Working Poverty in Europe: A Comparative Approach, by Neil Fraser, Rodolfo Gutiérrez and Ramón Peña-Casas

Palgrave Macmillan, 2011, xx + 342 pp, hbk, 0 230 29010 5, £60

This data-packed book is one of a series of publications to emerge from the EU-funded Programme on Reconciling Work and Welfare in Europe (RECWOWE). The programme’s context is the tensions between work and welfare –

the tension between employer demands for more labour market flexibility and citizens’ need for economic security; the tensions between the increased participation in paid work and the importance of family life, the greater fluidity in family relationships, and the greater flexibility in the labour markets; the friction between quantity and quality of the jobs to be created, between job creation and maintaining or improving the quality of employment and finally the conflicts raised by the need to adapt (industrial) social protection systems to new labour market structures (p.xviii)

and the programme’s task is to understand the relationship between work and welfare in the many different national contexts across Europe. This book’s task is to understand in-work poverty, and in particular the institutional and policy factors which affect it. The editors identify as particular worries the growing segmentation and casualisation of employment and the downward pressures on the wages of low-skilled workers (p.3).

The first part of the book offers comparative statistical analysis of the situation across Europe. Amongst the conclusions are that in the UK in-work poverty is caused both by partners’ low labour market participation and by low wages (p.32) and that in an era of high unemployment active labour market policies cannot on their own prevent poverty.

The second part contains chapters on various countries. The chapter on the UK concludes that working poverty is rising, that it is due mainly to low work intensity (p.91), and that means-tested in-work benefits have kept in-work poverty down to average European levels, which our earnings inequalities would otherwise have taken us above.

The third part of the book tackles cross-cutting themes and finds high mobility (in-work poverty is often transitory and recurrent) (p.199). Studied as individuals, women more often suffer in-work poverty than men (a fact not often noticed because so many women are in households with men) (p.229), that standard of living inequalities correlate closely to individual wage inequalities (p.246), and that in-work poverty is higher amongst non-EU migrant workers than amongst migrant workers from within the EU (p.271). A chapter on the effect of tax and benefits policies on in-work poverty finds, unsurprisingly, that means-tested benefits mean that higher earnings often don’t translate into higher disposable incomes (p.281). It also suggests that there is a trade-off between redistribution and employment incentives, and finds that in-work benefits can cause a particularly acute disincentive problem for a household’s second earner, resulting in adverse effects on the incentive structure for couple households (p.302). The authors find that incentives are not an important determinant of employment rates amongst the low-skilled. In countries where work pays the least, in-work poverty is lower because general anti-poverty policies reduce in-work poverty as well as out-of-work poverty, and that in-work benefits most effectively increase employment and reduce inequality where wage inequalities are high. The authors ‘question the political pertinence of an instrument whose effectiveness is greatly reduced when approaching its apparent objective’. It is stating the obvious to suggest that in an economic downturn the priority should be generous universal unemployment benefits (p.302).

In their overall conclusions, the editors find labour market activation policies to be expensive and relatively ineffective, and the UK’s in-work means-tested benefits expensive and a source of disincentives, particularly for a household’s second earner: ‘Research … does not indicate a strong effect overall on employment levels in spite of claims to ‘make work pay’. This is likely to be affected by other aspects of the institutional context, notably benefits for those not working and the conditions attached to them.’ (p.314)

This comprehensive and thoroughly-researched book quite rightly offers no simple political programme for the reduction of in-work poverty. What it does offer is a sense of the complexity of this policy field, and a source of information and properly tentative conclusions which anyone attempting to develop policy in the field really ought to read.