Address of Philippe Maystadt, President of the EIB
Forecasting study days, January 24th and 25th, 2002
1. Measuring poverty
When we try to understand a problem, we generally like to be able to quantify it. This also goes for a concept such as poverty.
A logical starting point would be to compare available income with some kind of standard reflecting a family’s basic needs. The idea behind this indicator of poverty is that most goods and services have to be bought in the market, and that a certain minimum level of purchasing power is required to satisfy basic consumer necessities. Thus, according to this indicator, widening income inequalities do not necessarily imply a growing absolute number of poor people as long as purchasing power at the lower end of the earnings scale does not diminish.
But in order not to be socially excluded, a person needs to be able to maintain a certain standard of living beyond what is necessary merely to satisfy minimum consumer needs. It is therefore sometimes better to look at poverty in relative terms, and many sociologists prefer to work nowadays with a relative poverty line. For instance, an income below 50% of national mean income appears to be a widely used threshold to classify people as poor.
Relative poverty needs to be seen, in addition, against the background of a geographical unit. As social cohesion does not respect administrative borders, the choice of a relevant area for poverty measurement is crucial, difficult and always bound to be ad hoc. An EU-wide relative poverty line, for instance, would be based on a geographical area that is too large. Taking “people living on less than 50% of average EU per capita income” as a standard would render most Greek and Portuguese people as poor. It would be hard, however, to argue that a majority of Greeks and Portuguese are socially excluded. Too small units, by contrast, are not ideal either. Let me take an example at the other extreme. Relative poverty in the district of “les Marolles” here in Brussels is probably low. But it does stand out against the average income earned in the region of Brussels-capital. Generally, there may be a variety of reasons to study relative poverty at the level of the State. Transfers and other social policies, for instance, are normally decided at the national level, in part because they reflect solidarity and values based on a common history, culture or religion.
Finally, it needs to be stressed that a snapshot of poverty in the earnings distribution for any given year does not tell us a great deal. Some people at the bottom of the pile might not be stuck there permanently. They may be poorly paid because they are young or relatively unskilled, and – if given a fair chance – can expect to earn more with experience or schooling. Otherwise put : the degree of income mobility may be more important to look at than static poverty numbers.
In the light of this introductory reflection, let us look at some evidence on poverty and income mobility in Europe.
2. Recent trends in poverty and income mobility in Europe
According to recent research, the number of people living on an income below 50% of a nation’s average varies widely within Europe. Typical poverty rates for the late 1980s were, for instance: around 3.5% of the population in Luxembourg, Norway and Finland ; some 4.5% of the population in Belgium and the Netherlands ; about 5.5% in Denmark, Germany and Sweden ; 8 to 8.5% in Hungary and France ; approximately 10% in Italy, Spain and Poland, and about 13% in the United Kingdom, along with Greece, Portugal and Ireland. The highest poverty rate, however, was found in the United States, with as much as 17.5% of the population living on less than half of the economy-wide per capita income.
Thus, high poverty rates were observed in English speaking and southern European countries, and low ones in the Nordic economies, as well as the Benelux area. Central European countries occupied the mid- to high range. Studies also show that relative poverty has been particularly significant for some groups: people living alone (especially older women) and single parent families.
What about trends in poverty rates? The gap between countries somewhat narrowed in the 1990s, but this was mainly due to a rise in poverty numbers in the large European countries, notably Germany, France and the UK – where the incidence of poverty almost doubled. An estimate by Eurostat reveals that roughly 55 million individuals lived below the 50% poverty line in the Member States of the European Union by the mid-1990s. Rising unemployment in Europe is, beyond question, a key cause of this trend.
Income mobility, by contrast, has been surprisingly uniform on both sides of the Atlantic for those employed, despite large differences in labor market regulations and social policies,, although there is a slight tendency for higher earnings mobility among young workers in Anglo-Saxon countries.
The share of those staying poor for prolonged periods is, fortunately, much smaller that what the previously mentioned poverty rates suggest, but the numbers remain substantial – between 2 and 5% of the population according to an OECD study. In fact, in the region of Brussels-capital, for instance, 3.5% of the population depends on the minimum existence income (“minimex”) or its equivalent.
But enough of figures. The criticism that can be levelled at reliance on figures is firstly that, like all statistics, they tend to distort reality. A number of people living below a certain income threshold are not even identified. We only need to consider all the illegal immigrants. Moreover, non-monetary aspects, which are of particular importance in this field – the environment, family status, the security provided by close relationships, personal motivation – cannot be picked up by statistics. There is no satisfactory statistical explanation for the specific nature of extreme poverty, which is always intimately linked to the history of the individual.
The second reason why I am sceptical of figures in this field is that such accounting niceties could hide actual indifference and policy indicators could be developed which might backfire on people themselves. The poverty level would become more important than the poor themselves and there would be a risk of devoting more attention to improving this figure than to the real needs of individuals. If we allowed ourselves to become obsessed by a statistics-based approach, we would end up favouring measures with the most significant statistical impact, rather than those which met the very concrete expectations of people seeking satisfaction of fundamental needs and rights.
For this reason, it is important not to rely entirely on statistics, but also – and above all – to allow the poor to speak for themselves.
3. Education for all
When listening to them, I have often been struck by the importance they attach to schooling for their children. This is undoubtedly the reason why, since the foundation of ATD-Fourth World, schooling has occupied a central place in its deliberations and approach. I shall not dwell on this point here, except to underline the danger of a theory which has been advanced by certain people in the context of globalisation. These people believe that it is sufficient to raise the level of training of part of the population to compensate for the effect of the reduction in the numbers of unskilled jobs brought about by the global redistribution of work. If the level of training of others is raised, an unskilled labourer will benefit from the space created in the market where he is seeking employment. In this “mechanical” theory, a worker who remains unskilled is helped by the fact that his neighbour has been retrained. Thus, for supporters of this theory, if a target were set for 80% of the population to attain a given level of training, this would be an excellent thing for all, including the other 20%. In my view, on the contrary, it would be a disaster for those who did not receive training. My argument is simple: in a world in which 80% of the population can read, remaining illiterate becomes a real handicap for the 20% who cannot. And if, instead of literacy, we consider the ability to speak English or use information technologies, the same argument applies.
This thesis obviously does not imply that progress towards improving the average level of training should be slowed down. On the contrary, it aims to show why we have to be more ambitious and why the goal of education for all must be taken to mean exactly what it says.
It is especially important to stress this since developments are underway at the very heart of the education system which will have the result of making this goal even harder to achieve. The educational strategy adopted by parents for their children is becoming more selective and is tending to compartmentalise the education system even further. “Good” secondary schools are becoming “better” and, as a result, “less good” schools are becoming “worse”. Choices of this type are often made by middle class families, particularly in the non-manual professions, which, whilst not necessarily having high incomes, nevertheless have the knowledge, skill, time and social networks required to decipher and utilise informal systems for selection and classification. Nor is it only the parents who use these selection strategies. Teachers have also been known to play a role, sometimes unwittingly. Thus, education, including state education, is affected in a paradoxical way by mass schooling: it is becoming more segmented and, in turn, a cause of further inequality.
Looking to the future, I should now like to consider three sensitive issues which will become increasingly important over the next few years:
how can we avoid the stigmatising effect of new social policies?
how can we reconcile security and freedom or avoid the tendency towards rigid and intrusive social control?
how can we involve the most deprived sectors of the population in the definition and implementation of decisions affecting them?
4. Avoiding the stigma
Question one: Should we not avoid excessive targeting of aid to the poorest and most vulnerable sectors of the population? Overly targeted policies can backfire on those at whom they are directed. This is the great problem with “those social policies which undermine the people they support, by branding them as underprivileged”. How can we break out of this dilemma that has too often bedevilled policies aimed at combating poverty? How can we improve the lot of the poor without labelling them as poor and thus making it more difficult for them to free themselves from their condition?
Various examples illustrate this problem. I have just mentioned schooling. Although the priority educational areas (ZEP) in France, or schools applying positive discrimination in Belgium, make it possible, in the very best cases, to stem the deterioration in the academic results of children from disadvantaged areas, they cannot prevent the stigma of the ZEP label from inducing more privileged parents to leave the ZEP, due to fears of excessively high concentrations of pupils from the poorest backgrounds.
Similarly, in the job market, certain types of special employment contract which are excessively targeted, cannot avoid being perceived as a stigma by future employers.
Or, to quote an issue which is currently being debated in several countries of the European Union – namely the right to have a bank account – it would, in my view, be dangerous to opt for the creation of special bank accounts reserved for the poorest people, with features which, when compared to normal bank accounts, would be discriminatory.
It seems to me essential to avoid the situation in which the help given to the most underprivileged has the result of enclosing them in ghettos from which they are unable to escape, as a result both of the stigmatising effects of these ghettos on the perceptions of others and of their psychological impact on the individuals themselves. On the contrary, the scope of reforms must be enlarged, whether in the field of education, credit or the labour market. Of course, this observation underlines the enormity of the task. Combating poverty cannot be viewed independently of the mechanisms of society as a whole. The problem cannot be “solved” by “one-off” measures directed solely at the poor. Instead, the fight against poverty must be based on a constant search for open gateways, bearing in mind that these gateways are open in both directions and that giving and receiving is a two-way process.
5. Reconciling security and freedom
A second difficult issue, and one which is clearly set out in the preparatory document for this Symposium, is the question of knowing how to reconcile security and freedom.
Charitable tradition under the “Ancien Régime” linked the performance of a duty of social responsibility with the subjection of the poor to supervision. Social policies were an inextricable mix of charity and policing, with the act of taking care of individuals necessarily involving an exercise of control over their behaviour.
By placing the accent on freedom, modern society has given rise to another concept, that of non-discriminatory social responsibility, which takes the form of a right rather than the imposition of supervision. “Whatever the vicissitudes of his life, a person must remain a fully-fledged citizen”.
It sometimes appears that certain recent policies represent a throwback to the Ancien Régime, inasmuch as they revert to control over behaviour. Certain new approaches, based on the legitimate concern to increase the effectiveness of social policies, run the risk of recreating, at least in part, an archaic concept, namely the classification of the poor by merit. Certain new procedures occasionally give the impression that we are back in a welfare office, drawing distinctions between the good poor and the bad poor. This is a very important problem for the future and one that needs careful consideration.
The temptation to control behaviour, by means of decisions to grant or withhold certain benefits, no longer dependent on an insurance system, is a very real one. This trend is very clear in the USA where numerous social programmes have adopted the aim of bringing pressure on people to behave in a specific way. For example, in some States, family allowances are reduced if children are absent from school more than a certain number of times. Adolescent mothers receive extra benefits if they marry, the aim being to reconstitute a stable family unit. Conversely, their benefits are frozen if they have another child. Drug addicts who refuse to follow detoxification treatment have their benefits suspended. In Quebec, poor women receive an additional monthly allowance if they breastfeed their babies, since this is better for their health.
How far can these programmes go down the road of social control? Where should the line be drawn? The desire for effectiveness is understandable. Personally, I agree that an additional allowance should be granted to young unemployed people who opt to undertake training leading to a qualification. But we can see clearly that there is a danger of abuse and that, under cover of providing social support, we run the risk of reverting to the welfare policies of the Ancien Régime. US human rights associations refer to this as “new paternalism” or “democracy of surveillance” and have even brought legal actions against certain programmes as constituting a serious breach of individual liberty.
We in Europe should also react against this tendency which, whilst invoking societal constraints of cost and effectiveness, actually sets out to regulate the most personal and sometimes most intimate behaviour of individuals.
I believe we must be extremely vigilant in this area in future years. The aim is to enable the poorest sections of the population to gain access to basic rights, but without compromising their freedom. In this area, as François Vandamme has stressed, the struggle must be pursued by legal means.
6. Partners in democracy
The third and final issue I would like to discuss is possibly the most important: what can be done to ensure that the most underprivileged sections of the population have a real share in democracy? How can we create a situation in which those who feel, experience and wish to express the need for justice can make their demands?
To achieve this, new ways have to be explored, since traditional methods of representation, whether political elections, trades union activism or mass demonstrations, give hardly any voice to the poor. In a genuine democracy, the poor must be able to influence the collective debate and the mechanisms which give rise to decisions affecting them.
This is a comprehensive issue which has to be addressed at different levels: at the local level, the importance of which has been underlined by Mme Jouen, but also at regional and national level, and even at European and international level, in the knowledge that this expression of the poor must take a variety of forms, that it will be inescapably diverse and that “it will be difficult to contain within the mould of certain well-worn ideas”.
It is true that representation of the poor does raise some new issues and that it will take time to develop the most appropriate methods. “It is not just a matter of devising new platforms to offer the silent so they can express themselves. They also need to be encouraged to speak from these platforms effectively”. And, for this purpose, we need to find methods to identify those who are remaining silent, teach them how to participate and ensure they are genuinely supported, with respect for their individual freedom and autonomy. This underlines both the complexity and richness of the approach pioneered by ATD-Fourth World.
This can, and must, foster a spirit of partnership and co-operation.
Firstly, co-operation between unions and associations, especially in joint action for the long-term unemployed. On this point, I appreciated what Mr Fonteneau said in the appeal he made at the end of his report.
Secondly, co-operation between companies and employment associations, to establish closer relationships and gateways, making it possible to reconcile economic performance and human development. It is a question of eliminating the fatal divide between the sphere of the efficient company and that of the search for employment. We know this will inevitably raise a number of problems which have still not been adequately resolved. This explains the need to organise a more direct dialogue, with the active involvement of so-called “job-seekers”. For we must be aware that the risk exists that the different employment rehabilitation procedures could, in fact, lead to the formation of a third sector, between the public and corporate sectors, which would end up occupying a population that would become static, whereas, in order to retain its utility and logic, it would have to remain essentially a transitional space, a space for socialisation and learning.
Lastly, co-operation between government and associations, which is necessary in view of the role played by associations on the ground, a role which public service cannot take on alone.
From the simultaneous orchestration of all these factors, a powerful twofold movement both drawing attention to the most disadvantaged and allowing them to express themselves can emerge – a movement which, by giving the poor a voice, creates awareness across the whole of society.
 Based on the Luxembourg Income Study Database – a collection of standardised data retrieved from household surveys covering 25 countries – and Eurostat’s European Commission Household Panel.
 Kangas, O., “For Better or for Worse: Economic Positions of the Rich and the Poor 1985-1995”, Center for Population, Poverty, and Public Policies, Luxembourg, LIS Working Paper No 248, January 2001.
 Veli-Matti, R., “Trends of Poverty and Income Inequality in Cross-National Comparisons”, Center for Population, Poverty and Public Policies, Luxembourg, LIS Working Paper No 272, August 2001.
 Awad, Y., and Israeli, N., “Poverty and Income Inequality: An International Comparison, 1980s and 1990s”, Center for Population, Poverty and Public Policies, Luxembourg, LIS Working Paper No 166, July 1997.
 European Commission Household Panel, 1994. Unlike the Luxembourg income study, these data are, however, not completely internationally comparable.
 Fabig, H., “Income Mobility in International Comparison – an Empirical Analysis with Panel Data”, Center for Population, Poverty, and Public Policies, Luxembourg, PACO Working Paper 26, June 1998.
 OECD, Employment Outlook, 1996.
 OECD, “Poverty Dynamics in Four OECD Countries”, Economics Department, Working Paper No 212, April 1999.
 Observatoire de la Santé – Report 2000 on the state of poverty in the Brussels-capital region, Journal du Collectif No 26, May-June 2001, Joint Community Commission, Brussels.
 For this trend, cf. the analysis by Agnès van Zanten: “Fabrication et effets de la ségrégation scolaire”, in Paugam, 5., “L’Exclusion: l’état des savoirs”, La Découverte, 1996, page 285.
 Schnapper, D., “Intégration et exclusion dans les sociétés modernes”, in Paugam, S., op. cit.
 Cohen, D., “Richesse du monde, pauvretés des nations”, Flammarion, 1997, page 131.
 Rosanvallon, P., “La nouvelle question sociale”, Seuil, 1995, page 182.
 These examples are given by Pierre Rosanvallon, op.cit. pages 212-213.
 de Foucauld, J.-B. and Piveteau, D., “Une société en quête de sens”, Odile Jacob, 1995, page 249.