- Observatory: EurWORK
- Working poor,
- Labour market change,
- Published on: 05 April 2010
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
Since the beginning of the 2000s, the number of working poor has been increasing in France, along with the level of poverty. The economic crisis and deterioration of the job market may exacerbate this tendency. It is difficult for the French social welfare system to address the issue, as it relates to different policies and systems. Moreover, for the past 20 years, social policies have focused on reducing unemployment, assuming that getting a job is the best way out of poverty.
Definitions and aims of study
The ‘working poor’ are a section of the population that is difficult to define not only due to a lack of specific data but also because the concept combines two levels of analysis: the working status of individuals and the wages that they earn from employment (individual level), and the extent to which they have a poverty-level of income within the household context (collective level).
The aim of the comparative analytical report is fourfold:
to obtain an insight into the extent of in-work poverty in different European countries and the characteristics of those affected;
to examine policies in place to tackle the problem of people in work on low levels of income and any assessments which have been carried out into the effectiveness of such policies;
to consider the views of social partners towards the working poor;
to investigate the effect of the current economic recession on the scale of in-work poverty.
For the purpose of the study, the working poor are defined in the same way as the indicator used by the European Commission to assess and monitor in-work poverty. Therefore, the working poor are those who are employed and whose disposable income puts them at risk of poverty. The expressions ‘working poor’ and ‘in-work poverty’ are thus used interchangeably.
‘Employed’ is defined here as being in work for over half of the year and ‘risk of poverty’ is defined as having an income below 60% of the national median. Income is measured in relation to the household in which a person lives and covers the income of all household members, which is shared equally among them after being adjusted for household size and composition. Accordingly, if persons are at risk of poverty, this may not be simply because they have low wages but because their wages are insufficient to maintain the income of the household in which they live at a certain level. Equally, a person can earn a very low wage but not be at risk of poverty because the income of other household members is sufficient to raise the overall household income above the poverty threshold. The study covers people on low wages, or low earnings in the case of self-employed persons. Low wages, defined in an analogous way as low income – that is, below 60% of the median earnings of those in full-time employment – potentially put individuals at risk of poverty. The risk is likely to increase in the current economic crisis as companies introduce various measures to try to cut wage costs while keeping people in employment by reducing their working hours, giving them extended leave or simply cutting wages.
The characteristics of the people concerned are also important, particularly their age, with young people and, in some cases, older workers being more likely to be employed in low-paid jobs. Women are more likely than men to be employed in low-paid jobs, even allowing for the relatively large number of women working part time. However, the statistics show that, if they are in work, women are on average across the European Union less likely than men to live in households with a poverty-level of income. Nonetheless, they are more likely than men to live in circumstances which put them at particular risk of poverty, such as being a lone parent in many countries. In addition, migrants are particularly vulnerable to being among the working poor, since they tend to combine various adverse characteristics, such as working in low-skilled jobs with low rates of pay and living in single-earner households.
A set of tables containing the data available at EU level on the working poor and on people with low wages was included in an annex to the questionnaire (see Annex 1 of the overview comparative analytical report). The data concerned derive from the EU Statistics on Income and Living Conditions (EU-SILC) for 2007, which are the latest available data and relate to the position in 2006. The national correspondents are asked to comment on the table findings for their country and to supplement the data included with data from national sources where possible and where these help to interpret the situation or add to the information included in the tables. The EU-SILC tables, for example, do not cover the position of migrant workers. The correspondents are also asked to specify the source of any additional data and the definitions used where these differ from those on which the table is based.
1. Scale and nature of in-work poverty
1.1 Please comment on the figures for the working poor for your country shown in the attached tables and what they indicate about the scale and nature of this. Please refer to any additional data available from national sources or any studies which have been undertaken if these provide additional information in this regard and help to give an insight into the issue. 1.2 Please comment on recent trends, giving any data or other evidence available to indicate whether the number of working poor has tended to increase or decline, between 2000 and 2007, especially considering women, young and older workers, self-employed, migrants.1.3 Please outline the main findings of any research studies which have been undertaken in your country on the working poor or on low pay, more generally, and what they reveal about the characteristics of the people concerned and the jobs that they do and how these might be changing over time.
In France, two major systems play an important role in the working poverty issue: the national statutory minimum wage (salaire minimum interprofessionel de croissance, SMIC) set by the government; and a dozen different social transfer incomes, largely determined according to the household situation.
The SMIC is 16% higher than the poverty income level. However, over a third of the working poor earn individual income higher than the annual SMIC. This is due to their household situation. On the other hand, 75% of workers who earn below the SMIC are not poor because their family situation and social transfers keep them above the poverty line. This is why women are not overrepresented among the working poor: despite representing 67% of workers earning less than the annual minimum wage, they ‘only’ account for 45% of the working poor.
According to a report from the National Institute of Statistics and Economic Studies (Institute National de la Statistique et des Études Économiques, INSEE), the minimum wage curbs poverty: self-employed people, who are not covered by the minimum wage, are overrepresented among the working poor.
|Among all workers||10.0|
|Among the working poor||30.0|
Source: INSEE, EU-SILC 2006
Data from EU-SILC 2007 show that the risk of poverty is significantly higher for non-employed (18%) and unemployed people (33%) than for employed people (6%). In France, where the employment rate is particularly low among young people and older workers, the risk of poverty affects these population groups more than others. People aged 18–24 years in full-time employment represent 25.8% of the working poor in France, compared with 7.8% for those aged over 25 years.
According to Ponthieux and Raynaud (2007–2008) (in French, 1.2Kb PDF), after being on the decline from 1996, the number of working poor rose from 1.22 million persons in 2003 to 1.53 million in 2005, which is 7% of all workers. This rise in working poverty can be partly explained by the increase in precarious and part-time jobs. Poverty is due more to the insufficient number of hours worked than to an inadequate hourly rate.
|In employment all year||93||6.2|
|In employment less than 12 months of year||7||10.9|
Source: INSEE, EU-SILC 2006
Income in working poor households consists of a larger proportion of welfare benefits: 21%, compared with 6% for all working households. According to the National Observatory of Poverty and Social Exclusion (Observatoire National de Pauvreté et de l’Exclusion Sociale, ONPES), France has a poverty rate of 25% before social transfers. After social transfers, this rate declines to 13%. The French social welfare system thus almost halves the incidence of working poverty. However, as it is moderately targeted at the poorest households, it does not allow for a further reduction.
About 30% of people living in a single-parent family are faced with poverty, which is 2.3 times higher than average. According to INSEE, over the last 10 years, the reduction of poverty has mainly benefited large families – meaning couples with three or more children.
2. Policies towards working poor
2.1 Is the issue of in-work poverty seen as an important problem in your country for the government to address? Has the issue become more or less important in the policy debate over recent years? To what extent is there seen to be a conflict between reducing the number of working poor in your country and increasing the number of people in work? 2.2 What kinds of policy have been devised to address the working poor issue in your country? On which particular area have national policies tended to focus on: labour market, social protection, fiscal policy or some combination of these policy areas? Which particular groups are policies targeted at: workers, employers, families? 2.3 Please describe the main measures taken for improving the income situation of the working poor. Are there any fiscal measures in place, in the form of tax credits, or in-work benefits more generally, for maintaining or raising the income of those in employment with low earnings? Are there any social transfer schemes in place to ensure that the income of households exceeds a minimum level, even if the people in the household are in work? If so, please outline their main features, including whether or not they apply to the self-employed as well as employees.2.4 Please assess the role that minimum wage legislation plays in limiting the number of working poor. Please indicate the nature of the regulation (statutory/legislative/collectively agreed/sectoral) in your country and how the minimum wage varies between different groups of worker. 2.5 How effective are the policies in place for reducing the number of working poor? Please refer to any survey, research studies or policy evaluations which have been undertaken to assess the measures in place.
The issue of poverty entered into the French public debate in the 1980s, particularly with the introduction of the Minimum Integration Income (Revenu Minimum d’Insertion, RMI), a benefit paid to people over the age of 25 years with a very low income, who were usually unemployed and ineligible for unemployment benefit.
However, the issue of working poverty only emerged in the early 2000s. The policies implemented by the government focused more on the problem of unemployment and integration than on the question of working poverty.
The French social welfare system was set up to cover the risks of salaried workers and their beneficiaries. Organised according to risk – for example, retirement, health, disability – it refers to precise categories aimed at specific populations, without considering poverty as a whole. The different political actors have long been opposed to universal benefit. For the politically conservative parties, it was seen as undermining the free operation of the labour market, which was considered as the most appropriate instrument for combating poverty. Politically liberal parties, on the other hand, considered that resolving the issue of poverty should be done through the transformation of society.
Integrating the issues of exclusion and working poverty into the French social welfare system implies deep changes, which are still not actually decided at political level.
Introduced in 2001, the tax credit Employment allowance (Prime Pour l’Emploi, PPE) is a financial incentive to return to work and remain in employment for people with low wages and/or social income. In 2007, nine million people benefited from it. For 7.9 million of them, it was related to their wage, which was between 0.3 and 1.4 times the SMIC; for the remaining 1.1 million, the benefit was due to their family situation. However, the PPE is not precisely targeted, excluding employees and self-employed people with very low income (lower than 30% of the SMIC). In total, the PPE has only enabled 6% of the working poor to rise above the poverty line (Bonnefoy et al, 2008 (in French, 546Kb PDF)).
According to Blanpain (2007) (in French, 1.4Mb PDF), France has a number of social transfers – such as child benefit, housing benefit, unemployment and disability benefit, and income guarantee systems – designed as a redistribution system in favour of low-income households. Before social transfers, 46% of single-parent families (mainly women with children) have income below the poverty line. The proportion declines to 27% after transfers (-41%). However, the social welfare system is more efficient for categories less affected by the risk of poverty. For couples with children, the poverty rate decreases from 22% before transfers to 12% after transfers (-45%).
The Active Solidarity Income (Revenu de Solidarité Active, RSA) was introduced on 1 June 2009 to replace the RMI. It aims to combine the reduction of poverty with a better integration in employment. The idea is to avoid the threshold effect observed with the social income system. Under that system, when an unemployed person accepted a job, as they were earning more, some social incomes were cut or reduced, and their final income was actually lower than before. Thus, the RSA system is designed to ensure that every additional hour worked results in a better total income for workers.
According to government test findings (in French, 136Kb PDF), the RSA should apply to between 3.1 and 3.4 million beneficiaries, and should enable about 700,000 people to immediately rise above the poverty line.
In addition to improving the working poor’s purchasing power, with a calculated average income increase of €109, the system aims to encourage minimum wage earners to return to employment.
|Number of ‘winning’ households||Proportion of ‘winners’||Average monthly increase (in €)|
|- without children||418,000||5%||91|
|- with children||279,000||20%||106|
|- with one income||273,000||5%||113|
|- with dual income||28,000||1%||81|
|Couples with children||661,000||8%||122|
|a) with one income||598,000||23%||126|
|- with one child||240,000||25%||136|
|- with two children||212,000||22%||130|
|- with three or more children||146,000||20%||103|
|b) with dual income||63,000||1%||85|
Notes: ‘Winners’ are the households for whom the shift to the RSA will result in a net total increase in their revenue, compared with the existing system. A simulation of the RSA was applied at national level, based on local tests in a third of the French territory comprising 34 départements or administrative units.
Source: Treasury and Economic Policy General Directorate (Direction Générale du Trésor et de la Politique Économique, DGTPE)
Set by the government on 1 July every year, the SMIC concerns almost 13% of French employees and 33.5% of part-time employees. In 2008, the increase in the minimum hourly wage benefited 2.1 million people, 940,000 of whom worked part time. Over half of the beneficiaries work in commercial and personal services sectors (Berry and Variot, 2009 (in French, 186Kb PDF)).
The minimum wage level is often mentioned in the debate on the link between poverty and employment. Trade unions call for an increase in the minimum wage to reduce working poverty whereas most employers see it as an obstacle to the free adjustment of supply and demand in the labour market and therefore as a cause of unemployment.
France is characterised by a large proportion of employees earning the minimum wage and, more generally, by a high concentration of employees at the bottom of the salary scale. This situation has intensified in recent years under the effect of policies for reducing social security contributions on salaries around the minimum wage level since the beginning of the 1990s. By reducing the labour cost at the bottom of the salary scale, labour costs become progressive. However, some economists and most trade unions criticised this as a low-wage trap effect: it tends to discourage recruitment on wages higher than those benefiting from the system. In fact, between 1994 and 2002, the proportion of employees earning the minimum wage increased from 8.2% to 14% (Berry and Variot, 2009).
A subsidised jobs (emplois aidés) scheme gives employers subsidies to hire employees with a low employability rate; it seems to have had an effect on employment and poverty. Between 2002 and 2005, when the government reduced the number of these subsidised jobs, the number of unemployed people rose by 350,000 and the number of people in poverty by 200,000. Moreover, poverty not only affected more people but it worsened, with the number of poor people at the lower end of the scale increasing more than the number of people at the upper end.
3. Attitudes of the social partners to the working poor
3.1 What is the attitude of the social partners in your country to the issue of in-work poverty? Is there any debate on the relative priority to be given to the quality of jobs and working conditions as against the quantity of jobs? What has been the impact of the present recession on their positions and on the actions taken towards reducing in-work poverty?3.2 Do trade unions have explicit policy proposals for reducing the number of people on low wages? If so, please outline the main features of these. Do such proposals include complementary schemes on healthcare, pensions and family support to help increase the effective income of workers? Do trade unions see a specific role for themselves in implementing and managing such schemes? What level of importance is attached to reducing the number of working poor in relation to creating more jobs or keeping more people in employment? 3.3 Do employers generally support measures for reducing the extent of in-work poverty? If so, indicate the principal measures they support and implement themselves such as respecting minimum wage levels, ensuring adequate basic rates of pay, paying suitable amounts for working overtime or in bonuses.
Trade unions and employer organisations have not really addressed the issue of the working poor.
French trade unions have built their collective action and demands model on two references: work and salaries. The issue of the working poor, which also involves the household dimension (structure of households), is not automatically included in this model.
Furthermore, the low rate of unionisation in France (about 7%, the majority of whom are in the civil service) limits the scope of action. Moreover, the profile of unionised workers may also influence the emphasis given to working poverty issues: trade union members in France are mostly male, qualified and over 40 years old with a permanent full-time employment contract, working in a large company or in the public sector with an average or above average income (Farvaque and Yonnet, 2008 (in French, 295Kb PDF)).
Generally speaking, trade unions link working poverty to the increase in precarious jobs. According to the General Confederation of Labour (Confédération Générale du Travail, CGT), alleviation of poverty can be ‘sought through the right to work and equal access to employment’. CGT criticises the lack of resources allocated to employment policies and social transfers, as well as the social tax exemptions for employers, which may lead to the low wage trap effect.
The General Confederation of Labour – Force ouvrière (Confédération générale du travail – Force ouvrière, CGT-FO) has similar concerns regarding the RSA. CGT-FO underlines that this new system may foster the development of precarious and part-time jobs.
The French Democratic Confederation of Labour (Confédération Française Démocratique du Travail, CFDT) is satisfied with the results of the local test of the RSA. It would like the government to go further with this project, by financing part of the system with the highest incomes, by a regular assessment to prevent companies from using it as a source of low-cost labour and by opening up the RSA to all employees, regardless of age or family situation.
The French Christian Workers’ Confederation (Confédération Française des Travailleurs Chrétiens, CFTC) underlines that quality of employment should not be traded for the quantitative objectives of unemployment reduction. CFTC proposes to implement a job quality index based on key indicators such as qualifications, lifelong learning, gender equality, health and safety in the workplace and work–life balance.
On the employer side, the Movement of French Employers (Mouvement des Employeurs de France, MEDEF) believes that poverty must be dissociated from precariousness, since the latter is related to a higher flexibility, which is a source of economic competitiveness and hence of poverty reduction. In a position paper (in French, 72Kb PDF), MEDEF declares that it ‘fully support the purposes of the RSA’, as it aims to ‘reduce poverty by work’. However, it is sceptical of the financial viability of a system that is likely to cost several billion euro more than the previous social system of minimum income.
To reduce poverty, a MEDEF report (in French, 161Kb PDF) calls for the development of household services, skill sharing in companies and the possibility to work when retired, by adding a wage to the pension.
4. Effect of current economic recession on in-work poverty
4.1 Is there any evidence that the number of working poor has tended to increase during the present recession (as a result of reduction in wages and/or working time)?4.2 Have any surveys or studies been launched since the crisis started to assess the effect on the working poor and to monitor the numbers involved? Please give details of such surveys or studies (their objectives, the approach adopted, the institution in charge, the main findings and so on). 4.3 Have any policy measures been taken to reduce the possible effect of the recession on the working poor?
Although no study exists specifically measuring the effects of the recession on the number of working poor, some indicators show that the current economic context is detrimental to this group.
Firstly, the causes of the transition from employment to unemployment – registered at the French public employment service (Pôle Emploi) – reveal that people in the most stable forms of employment are also being affected by the crisis. In February 2009, registrations at Pôle Emploi after a temporary work assignment or at the end of a fixed-term employment contract – which represent 35% of registrations – had increased by 10% compared with February 2008. Moreover, registration after a dismissal for economic reasons (representing 4.1% of registrations) had increased by 31.4%.
Secondly, the number of people deregistering from the Pôle emploi, particularly to return to employment, decreased by 23.2% in a year.
This deterioration of the labour market is coupled with a heightened competition between the different categories of workers, with a risk of the more vulnerable workers being excluded in the long term. The opportunities for obtaining work may be reduced for young people with insufficient professional experience, women returning to work after a break, long-term unemployed persons, low-qualified workers or people with qualifications that are specifically linked to their previous job, and older employees.
According to the French Federation of Temporary Work Agencies (Professionnels de l’intérim, services et métiers de l’emploi, Prisme), the number of jobs in temporary agency work declined by 35.5% in the first half of 2009, which represents the loss of 220,000 equivalent full-time jobs. Prisme indicates that this decrease is expected to continue (Domens, 2009 (in French, 154Kb PDF)).
At the end of March 2009, within the scope of the households section of its recovery plan, the French government awarded a €200 bonus to potential beneficiaries of the RSA, amounting to some 3.8 million households.
Regarding measuring tools, ONPES launched a project to identify by which processes the economic crisis generates or intensifies poverty. This project will have a specific focus on alert indicators relating to poverty and exclusion: identifying statistical sources and contacts with actors directly involved in this issue, including the working poor. ONPES also entrusted the French Economic Climate Observatory (Observatoire Français des Conjonctures Économiques) with the task of drawing up several scenarios relating to growth forecasts for 2010 to clarify the social consequences of the crisis.
Furthermore, the High Commission for Active Solidarity against Poverty (Haut-commissariat aux solidarités actives contre la pauvreté) has set up a quarterly opinion indicator to assess the impact of the economic crisis on the most vulnerable families. This survey was carried out by the Research Centre for the Study and Observation of Living Conditions (Centre de Recherche pour l’Étude et l’Observation des Conditions de Vie, CRÉDOC) among 1,000 households, 300 of which are living below the poverty line. The results of the first wave show that 70% of poor households are struggling and 15% are getting further into debt to meet everyday costs. Half of the poorest people consider their professional situation to be precarious and 38% expect to be shortly on part-time unemployment.
Beyond their controversial impact on wages, the public policies aiming to reduce working poverty are also challenged by the rather informal functioning of the French labour market: less than 40% of job offers are subject to a formal publication of any kind, compared with 95% in the United Kingdom (UK), for instance; and the proposed wage is indicated in only one out of three job offers. This context implies that, beyond qualifications, the worker has to mobilise other types of social resources – such as a personal network or self-introduction abilities – from which people in working poverty are frequently deprived. Thus, a kind of cycle effect emerges, which favours persons who are already at an advantage and puts at a disadvantage persons who are already disadvantaged. This issue is most significant for people subject to different forms of discrimination, such as women and migrants.
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Jack Bernon, ANACT