Public meeting to mark the International Day for the Eradication of Poverty « A long walk to poverty awareness » 21/10/2015 EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
This presentation does not claim to set out an exhaustive examination of the subject, nor to be a scientific work, but rather to find patterns for thought and discussion. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
1957 : Treaty of Rome • The signatory Heads of State affirm “as the essential objective of their efforts the constant improvements of the living and working conditions of their peoples” (Preamble, Treaty of Rome) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
Europe’s First Efforts • 1987: Program for European Aid for the Most Deprived (PEAD): makes surpluses from the Common Agricultural Policy available for distribution to Europe’s most deprived. • Commission President Jacques Delors, who considers solidarity a priority, develops and strengthens European funds (notably cohesion), in order to offset the market. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
2000: EU adopts Lisbon Strategy • Objective: " sustainable economic growth with more and better jobs and greater social cohesion. “ • New element: flexicurity : it is the worker who needs protection and assistance to either transition successfully in his/her existing job or move to a new job. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
2010: EU adopts EU2020 Strategy • 1st specific poverty reduction target at EU level: at least 20 million fewer people in or at risk of poverty and social exclusion. • Creation of European platform against poverty and social exclusion. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
2011 European Semester created - a yearly cycle of economic policy coordination • A dialogue between the Commission and Member States on the adoption of national budgets . • First scoreboard with economic and social indicators created. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
Assessment of EU action since 2000 • Results clearly show that insufficient progress has been made. 2000: Lisbon Strategy: intended 70% employment rate and 3% of GDP spent on R&D not achieved. • Increased employment results have not sufficiently helped to lift the most excluded out of poverty. Low-skilled workers still face insurmountable barriers. • In 2010 there were 23,7% of the EU population at risk of poverty and social exclusion in the EU. • In 2014 there were 24,4% (122 million people). • The crisis has hit Europe’s most deprived citizens hardest . (Source: Eurostat) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
Open questions 1. Definition of poverty? 2. Impact of fiscal consolidation by population category? 3. Impact of tax policies on the most deprived? 4. The impact of reduced public investment on the most deprived? 5. Other ways to tackle poverty without extra public money? EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
1. Definition of poverty? • Often income indicators are used rather than poverty indicators. Eurostat: "this indicator does not measure wealth or poverty, but low income in comparison to other residents in that country." • Does not assess, for example: – Access to public services – Health – Education (source : François Bourguignon, « Du revenu aux dotations : le renouvellement des conceptions de la pauvreté », Regards croisés sur l’économie 2008/2, p. 34-42) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
2.1 Impact of fiscal consolidation by population category? • Austerity, or fiscal consolidation: combination of cuts in public expenditures and tax increases. • Needed in order to avoid bankruptcy in vulnerable countries. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
2.2 Impact of fiscal consolidation by population category? • Expenditure on education, family and children decreased significantly in the Member States hardest hit by the crisis • Expenditure on old age has increased • ‘ increasing generational divide ’ (Darvas & Tschekassin) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
2.3 The impact of fiscal consolidation on the most deprived? • Relation between discretionary fiscal effort and severe material deprivation (Source: Darvas, Zsolt and Tschekassin , Olga (2015) ‘Poor and under pressure: the social impact of Europe’s fiscal consolidation‘, Bruegel policy contribution 2015/04, Bruegel) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
3. The impact of tax policies on the most deprived? Direct impact of tax policies: EU Commission suggests moving the tax burden from labour towards consumption (taxes on spending on goods and services, e.g. VAT) Yet, the poor are the most vulnerable to tax increases on consumption (Source: Darvas, Zsolt and Tschekassin , Olga (2015) ‘Poor and under pressure: the social impact of Europe’s fiscal consolidation‘, Bruegel policy contribution 2015/04, Bruegel) Indirect impact of tax policies: Tax evasion remains a long-lasting scandal in the EU – Fiat and Starbucks judgements pronounced today, Apple and Amazon still to come. Less taxes on labour should promote employment, according to the EU Commission EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
4.1 The impact of reduced public investment on the most deprived? • Crisis : drop in investment, in 2014, total investment was about 15% below the level of 2007. (EU Commission and EIB, ‘Why does the EU need an investment plan’ Factsheet , [URL: http://ec.europa.eu/priorities/jobs-growth-investment/plan/docs/factsheet1-why_en.pdf] • How to find the right balance between the immediate needs and future long-term needs? • Financial discipline is necessary and requires difficult decisions and cuts: but it is not possible to continue to live beyond our means in the long- term. • Irresponsible to place the burden on the next generation. • "Productive investment" is key, but how should this be defined? How to ensure that all members of society will benefit? EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
4.2 Investment in human capital? • Human capital : the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being (OECD definition) • Benefits: – Individuals (employment, earning, life satisfaction) – Enterprises (productivity) – Society (economic growth, social cohesion) • Which notably are acquired through education, including life-long education (vocational training for example) (Source : Developed based on CEDEFOP (2013), Boarini et al (2012) and Heckman and Kautz (2013)) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
4.3 Inequalities and economic growth • High wealth concentration limits investment opportunities. • The rise of income inequalities between 1985-2005 estimated to have knocked 4,7% off cumulative growth between 1990-2010 on average across OECD countries. (source : OCDE report In It Together: « Why Less Inequality Benefits All », 2015) EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
5. Other ways to tackle poverty without extra public money? • Why are available funds not claimed by those who could? (Lack of information? Too complicated? Pride?) • How to involve the private sector? Are social public policies sufficient to achieve the EU2020 poverty target? • Importance of cooperation with civil society, including deprived person, to design policies. EP Intergroup Fighting Against Poverty - International Day for the Eradication of Poverty 2015, Brussels 21/10/2015
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