Presentation by Herwig Immervoll, Expert, OECD on the occasion of the EESC hearing on European minimum income and poverty indicators (Brussels, 28 May 2013)

1. MINIMUM-INCOME
BENEFITS AS A SOCIAL
PROTECTION MEASURE
Public Hearing on “European minimum income and poverty indicators”
European Economic and Social Committee
Brussels, 28 May 2013
Herwig Immervoll
OECD, Directorate for Employment, Labour and Social Affairs
Herwig.immervoll@oecd.org

2. Need for adequate income protection for
the poorest.
Especially in countries where the crisis hit hard

3. Lower income households tended to lose
more (or gain less) in recent years
Changes in disposable income for total population and bottom and top deciles,
2007-2010, in % per year
Source: OECD Income Distribution and Poverty Database. See website for note on Isreal (www.oecd.org/social/income-distribution-database.htm).

4. Unemployment benefits were key contributor
to limiting initial income losses …
… but with increasing LT unemployment, follow-up assistance benefits
crucial for averting steep increases in poverty and inequality
Change in benefit receipt, OECD average
80
100
120
140
160
180
2007 2008 2009 2010
Unemp insurance
Unemp-to-population ratio
Unemp assistance
Social assistance
Disability
Old age
Source: Calculations based on OECD (2013, forthcoming) Social Benefits Recipients Database.

5. Income support for the poorest
Similar objectives,
very different approaches

6. Main objective of means-tested
“last-resort benefits” is to alleviate poverty …
… but value of benefit packages is well below poverty thresholds
benefits received by two-parent family with two children in 2011, % of median income
Source: OECD tax-benefit database. www.oecd.org/els/sociial/workincentives
0
10
20
30
40
50
60
70
Withcash housingassistance Nohousingassistance (↗)

7. Main objective of means-tested
“last-resort benefits” is to alleviate poverty …
… but coverage is often very weak
„pseudo’ coverage: GMI benefit recipients as % of income-poor households
average 2007-2010, working-age households
Source: preliminary calculations based on OECD (2013, forthcoming) Social Benefit Recipiency Database and Income Distribution Database.
0%
20%
40%
60%
80%
100%
Japan
Belgium
Estonia
Spain
Portugal
Hungary
UnitedKingdom
Poland
Denmark
Luxembourg
Netherlands
Switzerland
CzechRepublic
Austria
SlovakRepublic
France
Slovenia
Sweden
Germany
Norway

8. Scope and need for minimum-income
benefits …
... Different accessibility and value of “higher-order” benefits
Unemployment benefit coverage, % of LFS unemployed
Source: European Labour Force Surveys and Current Population Survey (US). For definitions and limitations, see Immervoll et al. (2004).
0
10
20
30
40
50
60
70
80
90
100
1995 2005

9. Scope and need for minimum-income
benefits …
... Different in-work incomes
Net incomes of a minimum-wage earner
2011, single individual, % of median household income
Source: OECD tax-benefit database. See website for notes on Cyprus. www.oecd.org/els/sociial/workincentives
-20
0
20
40
60
80
100
120

10. Strengthening income support for the
poorest: What priorities and challenges?
• Strengthen GMI in countries where provision is weak…
… while retaining flexibility in countries where it is part of a
finely tuned / decentralised element of social protection
• Strengthen GMI in the context of structural reforms of broader
social protection system
e.g., address underlying causes of declining unemployment-benefit coverage
• Balance concerns over coverage and benefit levels
• Balance „passive‟ and „active‟ support (Active Inclusion agenda)
e.g., risks of implementing new minimum-income in context of insufficient capacity for
employment support

11. Thank you
herwig.immervoll@oecd.org
Some sources and further information
• www.oecd.org/els/social
• www.oecd.org/els/social/workincentives
• www.oecd.org/social/inequality.htm
• “Reforming the Benefit System to 'Make Work Pay”: Options and priorities
in a Weak Labour Market”, IZA Policy Paper No. 50, Institute for the Study of Labor,
Bonn.
• “Minimum-Income Benefits in OECD Countries”, in: D. J. Besharov and K. A.
Couch (eds.), Counting the Poor. New Thinking About European Poverty Measures and Lessons
for the United States, Oxford University Press.