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8 May 1992
Doc. 6623
1403-11/5/92-2-E
O P I N I O N
on severe poverty and social exclusion:
toward guaranteed minimum levels of resources1
(Rapporteur: Mr SVENSSON, Sweden, Soc. Dem.)
I. Introduction
1. Although the member countries of OECD increased their Gross National Product throughout the 1980s, poverty in Western Europe at the same time became more prevalent, even though developments differed in various countries. This paradox, confirmed as far as the member states of the European Community are concerned, presumably also holds for other countries in Western Europe. The situation is of course aggravated by the events in Central and Eastern Europe, when the economic reforms, although highly necessary, have brought with them even greater poverty among large segments of the population.
2. Even though the poverty of the populations in Central and Eastern Europe, let alone in large parts of the developing world, is on a dramatically larger scale than in Western Europe, we should also pay attention to the latter. In the mid-1970s, it was estimated that some 30 million people in the then nine European Community member states were living in poverty, affecting over 10% of households. The figures for the increase in poverty in the mid-1980s, even given the inaccuracy of available statistical methods showed a rise in poverty of between 10 and 20% compared to previously. Thus, the paradox of growing national wealth and growing individual poverty is very much in evidence even in the wealthier of our countries.
3. A point should be noted which the Rapporteur is not alone in making: there is no automatic link between economic growth and human progress! And there is another far more unpalatable fact: no automatic link exists between wealth and the distribution of wealth. In other words, there is a lack of solidarity.
4. The difficulties involved in creating a social Europe - if indeed, it is created, even with the participation of eleven as opposed to twelve countries - clearly demonstrate that the Europe of 1993 is in danger of being exclusively a Europe for industry. It is currently fashionable to extol business ethics, competition and success; and those who preach the virtues of profit to the exclusion of all other values have been confirmed in their beliefs by the collapse of the dictatorial regimes in Eastern Europe and their planned economies.
II. Relative poverty and absolute poverty
5. It is true that the majority of West Europeans enjoy an adequate standing of living and well-being. They have jobs and housing, are comparatively well educated, etc and are in principle protected against unforeseen hardships, particularly of an economic nature. Nevertheless, it is estimated that 16% of the Twelve's population live below the relative poverty line. Young people, especially young girls, are specially exposed. (Relative poverty line refers to income at 50% of a given country's average income. It is one by the European Community as the most valid definition of poverty in a given country.)
6. It is, admittedly, difficult to define this concept: interpreting it is a subjective process and depends on whether it is seen from the viewpoint of, for instance, Greece or Denmark. Nevertheless it can be translated into figures, and there is a measure of agreement (although some contest this idea) that the poverty threshold should be set at 40% to 50% of the average wage in a given country. In Poland the number of people living below the poverty line increased to 40% in 1990 (from 23% in 1989), and in Bulgaria it is estimated at 20% of the population.
7. Table 4 in the Appendix shows the proportion of personal income in eight European Community member states accruing to the poorest 10% of the population. As can be seen, it is on average quite low, or at about 3%. Table 5 shows the proportion of the population in eleven European Community countries falling under the nationally defined "poverty line" in 1985. Here, the variation is quite large, or between 6% and 33%, and the figures may well have worsened in the years thereafter.
8. But another threshold has appeared, even in our own Europe as well as in Central and Eastern Europe: the absolute poverty line defined by UNICEF as "the income level which allows for the least costly satisfaction of a minimum nutritionally adequate diet plus a few other essential non-food requirements".
9. At the colloquy entitled "Towards greater social justice in Europe: the challenge of marginalisation and poverty", held in Strasbourg from 3 to 5 December 1991 the scandal of the emergence and spread of poverty in Europe was condemned and the argument of budgetary constraints used by governments to avoid fulfilling their obligations was exposed as fallacious.
10. A 2/3 society, in which one-third of the population live in bad economic and social conditions, is being presented to us as inevitable. But it should not be forgotten that poverty is a destabilising factor in society; a poor minority can hardly be expected to watch indefinitely from the sidelines as the majority goes about the business of living. There will soon be a total of 700 million "haves" in the world - against more than 7 000 million "have-nots"!
III. Poverty: a violation of human rights
11. Poverty in Europe must not be accepted and tolerated. It represents a violation of fundamental human rights, which states acknowledge and undertake to implement when joining the Council of Europe. In two separate but comparable conventions, the Council of Europe sought the recognition of civil and political rights on the one hand (European Convention for the Protection of Human Rights and Fundamental Freedoms) and of social and economic rights (Social Charter) on the other, while also affirming their indivisibility; but it is not pursuing this process to its logical conclusion, as prospective members of the Organisation are only required to comply with the Convention on Human Rights.
12. Surely evicting a family from their home because they cannot pay the rent is a violation of human rights! The right to work and the right to the minimum resources required for a decent existence are human rights, and these rights are essential to the exercising of civil and political rights. Children's rights recently enshrined in the United Nations convention on the subject are flouted daily in Europe as graphically demonstrated by infant mortality rates in Central and Eastern Europe (1989: 14 for every 1 000 births in Bulgaria, 16/1 000 in Hungary and 25/1 000 in the Soviet Union, as opposed to 8/1 000 in the OECD countries). (Table 1 in the Appendix shows infant mortality rates in a number of Central and East European countries, and in the OECD area, while Table 8 illustrates "Trends in Human Development", as defined by the United Nations Development Programme (UNDP), in a number of European and other countries.) Freedom of movement, the right of citizens to travel abroad and the traditional acceptance of immigrants are being called in question by fears of mass migration. Migration from Eastern Europe (with an estimated 1.3 million settling in the West in 1990) is now motivated by purely economic concerns. This phenomenon is occurring at a difficult time in view of migratory pressure from the south and the spread of xenophobic political movements in Europe itself. The West's economic and social aid must be designed to ensure that East-Europeans stay in their own countries.
13. In order to combat poverty it is essential to reject its inevitability, as well as the theory that the poverty of a minority is a sine qua non condition of the success of the majority at both national and world level, implying that if the North is to remain rich the South must stay poor.
14. We need to adopt a resolutely combative approach and reject a Europe that has room only for the wealthy. What we need, therefore, is a political will and its public expression. Politicians must say unequivocally what kind of Europe they want. Researchers at the UNICEF International Child Development Centre in Florence have illustrated what political measures will influence how many people in a country will fall below the poverty line. Your Rapporteur refers to Table 6 in the Appendix. It should be pointed out that the "Swedish" model could equally well be called "Scandinavian", and that the "United States" model has its counterpart also in parts of Europe, although in modified form.
15. To help this political will to emerge, the poor must be made visible and allowed to be heard, which is impossible at present because they lack the means to express themselves. The poor must be transformed from social outcasts into partners. (In France, an organisation called ATD - Aide à toute détresse - has documented the situation of 5 000 poor families. Thus it is possible to see how the poor themselves look at their situation.)
16. It is also necessary to change attitudes and remove the moral prejudice against poverty. All too often people with jobs assume that the poorest members of society do not really want to work: in fact, this is a facile, conscience-easing explanation of poverty. We also need to come to terms with the fact that one day the "job - income" tandem will no longer be society's sole point of reference. As it may not be possible to offer jobs to all parts of the population, the only way to help them may be to redistribute existing wealth.
IV. A struggle related essentially to economic policy
17. The struggle against poverty is also - indeed, above all - an economic obligation, for poverty is costly budgetarily speaking. For however it is done, society ultimately has to protect the individual against poverty, in the last instance through direct social assistance. And however the social welfare system is financed - through payments by the employer, the ordinary taxpayer or a combination of both - it is inescapable. It requires effective, determined action, economic measures: unemployment is the first stage in the exclusion process. Accordingly, it is necessary to develop job opportunities and, above all, find new ways of distributing then more evenly.
18. Unemployment affects the physical and mental health not merely of individuals but also of nations. It is an established fact, for instance, that suicides increase along with unemployment. Economic policy must be aimed first and foremost at bringing unemployment down as far as possible, and economic policies that sanction a degree of unemployment must be condemned as iniquitous, even if their purpose is to combat inflation or promote the so-called good of the economy. In employment policy-making it should not be forgotten that demand is a prerequisite for investment and the consolidation of investment, and that demand consists of real human beings, male and female.
19. Moreover, the new European order offers Europe an opportunity to cut military spending and allocate the resulting savings to other sectors, such as the social sector. This is a political choice. Civil employment, for instance in the social sector, is more "value for money" than military expenditure, for the simple reason that the latter is more "technological" than, say, the care of the elderly. Military outlays are also on the whole unproductive. Table 2 in the Appendix shows the level of unemployment in the several OECD countries from 1989 to 1993 (projected) as a percentage of the labour force. In 1991, the figure was 7,1% in the OECD area as a whole. Table 7 shows "active" (for example labour exchange, training, special measures for young or handicapped people, wage support schemes) and "passive" (cash payments to the unemployed, early retirement etc.) labour market expenditure as a percentage of GNP in the twelve European Community member countries plus Sweden in 1990. "Active" expenditure amounts to between 0,4% and 1,6%, while "passive" outlays are higher, up to 4,5%
20. Regarding co-operation with Eastern Europe, the so-called "shock therapy" approach, which consists of radical, non-gradual economic reforms, where everything must be done simultaneously (budgetary and monetary reform, elimination of subsidies, devaluation, removal of exchange controls and liberalisation of trade) could be too painful. Instead, we should accept delays in implementing reforms, especially economic reforms, as inevitable, and avoid repeating the past mistakes of other bodies, such as the World Bank in its dealings with developing countries. (The Rapporteur incidentally welcomes the greater attention recently paid by the World Bank to the social dimension of economic development, and in particular the importance and consequences of poverty.) It is, of course, in our interest to develop as rapidly as possible the capacity of these countries to buy our goods, as well as help them just as the United States helped Europe with the Marshall Plan after the second world war; but the brutality of the economic measures required must be offset by social and ecological measures.
V. Job creation in the social sector
21. Special attention must be given to children. Increasing numbers of them are living below the poverty line both in Western Europe and, in particular, in Central and Eastern Europe, with the multiple problems which poverty entails: health, nutrition, housing, education and unemployment. Statistics are still in their infancy and barely comparable in these countries, but they nevertheless provide confirmation that this poverty exists. In the former Soviet Union, for example, 10 to 12 million children can be considered poor; in Bulgaria 27% of families were living on the verge of poverty in 1989. In Hungary children are estimated to account for 32% to 40% of the poor. Unemployment is one of the causes of poverty in the East too, where it is approaching Western European levels. In 1991 it affected 1,1 million people in Poland, or 8,1% of the working population. In Bulgaria it was running at between 6% and 7% in May 1991. (The source of these figures is the UNICEF Study "Children and the Transition to the Market Economy", published in 1991.)
22. The economic transition involves stress, frustration and sacrifice for everybody, with repercussions on families and particularly children: parents working away from home or abroad, family tension, divorce, delinquency, etc.
23. Also in Western Europe it is the children who often stand to suffer, as is shown in Table 5. In the large majority of countries, there are, proportionally speaking, more families with children who fall below the relative poverty line as previously defined.
24. There has also been an increase in the relative poverty of families with children in several countries, at least during the period 1980-85: that is the United Kingdom from 20,1% to the previously mentioned 24%, in Denmark, though only from 8,7% to 9,1%. In countries like France and Spain, on the contrary, the figures showed a decrease.
25. In certain cases the differences are so small as to fall within the possible margin of error. The essential conclusion, however, is that families with children tend to be vulnerable to falling into poverty.
26. Moreover, throughout Western and Eastern Europe, care of children and the elderly are areas with considerable job creation potential, both in the public and private sector. Failure to meet needs in these areas, apart from entailing human suffering, will result in high costs for society. New jobs in the social sector will mean more jobs for women in particular as well as "spin-off" job creation (for every job in the house construction sector between four and five "spin-off" jobs are created).
27. In general, your Rapporteur wishes to stress the priority that should be given to education and temporary work opportunities provided by the authorities, over cash payments. Education will benefit not only the individual but society as a whole. The industry of a country needs educated people. Furthermore, a high level of employment and a developed social security system is good for the economy in the sense that they facilitate changes in industry. One may talk about a "social justice which is also productive". Employees will be more willing to face changes in their work environment if they know that they stand a good chance of finding a new job should the present one disappear, that they will not have to face unemployment or outright poverty. Security is valuable, and that is why this kind of social justice is productive. (Table 3 in the Appendix shows how young people in particular (under 25), and young women especially, are hurt by unemployment. Thus, close to 20% of women under 25 are out of a job in the European Community.)
VI. Social protection systems
28. Several systems have co-existed in Europe: Bismarck-inspired systems, Beveridge systems and mixed systems. Bismarck, it will be recalled, introduced the first social legislation in Europe, where social protection was essentially based on employment. Beveridge (in the United Kingdom) for his part felt that mere citizenship should suffice as a criterion to benefit from social security.
29. Countries with "pure" social protection systems are now few and far between, and all are moving towards universalism. The relationship between social protection and employment, where it still exists, is tending to disappear, or at least it is no longer the sole underlying principle of welfare systems. In addition to income-related pensions, minimum pensions have been introduced solely on the basis of residence. Some countries have instituted guaranteed minimum incomes, and this system of minimum basic benefits, which enables the poorest members of society and their families to live decently, should be developed and extended throughout Europe. These minimum benefits should be accompanied by measures designed to integrate their recipients into society, along the lines of the French RMI system ("revenu minimum d'insertion").
VII. Conclusions
30. In order to combat poverty we first need to recognise that it exists and investigate all the causes, forms and mechanisms of the phenomenon and the way in which it is perpetuated. Additional studies on poverty are necessary, together with statistics that are comparable at European level, a measuring instrument totally lacking in the Council of Europe at present. (The Rapporteur has throughout his presentation largely used statistics and data from the European Community, since it possesses the most complete and coherent documentation in this field. Figures for the rest of Europe are less easily available.) The Council of Europe's Colloquy "Social Justice: Poverty and Marginalisation" was an important first step in the direction of a better understanding of the poverty issue, as in the excellent report prepared by the Social, Health and Family Affairs Committee on severe poverty and social exclusion: towards governmental minimum levels of resources (Doc. 1592, Rapporteur: Mrs Håvik). This report deserves our wholehearted support in the Assembly.
31. The Committee of Ministers should increase member states' awareness of the growing poverty in Europe by preparing an annual report in co-operation with the poor themselves, which presents a picture of poverty in Europe and of the measures adopted and enables anti-poverty policies to be regularly assessed and adjusted. The development of the social situation in Europe needs to be closely monitored.
32. In drawing up a statistical picture of the social conditions in Europe, the Council of Europe should use a system similar to that employed by the European Community, so that data can be compared and double-work avoided. The Council of Europe's resources at intergovernmental level needs to be correspondingly strengthened. The Council of Europe should also build on its Social Charter and its Convention on Human Rights and Fundamental Freedoms in order to recommend to member states tangible measures to reduce the number of the poor.
33. In its intergovernmental activities, particularly where assistance to the countries of Central and Eastern Europe is concerned, the Council of Europe can no longer afford to ignore the economic dimension. Only the Parliamentary Assembly is working in this field, and its proposals are not followed up properly at intergovernmental level. The Council of Europe's action in the social field as well as in the educational and other sectors, and the assistance it is trying to give Eastern European countries as they move towards a market economy, are being hampered by the lack of an accompanying economic perspective. Similarly, who is better placed than the Council of Europe to contribute the vital human rights dimension to a study of economic issues?
34. During the transitional period special attention should be paid to children, and the Council of Europe's current initiative in favour of the children of Albania should be extended and expanded. It is unacceptable as well as dangerous for the future that children should be the main victims of democratisation. Providing immediate assistance to children at risk is fully in line with the political role of the Council of Europe.
35. In order to combat poverty, specific priority measures must be taken, particularly in the areas of housing, vocational training, employment and social protection.
- The right to housing must be raised to the rank of a fundamental human right: attention should be focused on the loss of housing as a factor contributing to pauperization and accelerating marginalisation.
- Policies designed to achieve full employment must be reaffirmed, and jobs created in "deficit" areas, such as social services for children and the elderly, environmental protection, housing or town planning.
- If society cannot provide everyone with a job and a fair wage, social protection systems that provide a minimum income are necessary to ensure that nobody is left totally without financial resources.
36. Finally, not only does this struggle require a multidisciplinary policy approach; it should also be worldwide in scope. The flow of aid to the developing countries should continue and must not be affected by the aid granted to Central and Eastern Europe.
37. In conclusion, the rich industrialised countries of Europe face three different tasks when it comes to fighting poverty and avoiding a continued drift toward the previously referred to "two-thirds society" in their midst. These tasks are:
- poverty at home
- support to the countries of Central and Eastern Europe in order to promote their development, so important for the future of Europe as a whole
- assistance to developing countries, and the objective of having official aid reach 0,7% of GNP. (The reader is also referred to the excellent report on North-South Interdependence and Solidarity, Doc. 6594; Rapporteurs: Mr Aarts and Mr Holtz, to be debated by the Assembly in May 1992.)
38. It cannot be denied that all these three tasks will cost money, which has to be paid by the tax payers. However, it is money which will be paid back. A world in poverty is not good for anyone. Countries which ensure proper distribution of wealth also have a high GNP. The struggle against poverty and the struggle for equality are in fact complementary and highly productive.
39. More recently, another development which helps the budgetary discussion is occurring: disarmament and the enormous savings that can be achieved in this field. Former United States President Nixon in a recent speech pointed to the enormous sums which Western countries deployed in order to protect themselves against communism. Now the latter's strength is broken, and we stand before the task of "managing peace" and ensuring the construction of a new structure.
40. This concerns not only the responsibility of Western Europe vis-à-vis Central and Eastern Europe, but also the struggle against poverty and the "two-thirds society" in Western Europe and our commitment to developing countries. In other words, also from a budgetary point of view it has become possible to assume these tasks without a major tax burden. However, the new situation does require that we do not in the first instance request less taxes for those who are already well-off.
41. The United Nations Development Programme (UNDP) in its report on human development 1991 points out that the global costs for defense went down by 6% from 1987 to 1989, or from the unbelievable sum US$ 1 016 thousand million, to the only slightly less incredible US$ 950 thousand million. The UNDP, like the rest of us, calls this the "peace dividend", and the organisation points to two priority areas for the freed resources: the urgent social problems in many industrial nations, from homelessness to drug addiction, and the wide range of development needs in the Third World. Your Rapporteur would add Eastern and Central Europe as a third priority area.
42. The present opinion has merely dealt with the economic aspects of the question of poverty. This is our duty in the Committee on Economic Affairs and Development. Many other dimensions of the problem have been covered by the Rapporteur of the Social, Health and Family Affairs Committee, Mrs Doris Håvik, in her excellent report to the Assembly. This Rapporteur can only commend her work and urge rapid action.
APPENDIX
Table 1: Infant mortality rates in Central and Eastern Europe, as compared to the OECD area, 1950-1989. (Sources: United Nations, World Bank, UNDP and UNICEF)
Table 2: Unemployment in OECD countries and country groups (per cent of labour force), 1989-1993 (projected) (Source: OECD, Economic Outlook, December 1991)
Table 3: Unemployment rates in the European Community (Source: Eurostat, No. 3, 1992)
Table 4: Proportion of personal disposable income in eight European Community member states accruing to the poorest 10% of the population (Source: First Annual Report of the European Community Observatory).
Belgium (1985) 3.3%
Denmark (1984) 3.5%
France (1984) 2.2%
Germany (1983) 2.8%
Ireland (1980) 1.9%
Netherlands (1985) 2.9%
Spain (1983) 2.6%
United Kingdom 2.7%
Table 5: Poverty incidence, as a percentage, for (a) households and (b) persons in 11 EC countries, 1990 and 1985 ("Poverty line" taken as 50% of the average national income
(Source: European Communities, doc. COM (91) 29 Final)
Households Persons
1980 1985 (%) 1980 1985
Belgium 6.3 5.2 7.1 5.9
Denmark 8 8 7.9 8
France 18 14.8 19.1 16.7
Germany 10.3 9.2 10.5 9.9
Greece 20.5 17.4 21.5 18.4
Spain 20.3 17.8 20.9 18.9
Ireland 18.5 17.4 18.4 19.5
Italy 12 14.7 14.1 15.5
Netherlands 6.9 7.9 9.5 11.4
Portugal 31.4 31.7 32.4 32.7
United Kingdom 14.1 18.9 14.5 18.2
Table 6: Principle characteristics of three welfare state models
(Source: "Children and the Transition to the Market Economy". UNICEF Study, 1991)
================================================================================
Liberal-residual Conservative Sovial democratic
(United States) (Germany) (Sweden)
================================================================================
Basis of rights need/work work citizenship
Distribution principle targeting occupation/ universalism
status
Organisation principle assistance/ social citizen guarantee
insurance insurance and insurance
Administration mix local-central corporative state
state and market self-governance
Role of market major limited minor
Role of means-test major limited minor
Commitment to services limited limited major
Commitment to full minor limited major
employment
Re-distribution low medium high
Poverty high moderate low
__________________________________________________________________________________________
Table 7: "Active" and "passive" labour market expenditure as a percentage of GNP, in the member States of the European Community, and of Sweden (Year: 1990; Source: OECD)
"Active" measures "Passive" measures
(eg. labour exchange, training, (Cash payments to the
special measures for young people, unemployed, early retirement Country the handicapped etc, wage support etc)
schemes)
Belgium 1.1 2.8
Denmark 1.3 4.5
France 0.5 1.9
Germany 1.0 1.2
Greece 0.4 0.5
Ireland 1.4 2.8
Italy 0.8 0.7
Luxembourg 0.4 0.7
Netherlands 1.0 2.2
Portugal 0.5 0.3
Spain 0.8 2.4
United Kingdom 0.6 0.9
Sweden 1.6 0.6
Table 8: Trends in human development as defined by the United Nations Development Programme (UNDP;
Source: UNDP Human Development Report 1991)
Reporting committee: Social, Health and Family Affairs Committee.
Committee for opinion: Committee on Economic Affairs and Development.
Reference to committee: Doc. 6185 and Reference No. 1665 of 21 March 1990, as amended on 28 January 1991.
Opinion: Unanimously approved by the committee on 25 March 1992.