Rate of in-work poverty attracts press attention

According to the report, ‘Employment and social developments in 2011’, Poland continues to have one of the highest in-work poverty rates in Europe. People most at risk of in-work poverty are those with the lowest level of educational attainment, the self-employed and family workers, and those employed on temporary contracts. The recent increase in the minimum wage is not expected to improve the situation as it applies only to people employed on full-time contracts.

Background

Although the latest report on Employment and social developments in Europe (11.1Mb PDF) prepared by the European Commission’s Directorate-General for Employment, Social Affairs and Inclusion addresses a wide range of topics, it is its coverage of in-work poverty that has attracted the attention of the Polish media. This is all the more important given that this topic has hardly been discussed so far in Poland (PL0910029Q).

The in-work poverty rate in Poland is one of the highest in the EU. In 2010 it was 11.4% and was lower only than that of Lithuania (12.3%), Spain (12.7%), Greece (13.8%) and Romania (17%). However, its gradual improvement between 2005 and 2009 (13.9% in 2005, 12.8% in 2006, 11.7% in 2007, 11.5% in 2008 and 11.0 % in 2009) has not been reflected in the recent media discussion.

In-work poverty by type of contract

Those working on permanent contracts are far less at risk of in-work poverty than those working on temporary contracts. In 2009, the in-work poverty rate was slightly above 5% for the former and approximately 11% for the latter. Although the in-work poverty rate for temporary contracts is below the EU average, it affects a large group of people because Poland has the highest percentage of temporary contracts in the EU, 26.4% of workforce in 2009 against the EU average of 13.4%.

However, it is the self-employed and family workers who have the highest in-work poverty rate at around 28% (Figure 1). The in-work poverty rate is also higher among those working part-time than those working full-time (nearly 20% and 10%, respectively), although the share of the former in the employed population is only 7.5%.

Figure 1: In-work poverty for employees and self-employed and family workers, 2009

Figure 1: In-work poverty for employees and self-employed and family workers, 2009

Source: European Commission (2011, p. 150)

Other factors leading to in-work poverty

Other important factors increasing the risk of in-work poverty include a low level of educational attainment and the specific family situation.

In Poland, the in-work poverty rate among those with the lowest educational attainment is the highest but one in the EU (outdistanced only by Romania) and amounts to around 28%; it drops to around 12% among those with a medium level of educational attainment (Figure 2).

The in-work poverty rate in Poland is also above the EU average for:

  • families with children (around 14% against the EU average of 10%);
  • two or more adults with children (nearly 15% against the EU average of 10%).

Figure 2: In-work poverty by education level, 2009

Figure 2: In-work poverty by education level, 2009

Source: European Commission (2011, p. 149)

Government action

The problem of in-work poverty does not trigger much action at the political level in Poland. Although the monthly gross minimum wage increased on 1 January 2012 from PLN 1386 (€330 as of 17 April 2012) to PLN 1500 (€357), it applies only to people employed on permanent contracts who are less likely to fall into in-work poverty. The rise is mainly connected to the increase in the amount of the sick leave and redundancy payments in the case of group lay-offs, and is therefore unlikely to improve the in-work poverty rate.

In 2009 the Team of Strategic Advisors to the Prime Minister proposed in their report, Poland 2030 (in Polish, 14.56 Mb PDF), a supplementary benefit for those newly-employed after a period out of work to help them make a stable transition into the workforce. They would receive both salary and the benefit in order to reduce the threat of in-work poverty, and perhaps to encourage the unemployed to take up legal employment instead of working in the informal economy or not working at all. However, the proposal has not yet been implemented.

Commentary

The press discussion that took place following the publication of the EU report was mostly in one of Poland’s prominent newspapers, Gazeta Wyborcza. In the discussion, experts criticised the increase in the minimum wage because it did not improve the income of most of the groups with a high in-work poverty rate. As for the proposed supplementary benefit, opinions varied. On the one hand, it was emphasised that it may encourage people to remain active in the labour market instead of relying on social benefits or choosing illegal work. On the other hand, some experts suspected that some employers would simply offer lower salaries to employees who they knew would receive additional state-funded benefits.

References

Anon. (2011), Ponad 8 proc. Pracujących jest zagrożonych biedą [More than eight percent of workers are at risk of poverty], Praca, 15 December 2011.

Bojanowski, M. (2011), Gdy praca nie popłaca [When work does not pay off], Gazeta Wyborcza, 29 December 2011.

European Commission, Directorate-General for Employment, Social Affairs and Inclusion (2011), Employment and social developments in Europe 2011, Publications Office of the European Union, Luxembourg.

Leszczyński, A. (2011), Pracujących biednych będzie przybywać [The number of working poor will increase], Gazeta Wyborcza, 29 December 2011.

Nawakowska, A. (2012), Jak wyjść z bieda-pracy [How to get oneself out of in-work poverty], Gazeta Wyborcza, 1 January 2012.

Marianna Zieleńska, Institute of Public Affairs

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