Individuals are at risk of in-work poverty when their equivalised yearly disposable income is below 60% of the national household median income level. The working poor represent a substantial group in Europe. Latest Eurostat figures show that in 2019, 9% of all workers lived in households that are at risk of poverty. Factors contributing to working poverty are low pay, household characteristics, quality of employment and gender, and other individual characteristics.
Eurofound has researched the development of in-work poverty in the EU since 2008. Research looked at the social ramifications of in-work poverty by describing the well-being and living conditions of the working poor. The study finds that in-work poverty is linked with lower levels of subjective and mental well-being, lower life satisfaction, as well as feelings of social exclusion, not to mention problems with accommodation.
The research assessed what Member States have done to alleviate in-work poverty and follows up on an earlier study which looked at the characteristics of the working poor in Europe, as well as the main policies and social partner views in relation to addressing the issue.
A living wage has been defined as a measure of income that allows an employee a basic but socially acceptable standard of living. Eurofound has compiled a practical guide to the living wage concept.
The COVID-19 crisis had a significant impact on wages and wage setting across Europe in 2020. It seems to have particularly affected low-wage workers, occupations and sectors. Decision-makers approached minimum wage setting for 2021 cautiously due to the economic uncertainty caused by the pandemic. Despite this, nominal statutory minimum wages rose in most Member States and the UK, although at lower rates than in recent years.
During economic downturns, unemployment is the main driver behind growing income inequalities, as shown by previous Eurofound research during the Great Recession.
EU labour markets are facing an increasing share of low-paid and low-skilled occupations, the erosion of traditional collective bargaining structures in some countries, and an increasing number of people at risk of poverty.
The European Pillar of Social Rights, adopted in 2017, sets out 20 key principles and rights essential for fair and well-functioning labour markets and social protection systems. It explicitly recognises the need for policies and measures to tackle in-work poverty and inequality. On 4 March 2021, the European Commission presented its action plan to fully implement the Pillar, turning the principles into concrete actions to benefit EU citizens, while also supporting the recovery from the impact of COVID-19. It proposes a new target for the EU to reduce the number of people at risk of poverty or social exclusion by at least 15 million by 2030.
