However, the actual impact of employment growth on poverty rates is still unclear as this depends on how the jobs created are distributed across household as well as on the ‘quality’ of the jobs concerned, or their rates of pay. On the other hand, ensuring that people have an incentive to look for a job rather than to live off social transfers is important not only to avoid undue dependency on the latter but to limit the cost to government budgets at a time of tight constraints on public finances.
To achieve this, there has been an increasing focus on making sure that people of working age are always better off if they are in work than if they are not, that the earnings from employment are always higher than the social benefits they receive when they are unemployed or inactive. This can be attained in various ways:
- by reducing levels of benefit or restricting access to them,
- by increasing earnings from employment through minimum wage legislation,
- by introducing in-work benefits to supplement low wages.
All of these have potential disadvantages, the first in the form of higher rates of poverty, the second by deterring job creation and the third in the form of high marginal deduction rates discouraging those in receipt of in-work benefits to seek to increase their earnings.
This seminar examined
- the relationship between employment and poverty in the EU, particularly over the course of the crisis,
- the extent of in-work poverty in Member States,
- policies to increase the income of low-wage earners while avoiding unemployment or inactivity traps.