Poverty Research and Poverty Measurement in Finland 2

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Poverty Research and Poverty Measurement in Finland 2 nd Peter Townsend Memorial Conference 22.

Poverty Research and Poverty Measurement in Finland 2 nd Peter Townsend Memorial Conference 22. 1. 2011 Bristol Veli-Matti Ritakallio University of Turku, Finland

Short history of Finnish poverty (research) • 1960 s to mid-1980 s welfare optimism

Short history of Finnish poverty (research) • 1960 s to mid-1980 s welfare optimism – Almost no poverty research – Urbanisation, industrialisation, transition to dual earner family model, rapid continuous economic growth and strong growth of the welfare state – Old forms of poverty were disappearing (large families in small farms and old-aged with extremely low pensions) • Early 1980 s: new's from Great Britain and Sweden – Poverty exists also in affluent societies – New ways to conceptualitze poverty (Peter Townsend's 1979 contribution was well known) – Social exclusion, particularly men, urban poverty

Short history of Finnish poverty (research) 2 • In 1990 s single contributions by

Short history of Finnish poverty (research) 2 • In 1990 s single contributions by social scientists: – Matti Heikkilä (1990) Poverty and Deprivation in a Welfare State. A Study of Poverty and Welfare Deficits in Finland (income (fixed threshold)) – Veli-Matti Ritakallio “Poverty in Finland” (1994) Poverty in Finland. A Study of Effects of Income Transfers (income (50% threshold), expenditure (50% threshold) and social assistance approaches) • Since 2000 more activity, because of EU OMC? ! • Statistics Finland (semi-official (European) poverty rates): – Low income (poverty) rates 50% poverty line since 1996 – Low income (poverty) rates 60% and 50% poverty line since 2001

Early 1990 s economic downturn and poverty (measurement) • In 1995 professor Olli Kangas

Early 1990 s economic downturn and poverty (measurement) • In 1995 professor Olli Kangas and Veli-Matti Ritakallio started Finnish poverty and social exclusion survey project, which still continues. During the project has been done in Finnish conditions large survey data collections at 1995, 2000, 2005 and 2010. This allows reliable analysis of trends of poverty in Finland. • Surveys have approached multidimensionally poverty related issues. • Starting point of the project was the strange results produced by income poverty measures during the 1990 s economic crisis. See next figure

Income differentials, GDP, Low income poverty, Unemployed with minimum compensation and Social assistance recipiency

Income differentials, GDP, Low income poverty, Unemployed with minimum compensation and Social assistance recipiency in Finland 1990 -1995 Gini GDP Income pov. Soc. ass. Unempl with min compensation +bankruptcies, overindebtedness, soup-kitchens etc. Gini-coefficient, GDP in Finland 1990 -2009 tens of billons €, 2009 prices, Income poverty (60% Md Poverty line), Basic unemployment allowance/labour market subsidy beneficiaries during the year % of persons aged 17 -64, Social assistance recipients (during a calendar year) % of population

Four national representative surveys 1995, 2000, 2005 and 2010 • • To study poverty

Four national representative surveys 1995, 2000, 2005 and 2010 • • To study poverty in Finland by several parallel measures University of Turku Effective sample sizes and response rates: 1995 1858 65% 2000 2400 61% 2005 2391 60% 2010 2068 52%

Parallel indicators of poverty • RELINC: Relative income poverty: current oecd equivalent selfreported DPI

Parallel indicators of poverty • RELINC: Relative income poverty: current oecd equivalent selfreported DPI is less than 50% of the national median income • SCARCITY: Economic hardship: respondent’s subjective evaluation of problems in making ends met (feeling that its highly difficult to make ends meet) together with continuous troubles in paying bills (rent etc. ). • CONSE: Cumulative deprivation: all those who lack at least three commodities regarded as necessary by the majority of the whole population are poor. • DEBTS: Subjectively felt overindebtedness • SOC. ASS. : Recipiency of last resort social assistance • CUMULATIVE/RELIABLE/DUAL CONDITION: Poor according to at least two of the five indicators presented above.

Poverty by Different Indicators in Finland 1995, 2000, 2005 and 2010, %

Poverty by Different Indicators in Finland 1995, 2000, 2005 and 2010, %

Poverty by Different Indicators in Finland 1995, 2000, 2005 and 2010, %

Poverty by Different Indicators in Finland 1995, 2000, 2005 and 2010, %

Income differentials, GDP, Low income poverty, Unemployed with minimum compensation and Social assistance recipiency

Income differentials, GDP, Low income poverty, Unemployed with minimum compensation and Social assistance recipiency in Finland 1995 -2009 Gini GDP Income pov. Unempl with min compensation Soc. ass. Gini-coefficient, GDP in Finland 1990 -2009 tens of billons €, 2009 prices, Income poverty (60% Md Poverty line), Basic unemployment allowance/labour market subsidy beneficiaries during the year % of persons aged 17 -64, Social assistance recipients (during a calendar year) % of population

Poverty risks by the source of income 2010, % Indicator: Reliable poverty

Poverty risks by the source of income 2010, % Indicator: Reliable poverty

Poverty profile by the source of income 2010, % (Income support 40% of all

Poverty profile by the source of income 2010, % (Income support 40% of all poor)

Poverty risks by household type in Finland 2010, %

Poverty risks by household type in Finland 2010, %

Poverty risk by age 2010, %

Poverty risk by age 2010, %

Conclusions so far • Huge increase in income differentials • Extent of poverty 1990

Conclusions so far • Huge increase in income differentials • Extent of poverty 1990 -2010 has rather decreased than increased • Who are in the highest risk? – – – Long-term unemployed Single parent families Those relying on minimum social security Students Renters • Employed and those on earnings-related benefits are not likely to live in poverty • Latest 2008 recession didn’t hit Finns very badly • Relative position of those on minimum benefits has deteriorated (next slide!)

Basic amount of social assistance 1991 -2009 vs. 60% Md poverty line, in euros

Basic amount of social assistance 1991 -2009 vs. 60% Md poverty line, in euros (2009 prices) Pov. line Soc. ass. 14€/day!

Income poverty (60%) and Economic Hardship (Great difficulties to make ends meet) in European

Income poverty (60%) and Economic Hardship (Great difficulties to make ends meet) in European countries at 2005, % Source: EU-SILC, own analysis

Peter Townsend 1979, p. 31 • "Individuals, families and groups in the population can

Peter Townsend 1979, p. 31 • "Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the amenities which are customary, or are at least widely encouraced or approved, in the societies to which they belong. Their resources are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities. "

Several choices and choices matter! • How to operationalize the following: – Lack the

Several choices and choices matter! • How to operationalize the following: – Lack the resources • Incomes • Enforced expenditures (housing costs, health care costs, child care costs etc. )? • Equivalence scale (oecd, mod-oecd, square root, concensual)? ! – Resources are so seriously below the average • 40%/50%/60%? ! – Societies to which they belong • • Nation state! Province they live? ! EU? ! Age standardizations? ! – Excluded from ordinary living patterns, customs and activities • Cumulative enforced lack of necessities (how to define? ) – Dual/triple condition: • Low economic resources+ subjective statement+ (cumulative) lack of necessities?

Thank you! 19. 5. 2004 Turku New's

Thank you! 19. 5. 2004 Turku New's