Working Poor in the European Union

By Ramón Peña-Casas and Mia Latta

he concept of 'working poor' has its roots in the United States where, since the early 1970s, it has been used to qualify the growing problem of working households that are in a situation of financial poverty.

In the European economy, there has been an implicit acceptance of higher levels of unemployment as the 'price to pay' for better quality jobs and higher levels of social protection. At the same time, in order to tackle this unemployment, notably by improving the competitiveness of enterprises as an incentive for higher employment supply, emphasis has been put on policies to provide a greater flexibility and deregulation of European labour markets. However, the rise of unemployment since the 1970s and the relative failure of policies attempting to eradicate it, as well as the increase of atypical and precarious working patterns, have generated a 'new poverty'. This poverty affects the economically active population beyond the traditional poor such as homeless, unemployed or retired people.

The existence of working poverty in Europe undermines the commitment to 'quality of work' that is conscientiously promoted in the European Employment Strategy. It also undermines the commitment to eradicate poverty that forms one of the main pillars of EU policy in combating social exclusion. EU policymakers are therefore increasingly highlighting working poverty as a key challenge in the areas of both employment policy and policy in relation to social inclusion.

Based primarily on a comprehensive literature review, this report covers issues such as definitions of the working poor, the incidence and characteristics of the working poor and related subgroups, as well as examining the various policy responses aimed at alleviating or combating working poverty.