) data show that, indeed, migrants and foreign citizens are more exposed than natives and ‘nationals’, although to a varying extent. Moreover, even when controlling for the usual individual-level factors of IWP highlighted in the specialist literature, as well as all country-level variables through fixed-effects models, not being a native or a national citizen increases the odds of being IWP in Europe, which means that the usual explanations of why these minorities are more affected by in-work poverty – sociodemographic profile, social policy, the state of the economy, and immigration policy – are far from totally explaining the disadvantage they face in the labour market. Even if these results do not fully demonstrate that discrimination is at play, because it is not possible to rigorously control for all dimensions of productivity, nor to control for respondents’ social networks’ composition and resources, they nonetheless represent an interesting contribution to a little-studied aspect of in-work poverty.
Armando Barrientos and Vidhya Unnikrishnan
In-work poverty is widespread in low- and middle-income countries. This chapter examines the relationship between in work poverty, poverty and social assistance in developing countries. Low- and middle-income countries have experienced a sharp decline in poverty and in-work poverty in the last two decades, but in South Asia and sub-Saharan Africa the reduction of in-work poverty has lagged behind the decline in poverty. There is a strong correlation between in-work poverty and informality, rural location and work in agriculture. The expansion of social assistance programs in low- and middle-income countries has contributed to the decline in global in-work poverty. In theory, they could also contribute to higher in-work poverty to the extent that they encourage informal employment. High incidence of in-work poverty highlights the limitations of current development policy. In order to reduce in-work poverty it is important to share the benefits from economic growth with the disadvantaged groups. Policies aimed at sustained economic growth, investment in human development, and strengthened social protection will be effective in addressing in-work poverty.
Latin America experienced a long period of sustained growth from 2003 that positively impacted upon social and labour market indicators. Less inequality and higher incomes resulted in lower poverty and extreme poverty incidence rates. However, even in this positive context the region continues to exhibit important shortcomings in the labour market. The most evident are high levels of unemployment, precariousness and informality. Given the importance of the labour market in household income generation, especially in a region where social protection coverage is limited, those precarious labour conditions often give rise to poverty and social exclusion. As a consequence, a large proportion of the workforce has a job that does not generate sufficient income to escape poverty. Thus the phenomenon of the ‘working poor’ in these countries shows that having a job is no guarantee against poverty. The aim of this chapter is to contribute to the understanding of the incidence, characteristics, trends and underlying driving forces of in-work poverty in Latin America in the new millennium. The empirical analysis focuses on five countries: Argentina, Brazil, Costa Rica, Ecuador and Peru. This selection of countries offers a varied picture of in-work poverty incidence in the region.
Kezia Lilenstein, Ingrid Woolard and Murray Leibbrandt
In South Africa, finding employment is generally regarded as the primary means of escaping poverty. However, the extent of income sharing, coupled with high incidence of low-wage work, may leave even those who find employment unable to ‘work themselves out’ of poverty at the household level. Yet, despite a proliferation of poverty studies, there has been little work focusing on poverty amongst employed South Africans. This chapter therefore provides a baseline descriptive analysis of the markers of poverty among the employed and their households. The authors find that in South Africa there are specific, historically disadvantaged groups which are most likely to suffer from in-work poverty. These include African and Coloured workers, females, those with low education levels, those living in rural areas and those in more temporary forms of employment. While both wages and household composition are important markers of in-work poverty, the risk of poverty is greatest when these two markers intersect, with even ‘high’-wage workers at high risk of poverty if they live in households where their income is shared with many non-working household members.
Paolo Barbieri, Giorgio Cutuli and Stefani Scherer
This chapter provides an overview of the main trends and determinants of in-work poverty in Italy, a country representative of the Mediterranean welfare-and-labour market arrangement. Even in presence of relatively low levels of earning dispersion, Italy displays comparatively high rates and a moderate increase of in-work poverty during the 2000_2014 period. Three main points of interest emerge from the analyses. First, in a context of (still) low female labour market participation, single-earner couples as a relevant portion of Italian households and a significant driver of in-work poverty exposure. Second, the accumulation of individual labour market risks at the household level, particularly relevant in the dualistic and highly segmented Italian labour market. Third, the risks of protracting in-work poverty statuses over time, with negative consequences in terms of between-households inequality trends. According to the empirical evidence, the definition of possible policies contrasting the diffusion of in-work poverty would require a combination of measures. On the one side are the implementation of policies aimed at reducing the incidence of single-earner households, both by promoting a further increase in female employment, and by providing reliable work_family reconciliation tools, especially in the presence of childbirth (and children) in the household. On the other side is the provision of effective measures targeted to cushion, by means of reliable unemployment benefits and fiscal incentives, the poverty risks related to low-work intensity and high employment precariousness among the weakest segments of the workforce, employed in marginal labour market positions.
Lane Kenworthy and Ive Marx
In-work poverty became a prominent policy issue in the United States (US) long before the term itself acquired any meaning and relevance in other industrialized countries. With the US’s embrace of an employment-centered anti-poverty strategy, in-work poverty has become even more of an issue. This chapter reviews some key trends, drivers and policy issues. How much in-work poverty is there in the US? How does the US compare to other rich democracies? Has the US’s in-work poverty rate changed over time? Who are the in-work poor? What are the main drivers of levels and changes in in-work poverty? Finally, what are the prospects for the US’s working poor going forward?
Chung-Yang Yeh and Jen-Der Lue
In-work poverty (IWP) has emerged as a critical issue in the East Asian welfare states (Japan, Korea and Taiwan) during the past two decades. However, a comparative lens to empirically study IWP in East Asian economies is absent due to the lack of a comparable database. The authors argue that three East Asian welfare states have different patterns of IWP due to different patterns of capitalist structure and labour market. This chapter uses the Luxembourg Income Study (LIS) to show different patterns of IWP in East Asia. Japan and Korea adopted a series of social policies, including activation and family policies, under the umbrella of social investment, although in the contexts of different political discourses and trajectories. By contrast, only a few temporary policy measures were introduced to help the working poor in Taiwan.
Sarah Marchal, Ive Marx and Gerlinde Verbist
This chapter provides an overview and discussion of the direct income support measures available to workers. Using model family simulations of the net income and income components of a single person and a lone-parent family, the authors assess the policy measures currently in place in the European Union (EU) member states and the United States to guarantee an income floor to working families: minimum wages, favourable tax and social insurance contribution conditions, and supportive benefits. They demonstrate that despite ample supportive direct income measures, net incomes at minimum wage are well below the EU at-risk-of-poverty threshold. Yet there has clearly been a tendency to implement direct income support measures that increase the net incomes of workers paid at or around the minimum wage. The authors discuss how direct income support measures, in particular personal income tax reliefs, social security reductions and different types of social benefits, can play a broader role in combating in-work poverty at large.