SOCIAL INCLUSION

Like other Scandinavian countries, Norway is a relatively equitable society. Poverty rates are among the lowest in the world. The Norwegian government has assumed responsibility for supporting the standard of living of disadvantaged or vulnerable groups. As a result, expenditures for social policy are well above the EU average. Government-provided social insurance is strong in almost all areas. Family support exceeds 3% of GDP, in the form of child allowances, paid leave arrangements and child care. Social insurance spending related to work incapacity (disability, sickness and occupational injury benefits) is also generous.
A major reform of the social security administration was launched in 2006, creating a new integrated agency (NAV) into which was merged the previous employment service and the previous pension and subvention agency. Social assistance remains separate as a municipal service, but is to be co-localized with the local NAV office in each municipality. The stated purpose was better coordination between both employment and subvention services and state and municipal services for the overall aim of stimulating employment and reducing welfare dependency. Driving through this administrative reform was a considerable political achievement, but its success in relation to intentions remains an open question. The process of implementation has so far proved more protracted and expensive than anticipated and remains fraught with administrative problems and may come to be seen as a second major reform failure in the social area, in addition to health care reform. An assessment is being undertaken under the auspices of the National Research Council.

There is a high degree of social cohesion in Denmark. The country is very egalitarian. High taxes allow for generous transfers to less well-off citizens; there are few instances of absolute poverty in Denmark. Welfare programs also have strong legitimacy. A high percentage of people are said to be happy with their life.

The American scholar John Campbell has written that, “for Danes, social cohesion is a national priority…that social cohesion has contributed significantly to Denmark’s ability to adapt flexibly to globalization. I maintain (and research confirms) that the greater income and social equality experienced by Danes than by those in many other advanced capitalist countries leads to more social trust and a greater collective commitment to national goals, given that a more equitable distribution of wealth ensures that national gains benefit everyone.”
Denmark has the highest Gini coefficient score (least inequality) among OECD countries. Denmark also has the highest score on life satisfaction. In respect to gender equality, Denmark ranks third after Sweden and Norway. Only two countries, Sweden and the Czech Republic, have better scores on poverty.

Poverty is a relative concept, however, which includes both economic and non-economic dimensions (such as social inclusion). There is no official definition of poverty in Denmark, although an implicit definition is implied by the lowest level of assistance in the social safety net. Recently there has been much debate both about the definition of poverty and thus the country’s number of poor, and whether an official poverty definition is needed. The rules in the social assistance system requiring residence in seven out of the preceding eight years to qualify for base assistance is a much-debated issue. If this condition is not met, a lower benefit (starthjælp) is offered. Questions remain whether this rule is responsible for causing poverty and social exclusion.

Social cohesion is seen as a pillar of competitiveness in Luxembourg, as it ensures social stability. It has been an explicit goal of successive governments and has been encapsulated in many social laws: a minimum salary for wage earners, uniform in all the sectors of the economy; a guaranteed minimum income subject to certain conditions (minimum age, period of residence in Luxembourg, etc.); and other social allowances such as child benefits and a minimum pension.

Despite the increase in unemployment and the scarcity of affordable housing, the latter of which is seen as a major problem especially for young families, Luxembourg’s society still appears very egalitarian, in comparative terms.

Sweden ranks extremely high on all indicators on social inclusion and equality. A universal welfare state has been in place for several decades and although there are signs of growing inequalities in terms of disposable income, social exclusion is still very rare in Sweden. Rising income inequalities and problems of integration for non-Swedish citizens are discussed intensely in public. Currently, the values of equality, integration and community (“Gemeinschaft”) still prevail in Swedish politics and society.
The main challenges to this pattern are, first, the increasing heterogeneity of the community in terms of ethnicity, where immigrants find it difficult to become fully integrated socially and in the workplace. However, the much debated threat of welfare tourism, i.e. EU citizens coming to Sweden in order to benefit from universal welfare programs, did not become a real problem. Second, globalization has given the government incentives to cut taxes in order to make businesses more competitive.
There are still homeless people in Sweden and people with limited material security and poor life chances. But this implies no detraction to the overall integrative character of the Swedish welfare state.

Austria’s welfare state system remains one of the world’s most extensive. It substantially reduces poverty to a level that is far below the OECD average and considerably mitigates income inequality. Social policy is thus rather successful in preventing exclusion of the poor.
Nevertheless, social policies in Austria must address several major problems. One such problem is the absence of an inclusion framework for illegal immigrants. This problem affects more than immigrants alone. It creates a specific underclass of those living in extreme poverty within the underclass, and thus challenges social cohesion more generally.
The new poverty is another such problem. Since 1980, the gap between rich and poor has widened. To make matters worse, since 2008, poverty levels have grown. Due to the current economic downturn, and not least the opening up of the Austrian labor market to the new EU member countries from Central and Eastern Europe, these developments are expected to deteriorate in the coming years.
At the time of this writing (July 2010), the Austrian government is considering the implementation of a new basic social security for all legal residents. If implemented, this new system would expand the system’s inclusionary net.
Furthermore, Austria suffers from immense deficits in equal pay gender policies. Women generally earn about a fifth less than men at equal occupational levels in the same jobs. The Austrian policy has so far failed to effectively address these issues.

Generous employment protection, unemployment benefits and social safety nets contain poverty to a large extent. The employment among women has also been improving in recent years. The weak spot in this otherwise positive picture is upward social mobility, which remains fairly limited. Immigrants have a hard time climbing the social ladder, while some post-industrial regions face widespread unemployment and a bleak economic outlook for the families of former blue-collar workers. Active labor market policies aimed at increasing “incentives to work” at both the federal and regional levels have also resulted in reduced benefit levels, thereby increasing at-risk-of-poverty rates in recent years (the Ministry of the Economy reports that the Gini coefficient has increased by 17% over the last 10 years). Beyond social policy, education has been shown to perpetuate inequality, in spite of substantive efforts at the regional/community level. Several studies have demonstrated that youngsters from underprivileged families have very little access to studies and qualifications which will ensure them stable employment, let alone allow them to improve their social standing. Therefore, in some areas and communities, social exclusion (in the form of exclusion from the stable job market) is perpetuated across generations.

Social policy has largely prevented poverty in Finland. In terms of poverty rate and life satisfaction, the Finnish rankings are excellent from a comparative point of view. The Finnish income redistribution system has in fact proved to be one of the most efficient in the European Union when it comes to poverty reduction. Still, although there is no absolute poverty in Finland, relative poverty prevails. Generally speaking, of those who have experienced poverty, one-third are subject to persistent poverty, another third to occasional poverty and a final third to borderline poverty. During recent years and due to the economic crisis, the number of people exposed to long-term unemployment has been increasing, and this, of course, adds to the general level of poverty. Interestingly, there is a strong consensus in the Finnish population on the causes of poverty, as Finns have blamed the flaws and inadequacies of the labor market and thus emphasize a structural explanation of poverty. The National Action Programme of Finland, within the framework of the European Year for Combating Poverty and Social Exclusion 2010, identifies the following key objectives: enhancing child welfare, reducing health inequalities, combating the risk of poverty of older women living on national pensions, as well as structural unemployment affecting elderly men in particular.

Irish social policy places a high priority on poverty reduction. The income tax system is quite progressive and the tax system as a whole is broadly progressive. During the boom years, increases in social security expenditures – pensions, family income support, unemployment benefits and the like – were designed to lift those dependent on these income sources out of absolute poverty. This goal was facilitated by the rapid growth in national income and above all by the fall in unemployment.
In 2008, 14.4% of the population was at risk of relative poverty. This is a slight reduction from earlier years. More up-to-date figures are not yet available, and it is to be feared that the steep rise in unemployment will have increased the incidence of relative poverty. On the other hand, the nominal value of social welfare payments (including pensions) was maintained in 2009 and 2010 even as the price level fell. According to the widely used Consumer Price Index, the Irish price level fell by 8% between September 2008 and February 2010. Yet most social welfare payments (including pensions) are now 3% higher in nominal terms then they were at the end of 2008. This outcome was not a conscious policy, but rather the result of political resistance to a downward adjustment in social welfare payments even during a period of deflation.
Controversy arose from the July 2009 decision to close the Combat Poverty Agency and integrate its work with that of the Office for Social Inclusion, forming the Social Inclusion Division within the Department of Social and Family Affairs. Various interpretations of this change have been made, but undoubtedly the agency’s very critical commentary on government policy played a part in this decision.
The provision for spending on Social and Family Affairs in the 2010 budget was 66% higher than that in the 2007 budget, due to a combination of increases in benefit levels and increases in the numbers of individuals qualifying for payments. The current economic and fiscal crisis is placing a severe strain on the country’s ability to maintain its relatively high rates of social welfare payments as unemployment rises (and, longer term, as the population ages). But the commitment to poverty reduction and social inclusion built up over the boom years has so far been maintained, albeit at substantial cost to the Exchequer.

The social security system is comprised of a national social security scheme (Volkverzekering) and an employee social insurance scheme (Werknemersverzekeringen). The national social security scheme concerns all residents of the Netherlands and the benefits are independent of salary. The employee insurance scheme concerns employees and benefits depend on the last earned income. The aim of the Dutch social security system is to provide guaranteed income for all those for unable to support themselves independently as a result of unemployment, invalidity or illness. The system thus ensures rights of equal political and civic participation. Social provisions are financed by general revenues.

In 2006, 1.2 million people (8% of the population, but 1,000 less than in 2005) were living in poverty, with children comprising a large portion (11%) of this figure. The risk of poverty is higher for single-parent households, the elderly and non-western immigrants. Despite the financial crisis, 75% of the Dutch public believes that the Netherlands is a prosperous country. People identify antisocial behavior, income levels, the economy, and crime and safety as the most important social problems. In a 2008 poll, 3% of the population as a whole stated they were not happy and 84% stated they are happy or very happy. Compared with 2006, these figures show some improvement: slightly fewer unhappy people and slightly more happy people (5% and 82%, respectively, in 2006).

New Zealand has a long tradition of making an egalitarian society a social goal. It belongs to a group of countries that can claim the highest levels of gender equality, based on the ratio of female-to-male earned income. New Zealand also supports a comprehensive system of social security benefits, including income support. Increased efforts have been put into reducing general disparities, most evident between New Zealand Europeans and the Maori and Pacific Islander populations. These differences however are more of a reflection of economic, structural and geographic influences rather than race-based discrimination.

Switzerland prevents poverty to a large extent. On the one hand, this is due to an effective system of social assistance, in particular with regard to older generations. It is rare to fall into poverty after retirement. On the other hand, Switzerland is one of the least redistributive countries (if post-tax/post-benefit income is compared to pre-tax/pre-benefit income), thereby limiting socioeconomic disparities only to a very limited extent. Income inequalities created on the labor market are ameliorated only marginally by public policies and the tax system. This stands in stark contrast to most other developed democracies, in which the Gini index of pre-tax income inequality is substantially higher than the Gini index of post-tax income (cf. Pontusson 2005: 154, 171).
The major social insurance programs regulated on the federal level (sickness, unemployment, accident, age) work effectively and are comparatively sustainable. The benefits are generous. Social assistance is means tested and carries some stigma.
Life satisfaction is very high, income inequality is moderate, the share of working poor in the population is small and gender inequality has been reduced substantially in recent years.

During the review period, a renewed and heightened focus on poverty and social exclusion has accompanied the election in November 2007 of the Labor government. The government created a Social Inclusion Unit (SIU) within the Department of Prime Minister and Cabinet that is to report to the Deputy Prime Minister. The government has correspondingly developed a social inclusion agenda and implemented various policies and programs targeting disadvantaged children, people living in socioeconomically disadvantaged areas, people with disability, the homeless and Indigenous people. However, there has been little new policy action of substance. In the specific area of homelessness, the government released a white paper, The Road Home, in December 2008 which outlined a plan for reducing homelessness in Australia by 2020, with specific goals to halve overall homelessness, and provide accommodation to all rough sleepers who seek it. The program provides an additional AUD 1.2 billion in funding over four years to address homelessness. In September 2008, the government established the Office for Youth, within the Department of Education, Employment and Workplace Relations, to ensure better coordination of youth policy across government.

Most social policies, such as income transfers (e.g., child benefits, pensions) and educational policies, support societal inclusion and ensure equal opportunities. But certain groups, such as recent immigrants and Aboriginal Canadians, are to a considerable degree excluded or marginalized from mainstream society because of difficulties obtaining appropriate employment. For these groups, social policy has done an inadequate job of preventing social exclusion.

Quantitative indicators of social exclusion suggest that there are some problems within Czech society. At the national level, average income has increased, but not as much as in the previous period. Inequalities in income have also gradually increased at the regional level (i.e., between the capital and the rest of the country) and across different sectors. The effects of the economic crisis are visible in declining rates of life satisfaction. Income inequality measured using the Gini index has shown a slight increase. Due to a relatively favorable employment picture and a rather redistributive social policy, however, income inequality in the Czech Republic remains one of lowest among the OECD countries. A stubborn problem is the social exclusion of Roma population. For instance, more than half of all Roma children are still enrolled in special schools for pupils with learning difficulties. In 2008, a newly created agency launched a number of pilot projects aimed at increasing the social inclusion of Roma.

Expenditures for social security and poverty reduction are still high in Germany. However, social inequality and poverty risk is increasing. During the years of rising unemployment, poverty risks increased as well, setting Germany on the path to a more unequal society. But this data does not yet appropriately reflect the successes of recent years in lowering long-term unemployment, a key driver of poverty. Thus, it remains to be seen whether the robust labor-market situation will be reflected in social data.
Regional heterogeneity is substantial. In the former East Germany, the average poverty level is 20%, with levels reaching nearly 30% in some areas. By contrast, some of the former West German or “old” states in the south (Hesse, Bavaria, and Baden-Württemberg) have poverty rates around 11%. “Old” states in the north show higher poverty rates than do their counterparts in the south. Though there is a methodological dispute as to whether these figures are realistic given the significantly lower costs of living in the former East Germany, a fact not adequately reflected in the study, these results point to marked differences between East and West.
In addition, there are considerable differences in income levels between the individual states. The poverty line is drawn at an income level which is less than 60% of the national average income wage. For singles this amounts to €764 per month, and for couples without children to €1,376. The average poverty rate nationwide is 14.3%, with the average in the former West being 12.9%, 6.6% lower than in the former East. A more detailed picture is given by the German federal government’s 2008 Report on Poverty and Wealth. More and more workers with fulltime jobs have incomes which are below the poverty line. In addition, the middle class, defined as having income between 70% and 150% of the average income, is constantly decreasing. Only 54% of employees are now grouped as being part of the middle class, compared to 62% in 2000. Only a small number jumped into the wealthy group (with income above 150% of the average), whereas most of those leaving the middle class fell into the group with high poverty risk. Within the poor income groups, income has consistently moved away from the 60% of average income level, thus intensifying the poverty risk.
Children’s poverty rates have also increased in recent years. Today it is estimated that more than 3 million German children live in poverty; in some cities, such as Berlin, more than 35% of all children are poor.
Concerning pensioners, only 2.3% are dependent solely on basic social security. However, today’s favorable situation of relatively wealthy pensioners cannot be extrapolated into future decades. After many years of high levels of unemployment, low Hartz IV welfare payments, decreasing wage incomes and unsteady work lives, an increasing share of the population will be faced poverty in retirement. In addition, changes to the pension formula in recent years have aimed at reducing pension benefit payments.
A simulation study performed by the German Institute of Economic Research (DIW) makes clear that pensions in the years to come will consistently decline. Whereas East Germans may currently expect a pension between €900 and €1000 per month, for those who were born between 1962 and 1971, the level will sink to around €600 per month, which is near the basic income security level. Younger cohorts may face pensions which lie under that line. In addition, low-income groups are unable to save money in private pension funds, which would complement their low state pensions with private assets.
Reducing the various risks of social exclusion while at the same time making the German welfare state sustainable for future challenges – primarily demographic changes and changes in labor conditions – seems an impossible task. The groups particularly at risk of poverty are mainly the unemployed with uncompleted or no vocational training, single parents, and persons with a migration background. To effectively deal with the problems of these groups remains a task for the years to come. However, there have been discussions about setting a government-guaranteed minimum wage, something that has previously been done only through the social partners. The Assigned Workers Act requires that a collective bargaining agreement should apply to at least 50% of workers in a given industry, thus varying from sector to sector. The outgoing government changed the Assigned Workers Act in order to make it easier for the social partners to introduce minimum wages in a larger number of sectors. Today, around 3 million workers are covered by minimum wages agreements. The question of whether statutory minimum wages can be part of a coherent strategy to boost employment and fight poverty, and thus foster social inclusion, remains a highly controversial issue in German politics and economic theory in general. There is the risk that a politically motivated establishment of an excessive statutory minimum wage may not reflect economic realities, thus leading to unemployment for those with low educational attainment. If that were the case, a minimum wage could even worsen the problem of social exclusion and transfer dependency.
Since unemployment is the major economic factor in poverty risk, the recent favorable labor market developments represent a sign of hope. This trend could demonstrate that the Hartz labor market reforms were successful in fighting poverty in the medium term due to their success in reducing structural unemployment.
Apart from these issues, it is uncontroversial that social inclusion should be addressed through reforms of the education system aimed at reducing the share of people leaving the system without some type of formal qualification.
Other phenomena of social exclusion are even harder to address through political strategies. Looser family ties, shrinking involvement in associations and lower membership in religious communities all point to trends implying a greater risk of individual isolation. Government policy to date has provided a quite favorable environment for citizen involvement, with policies such as the generous tax treatment of voluntary donations to charities and other public interest organizations.

In the years prior to the 2008 economic collapse, inequality increased in Icelandic society more rapidly than elsewhere in Europe. The main source of this development was a regressive tax policy, including a creeping reduction in real terms in the level of income at which low-income households were exempted from paying income tax. This development increased the tax burden of low-income wage earners due to rather high levels of inflation. The government in power since 2009 has begun to readjust the tax system in favor of low-income households, in an attempt to improve their situation. However, as a consequence of the significant cutbacks in the public sector, pensions and social reimbursements have been cut as well. Therefore, it is difficult to say whether the situation of disadvantaged groups has improved or not. Since 2009, the strain on charity organizations that provide food and clothes free of charge to the needy has increased markedly. This suggests that the economic crisis has increased the risk of social exclusion and that the government has not been fully able to stem this development through its social policy. Even so, medical statistics on emergency room admissions, the use of antidepressants and the incidence of suicides do not suggest significant changes in trends since before the crash. On balance, the evidence on social exclusion is therefore mixed.

Japan, once a model of social inclusion, has developed considerable problems of income inequality and poverty during the past decade.

The DPJ-led government is particularly outspoken on these issues. Equity concerns formed a considerable part of the DPJ´s electoral manifesto, and of former Prime Minister Hatoyama´s policy speech upon inauguration. It is an open question whether the government can muster enough funds to develop truly substantial policies for social inclusion, however. During its first months of office, the DPJ government gained less funds from scrapping supposedly wasteful fiscal programs than it had hoped. The most significant social inclusion measure put into legislative form in March 2010 involved financial support for households with school-aged children.

To combat the high degree of inequality in the country – the United Kingdom developed into one of the most unequal countries in Europe during the 1980s and early 1990s – was one of the overriding aims of the New Labour government in 1997. In particular, the reduction of child poverty (which affected 33% of all children in 1996) through measures such as tax credits and benefit reforms for families with children was central to the new government’s mission. While some successes were achieved in raising the income of the poorest, inequality more generally remained very high in the United Kingdom, not least because the government also actively encouraged growth at the top end of the income distribution. The ratio between the earnings of those at the 90th percentile and those at the median reached an all-time high of 2.0 in 2003. Taking the Gini coefficient as a measure of inequality, the United Kingdom is close to the bottom of the European distribution, and is almost on a par with the United States.

The Brown government appointed a Social Exclusion Task Force to coordinate the government’s policy against social exclusion and improve cross-departmental delivery for the most disadvantaged members of society. A special focus was put on people who faced a combination of linked and mutually reinforcing problems such as unemployment, discrimination, poor skills, low income, poor housing, high crime and family breakdown. In 2007, Public Services Agreement No. 16 tried to ensure that the most socially excluded adults were offered the chance to get back on the path to separate accommodation, employment, education and training. It focuses specifically on four groups considered particularly vulnerable: young people leaving care, offenders under probation supervision, people receiving secondary mental health services and people with moderate to severe learning disabilities.

Welfare to work has remained the core principle driving social inclusion policy. An important objective announced by the government in December 2008, and since elaborated, was the goal of tackling the high level of inactivity (as opposed to unemployment) through reform of incapacity benefit eligibility rules. The crisis has interfered with this plan, but it can be expected to remain a central objective. An associated target, first announced as an “aspiration” in 2005 by the Department of Work and Pensions, is to raise the employment rate to 80%, well above the 70% level (defined a little differently) in the EU’s Lisbon strategy, and now recalibrated for the Europe 2020 strategy.

By international and European standards, the French welfare state is very generous and covers all possible dimensions affecting the collective and individual welfare, not only of nationals but also of foreign residents and keeps poverty at a comparatively low level.
Nonetheless, the fact that very few aspects of life escape social policy coverage both at the local and national level also has drawbacks, as high benefits for a long period of time create negative employment incentives. The problem has been present for years in public debate and in action. The debate has mainly focused on social cohesion and on fighting social exclusion, seen as a cumulative process of material poverty and inability to take part in social and political life. This is linked to the double effect produced by social policies: on the one hand, they prevent individuals and families from falling into situations of extreme poverty; on the other, the status of quasi-permanent unemployment is a crucial factor of social exclusion and demoralization. There is a striking contrast between the considerable financial effort made by public authorities and the long-term failure to bring back the unemployed into the labor market. In 2009, the government initiated a new scheme (Revenu social d’activité) which complements low wages, giving people better incentives to go back to work, offering better coverage while trying to avoid the pitfalls and drawbacks of the former system. Its implementation is too recent to draw conclusions about its potential effects. In any case, the economic crisis has struck again the weakest groups, for example, youth and workers over the age of 55.

The United States ranked 24th among 25 countries in economic equality, measured in terms of the proportion of the population below 50 percent of median income. Inequality has reached record highs. The richest one percent of Americans in 2005 claimed since 1929 the largest share of the nation’s income (19%). At the same time, the poorest 20% of Americans had only 3.4% of the nation’s income. In international comparison, particularly cash benefits for working age people and children are dramatically lower than in most OECD countries. Based on 2008 data, 39.8 million people in the United States lived below the poverty line. In 2008 the poverty rate increased for the first time since 2004 when it rose to 13.2%, up from 12.5% in 2007. This was the highest rate since 1997. Most of the increase fell on non-Hispanic Whites (8.6% in 2008, up from 8.2% in 2007), Asians (11.8% in 2008, up from 10.2% in 2007) and Hispanics (23.2% in 2008, up from 21.5% in 2007). For Blacks, the rate remained unchanged (24%). These numbers lend support to the assumption that the increase was mostly due to a severe recession and the downturn in the construction and real estate markets. The greatest increases occurred in the states of California, Connecticut, Florida, Hawaii, Indiana, Oregon, Michigan and Pennsylvania. Many elements of the stimulus package (the American Recovery and Reinvestment Act, or ARRA) tried to address the hardship caused by the recession. ARRA contained several measures, including: the extension of employment benefits and increases in benefits; transfers to the states for Medicaid, education and housing; increasing benefits for families with children; increasing food stamp benefits and expanding tax credits for the working poor. ARRA contributed measurably to the attempt to increase social inclusion during a serious economic downturn, but did not dramatically reduce the number of people falling under the poverty line. The expansion of health care coverage should make a significant contribution to social cohesion. The Earned Income Tax Credit was, in the past, a significant factor in lifting families out of poverty. Currently, it fails to help workers without children. Providing help to such workers would lift up to two million out of poverty. There is no sign that the Obama administration plans to pursue this. The Obama administration pursues a piecemeal approach that does not drastically reverse the course in social policy. It continues to be less generous to the non-working poor, and much more generous to working poor households. This state of affairs probably reflects societal consensus.

Hungary has seen a tendency towards social polarization for some time, with about one-third of the population being left behind in socioeconomic terms. While income inequality declined somewhat in the mid-2000s, it increased strongly during the economic crisis. Poverty islands have emerged in the (north-) eastern part of the country, and the Roma issue has become very serious. Pre-occupied with fiscal consolidation, the Gyurcsány and Bajnai government did little to address these problems. One unconventional measure has been the adoption of a new Code of Conduct for Public Utilities (Közüzemi Kódex). Introduced on April 1, 2010, it contains provisions on how public utilities should deal with poor customers and delays in payments.

The impact of policies aimed at preventing economic disparities have been seriously weakened by the increasing ineffectiveness of the main instruments used. The progressive tax system and a series of deductions and benefits for low-income individuals, which should have accomplished redistributive functions, have largely ceased to work in this direction. The rise in tax rates and the erosion of benefits and deductions due to inflation, as well as the prevalence of tax evasion among certain parts of the population, have curtailed the system’s redistributive effects. Moreover, the system’s redistributive effects fail to reach that part of the population which earns less than the minimum taxable income. Provisions for sustaining the monetary income of the extremely poor are thus very limited. In general, allowances for families with children are rather small, and do not compensate for the costs of raising a large family. The problem of poverty is thus particularly serious for young families, especially where only one adult is employed. Some of the pensions of the elderly are also extremely low. During the crisis, the government introduced a social card applicable to private consumption (worth €40 per month) for the poorest sectors of the population, and moderately increased some of the lowest-level pensions. An effective poverty reduction policy would require larger and more effective instruments.

Inequality of income and regional disparities between cities and rural areas, as well as between the western and eastern parts of the country, are relatively high. Only poverty among the elderly is among the lowest in the European Union. The Tusk government launched a new campaign in December 2008 aiming at improving the social situation of children, stressing activation schemes for parents and putting more effort on the development of social services. Two special points of concern are to improve gender equality, and facilitate better and closer consultation with civil society actors. This is supported by the EU, as 2010 was declared the European Year for Combating Poverty and Social Exclusion.

In its rhetoric, the Fico government heavily emphasized social inclusion. The measures adopted focused on providing selective benefits to the elderly and to families with children. In contrast, social protection for the unemployed has been less generous. The government refrained from prolonging the maximum duration of unemployment benefits after the economic crisis, and it took until January 2010 that it relaxed the rather tight requirements for becoming eligible to unemployment benefits. Still, social disparities and (relative) poverty have remained limited since the onset of the economic crisis. However, the Roma minority suffers a high degree of social exclusion.

The gap between rich and poor has widened further during the last two years, and criticism of the government’s lack of action on this issue is growing in strength. The Korean welfare system is not designed to reduce inequality, and even its capacity to prevent poverty is very limited given the very low level of social transfer payments. These small payments force unemployed individuals to accept any job offer, even if wages are much lower than in their previous employment. This explains why Korea has the highest share of working poor in the OECD. The welfare system also depends on family-based security, in which parents are willing to support their children even after completion of a university degree. In Korea, it is also common that the more well-off members of a group (colleagues, friends, high school alumni, etc.) invite less-fortunate members, so that these individuals can continue to participate in social activities. However, in Korea’s increasingly money- and consumption-oriented society, poverty is becoming a source of shame, which partly explains the low levels of life satisfaction in Korea.
In the past two years, the Lee administration has shown little enthusiasm for the previous government’s plan to transform Korea into a modern welfare state. Rather, Lee has sought to solve social problems through high growth rates and job creation linked to public work programs and infrastructure projects. Furthermore, the recent massive influx of North Korean defectors from low social classes has made the issue of their integration into South Korea’s workforce worrisome. Available data on the work integration of North Korean defectors casts a spotlight on this group’s marginalization in the primary labor market, as well as on other indicators of their poor level of work integration.

Social exclusion remains a perennial problem for Spain: 20% of Spaniards already lived under the poverty threshold in the 2005 – 2008 period. In terms of social inequality, young and elderly people are at higher risk of poverty, while immigrants and some groups of women have been particularly affected by unemployment and/or precarious employment. If anything, the current recession has led to further impoverishment of vulnerable households, broadening the gap between these and the wealthiest sectors of the population. Spain’s Gini coefficient is the highest within the European Union, and there is a 10-year difference in life expectancies between the top and bottom income percentiles.
The Spanish government’s chief instrument in the fight against social exclusion is the National Action Plan for Social Inclusion. In the 2008 – 2010 period, this plan pursued a two-fold strategy: on the one hand, a broad-ranging policy of active social inclusion (through labor-market initiatives, income guarantee measures and improvement in the quality of public services); on the other hand, measures targeted specifically at immigrants and elderly. With respect to immigrants, the budget committed to implementing the Strategic Plan for Citizenship and Integration amounted to €1.5 billion for the 2008 – 2010 period. As for the elderly, the basic regulatory and institutional aspects of the National System of Dependency are now in place (including two new occupational certificates – Socio-Health Care for People At Home and Socio-Healthcare for Dependent People in Social Institutions – and the creation of the Territorial Council of the System of Autonomy and Care for Dependency). However, funding restraints have brought this program to a standstill in some autonomous regions. Most importantly, the Spanish central government lacks appropriate oversight mechanisms. Assessments are oriented toward examining progress in terms of budgetary execution or legality rather than in terms of the effectiveness of measures to reduce inequality.

Compared to the OECD average, Chile has a high degree of income and wealth concentration, low social mobility, and more generally, low levels of social inclusion and cohesion as well. However, government policies geared toward reducing poverty, promoting mobility, and improving social cohesion and inclusion are growing more common and broadening their approach. A rising share of GDP is being directed toward conventional social expenditure programs (e.g., public education, public health, public pensions, crime prevention) and nonconventional social programs (e.g., youth programs, gender equality programs, child care, private land purchase by the government for distribution to ethnic communities, other support programs for ethnic minorities, support to single-mother households), as well as toward direct transfers to the poor, with mixed results. Gini coefficients for income distribution are higher for pre-transfer than for post-transfer measures of income, indicating that transfer payments are reaching the poor. Part of the programs’ lack of effectiveness could be due to their distorting effects on incentives to work and save. No explicit affirmative-action programs benefiting women or ethnic minorities are in place. However, means-testing of social benefits (access to public health benefits, public pension subsidies, public housing, etc.) is widespread.

The Greek welfare system is rudimentary and offers only partial support. Unemployment benefits are very limited, as are other state benefits. The exception is state pensions; very few also have private pensions. Government efforts to tackle poverty are also limited. The traditional reliance on the family and other social networks remains important in the context of high unemployment.
Compared to the previous reporting period, the current period (2008 – 2010) saw no dramatic changes in terms of social inclusion policies or social cohesion outcomes. This is because the global financial crisis did not hit Greece, which has a less open economy than many other European countries, until late in 2009. The fiscal crisis of the Greek state did not erupted fully until the first months of 2010, and the austerity measures taken by the Greek government did not start taking their toll until after the spring of 2010.
In 2008 – 2010, the poverty rate remained steadily high, at about 20%. The income differential between men and women remained large, with Greek women earning on average half that earned by men. Income inequality, already large, did not grow substantially, leaving Greece on a par with the rest of the southern European countries (Italy, Portugal and Spain), and in a better position than the most unequal OECD societies.
In 2008 – 2010, government policy aiming to prevent poverty risks and enhance equal opportunities was haphazard. The ND government, in power between September 2007 and October 2009, passed laws which provided for the foundation of new special funds. Those laws were never really implemented, and the funds were ultimately dismantled. After October 2009, the new PASOK government made an initial effort to exempt the poorest wage-earners from the austerity measures, but the final shape of such policies remained to be determined as the review period drew to a close.

Government social policy seeks to limit the most extreme socioeconomic disparity, but this effort is poorly funded and does not effectively prevent poverty. Taxes have recently been increased, including on pensions. The ostensibly minimum salary level of €475 per month in 2010, which is in fact higher than what some workers earn, is not enough to prevent poverty. The same is true for some pension levels.
The gravity of the country’s poverty and socioeconomic disparity is demonstrated in a whole series of current indicators. Portugal has the most unequal distribution of income in the European Union, and the greatest percentage of people in poverty (20%). The country has slipped from 26th to 27th place in the United Nations’ Human Development Index. The lack of social cohesion is widely recognized, and there is currently a great deal of discussion of how to remedy this serious situation. The obstacles including the following: the existence of multiple uncoordinated social security programs; archaic and underfunded pension programs; a large number of poorly skilled workers; and a low minimum wage, which serves as a reference for other remunerations. Policies able to remedy these many problems have yet to be implemented. Moreover, social inclusion policy is likely to weaken rather than the opposite. The economic recession and the rising levels of unemployment have increased the risks of social exclusion. Indeed, the number of recipients of the “social inclusion income” (a successor to the guaranteed minimum income) increased by 38.6% between January 2007 and May 2009. In March 2010, the government announced reductions in welfare benefits, including unemployment benefits, and implemented more stringent eligibility criteria. These are aimed at curbing the budget deficit. However, with savings amounting to a total of just 0.5% of GDP by 2013, their cost in terms of social inclusion is likely to be higher any associated budgetary consolidation benefits.

Turkey’s income distribution is among the OECD’s most unequal. The country’s Gini coefficient, an indicator of income inequality, diminished from 0.43 in 2006 to 0.41 in 2007. Thus, a more equal income distribution has enabled the poor to benefit more from the increase in general welfare. The proportion of the population below the poverty line has been estimated at 18%.
Poverty in Turkey is found particularly among the relatively less educated, informal workers, unpaid family workers, those who work in agriculture and in extended families. Educational background is a key variable associated with poverty. The poverty rate among illiterate individuals was 34.8% in 2007, as compared to 1% for individuals with tertiary degrees. The employed poor earn low wages owing to their low levels of education and the peculiarities of the agricultural sector they disproportionately work in, and the majority of them work temporarily and without social security. In 2007, poverty rates for unpaid family workers and informal workers were respectively 9 and 8.5 percentage points higher than the general poverty rates.
According to the findings of The Child Labor Research program, 5.9% of children in the 6-17 year age group are employed, with 68.5% of this group unable to continue their education and 40.9% working in agriculture. This highlights the importance of activities targeted at the elimination of child labor, whose worst forms include working in the street, or in heavy and dangerous, mobile and temporary agricultural jobs. There remains a need to reform the trial and rehabilitation systems for children caught in the justice system.
To make things worse, poverty in Turkey is often associated with ethnicity, with the most serious poverty found amongst the Kurds.

Mexico is a very unequal society with serious problems of poverty and social inequality. There was a slight reduction in extreme poverty in Mexico during the 2000 – 2006 period, due in part to better targeting of government help (though this remains very limited in quantitative terms) and in part to the growth in remittances from Mexicans working in the United States. However, the recession has reversed this latter trend, at least for the time being. Official figures show a significant increase in poverty between 2006 and 2009, and remittance income has been falling. The governmental Oportuindades program, which replaced largely untargeted food subsidies, was designed to provide help to the poorest individuals, but with this help targeted to recipient behavior. It has been internationally praised. There has also been some experimentation, in Mexico City and some other cities, with a general old-age pension system. This has proved popular, and may be extended to other states, but it is very expensive. Meanwhile, at the other end of the scale, there has been considerable oligopolization of the economy. Low taxes and weak competition policies have further enhanced the concentration of wealth.