10.6092/issn.1561-8048/9693
The economic and financial crisis has resulted in a significant increase in the EU working poor. Nevertheless, the EU and its Member States have hardly coped directly with this phenomenon, adopting instead “traditional” social policies, aiming at increasing employment or combating poverty in general. However, in-work poverty is a complex issue, stemming from a variety of factors and requiring to be addressed specifically. The present paper offers an overview of in-work poverty in the EU from a labour and social security law point of view. Firstly, the concept of in-work poverty is delimited. Secondly, poor workers are identified according to the contractual typology. Thirdly, other in-work poverty factors are searched to understand if in-work poverty is exclusively linked to the labour market. Then, some examples of national working poor’s measures are analysed, as well as the EU policies in this regard. Finally, it is assessed if the EU actions are effective in order to solve the working poor problem and to coordinate the national anti-in-work poverty strategies chosen by the Member States.
application/pdf
1561-8048
9693
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Marco Tufo
Italian Labour Law e-Journal
Minimum income
The Working Poor in the European Union
Text.Serial.Journal
https://illej.unibo.it/
12
Miscellaneous
2019-07-23
2019-07-17
2019-07-23
2020-09-15
99-122
ILLeJ
Marco Tufo
2019/07/23
10.6092/issn.1561-8048/9693
99
Università di Siena
1561-8048
1
Minimum income
en
122
The Working Poor in the European Union
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The Working Poor in the European Union                                             Italian Labour Law e-Journal
Marco Tufo                                                                                Issue 1, Vol. 12 (2019)
Marcotufo88@gmail.com                                                                           ISSN 1561-8048
                                                                  https://doi.org/10.6092/issn.1561-8048/9693




             The Working Poor in the European Union*
                                            Marco Tufo**


 1. Introduction. 2. Who are the working poor? 3. The working poor and the labour market.
 4. The individual and collective causes of in-work poverty. 5. The anti-in-work poverty
 instruments. 6. The EU anti-in-work poverty policies. 7. The minimum wage and the
 minimum income in the EU. 8. Some national answers to in-work poverty. 9. Conclusions.



                                                  Abstract

     The economic and financial crisis has resulted in a significant increase in the EU working poor.
     Nevertheless, the EU and its Member States have hardly coped directly with this phenomenon,
     adopting instead “traditional” social policies, aiming at increasing employment or combating
     poverty in general. However, in-work poverty is a complex issue, stemming from a variety of
     factors and requiring to be addressed specifically. The present paper offers an overview of in-
     work poverty in the EU from a labour and social security law point of view. Firstly, the concept
     of in-work poverty is delimited. Secondly, poor workers are identified according to the
     contractual typology. Thirdly, other in-work poverty factors are searched to understand if in-
     work poverty is exclusively linked to the labour market. Then, some examples of national
     working poor’s measures are analysed, as well as the EU policies in this regard. Finally, it is
     assessed if the EU actions are effective in order to solve the working poor problem and to
     coordinate the national anti-in-work poverty strategies chosen by the Member States.
     Keywords: Working poor; In-work-poverty; European Union; Minimum wage; Minimum
     income.




 1. Introduction.

    During the last years there was a significant increase in the EU working poor1. This is the
 result of the economic and financial crisis and its consequences on the EU labour market.

 *
    This article was presented, in a draft version, at the XII World Congress of the International Society for
 Labour and Social Security Law (ISLSSL) “Transformations of Work: challenges for the National Systems of
 Labour Law and Social Security” held in Turin, Italy, on 7 September 2018.
 **
    PhD in Labour Relations, Fondazione Marco Biagi, Università di Modena e Reggio Emilia. Research Fellow,
 Università di Siena. This article has been submitted to a double-blind peer review process.
 1 According to the last Eurofound’s report (Eurofound, In-work poverty in the EU, Eurofound, 2017), the in-

 work poverty rate increased from 8 percent of 2007 to 10 percent.
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                                                                                                   Section: Miscellaneous


Nevertheless, the EU Member States as well as the EU itself have hardly coped directly with
this issue, adopting instead “traditional” social policies, aiming at increasing employment or
combating poverty in general. But in-work poverty is a complex issue, stemming from a
variety of factors and requiring to be addressed specifically.
   The present paper offers an overview of in-work poverty in the EU from a labour and
social security law point of view.
   Firstly, the concept of in-work poverty is delimited. Secondly, poor workers are identified
according to the contractual typology. Thirdly, other in-work poverty factors are searched to
understand if in-work poverty is exclusively linked to the labour market. Then, some
examples of national working poor’s measures are analysed, as well as the EU policies in this
regard. Finally, it is assessed if the EU actions are effective in order to solve the working
poor problem and to coordinate the national anti-in-work poverty strategies chosen by the
Member States.


2. Who are the working poor?

   As the working poor phenomenon has been studied mostly by economists and
sociologists, no legal definitions are available. However, also looking at socio-economic
studies the situation is equally unclear. Generally, the expression “working poor” itself has
been perceived as an oxymoron for a long time, “because nobody who works hard should
be poor”2. After all, in most West Developed Countries, poverty has been often considered
“the ‘stigma’ of inactive person”3 and the result of laziness or disability, so that
unemployment has been assumed to be the principal factor to explain poverty, while work
the main instrument to escape it4.
   But defining the working poor is quite controversial, especially due to the different
meaning that the two concepts which compose the expression, “poverty” and “work”, can
take5.
   “Poverty” can be assessed in absolute or relative terms. “Absolute poverty” is defined as
“a condition characterised by severe deprivation of basic human needs, including food, safe
drinking water, sanitation facilities, health, shelter, education and information”6, while
“relative poverty”, according to the definition firstly agreed by the European Council in 1975,

2 Andreß H.-J., Lohmann H., Introduction, in Andreß H.-J., Lohmann H. (eds.), The Working Poor in Europe.
Employment, Poverty and Globalization, Edward Elgar, 2008, 1; Balandi G.G., “La collocazione costituzionale degli
strumenti di sostegno al reddito”, in Lavoro e diritto, 4, 2018, 575.
3 Eurofound, Peña-Casas R., Latta M., Working poor in the European Union, Eurofound, 2004, 3.
4 Strengmann-Kuhn W., Working Poor in Europe: A Partial Basic Income for Workers?, Basic Income European

Network, 9th International Congress, Geneva, September 12th-14th, 2002, 1; Eurofound, Peña-Casas R., Latta
M., (3). In Europe this idea of poverty dates back the Age of Absolutism, when poverty was thought to be a
moral defect. For this reason, forced labour was largely used to re-educate poor people (see Ritter G. A., Storia
dello Stato sociale, Laterza, 2011, 38).
5 Coval C., Cutuli G., “Dinamiche e persistenze della povertà in Italia: un’analisi sui working poor tra il 2002 e il 2012”,

in Sociologia del lavoro, 144, 2016, 137; Marx I., Nolan B., In-Work Poverty. AIAS, Gini Discussion Paper 51, 2012,
11; Crettaz E., Bonoli G., “Why Are Some Workers Poor? The Mechanisms that Produce Working Poverty in a Comparative
Perspective”, in REC-WP 12/2010, 7; Eurofound, Peña-Casas R., Latta M., (3).
6 United Nations, Report of the World Summit for Social Development, Copenhagen, 6-12 March 1995, 38.



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occurs when income and resources are so inadequate as to preclude a person from having a
standard of living considered acceptable in the society in which she/he lives7. Moreover, the
concept of poverty, in absolute or relative terms, needs fixing a “poverty threshold” below
which an individual or a group of people is deemed to be poor and this threshold can vary
according to different criteria8.
   It is then necessary to understand “who is working”. As an employment performance can
fluctuate depending on time, the problem here is to identify how much time, and during
which reference period (e.g. in a week, in a month, in a year), an individual should have
worked to be considered “at work”9. But it is even pivotal to understand if employees or self-
employed people and standard or non-standard workers should be considered. In other
words, we need to decide if the concept of “work” depends on the contractual typology10.
   Defining the working poor phenomenon is complex also because of the different
dimension that “work” and “poverty” have. On the one hand, “work” is conceived
individually, concerning the individuals’ working status11, regardless the typology of the
contractual relationship12. On the other hand, “poverty” is a collective concept, related to the
household income13. In the light of this, a first definition of working poor focuses on “work”,
identifying the working poor with the low-wage workers, who are employed people with low
labour incomes and specifically below the low-wage threshold, namely less than two-thirds
of the median earnings14. This definition, however, underestimate that having a low labour
income does not necessary lead to poverty, as an individual can have other income sources
such as other household members’ earnings or social transfers15. For this reason, following
the collective dimension of “poverty”, a different definition claims the “working poor” are
those workers whose household income is below the “poverty line”16. Moreover, to
distinguish the individual from the collective dimension, this second definition is sometimes
traced back to the expression “in-work poverty”, whereas “working poor” is used for low-
wage workers17.

7 Eurostat, Combating poverty and social exclusion. A statistical portrait of the European Union 2010, Eurostat-European
Commission, 2010, 6.
8 See amplius Strengmann-Kuhn W., (4), 3. The “absolute poverty line” is defined on the basis of a basket of

goods and services, kept constant in real terms, whereas the “relative poverty line” is a share of the median
equivalised disposable income (Crettaz E., Bonoli G., (5),7).
9 Blagoycheva H., “Employment and the “Working Poor” Phenomenon in the EU”, in International Journal of Economics

and Business Administration, IV, 3, 2016, 5; Marx I., Nolan B., (5), 11; Crettaz E., Bonoli G., (5), 7.
10 For an overview of “work” and “poverty” definitions in different countries, see the tables carried out by

Crettaz E., Bonoli G., (5), 8 and Eurofound, Peña-Casas R., Latta M., (3), 7.
11 Blagoycheva H., (9), 4-5; Herman E., “Working Poverty in the European Union and its Main Determinants: an

Empirical Analysis”, in Inzinerine Ekonomika-Engineering Economics, 25(4), 2014, 427; Eurofound, Working poor in
Europe, Eurofound, 2010, 1.
12 Eurostat, “EU statistics on income and living conditions (EU-SILC) methodology - in-work poverty”, 2018,

https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=EU_statistics_on_income_and_living_conditions_(EU-SILC)_methodology_-_in-
work_poverty, accessed 13 April 2019.
13 Blagoycheva H., (9), 4-5; Herman E., (11), 427; Eurofound, (11); Eurofound, Peña-Casas R., Latta M., (3), 4.
14 Coval C., Cutuli G., (5), 137.

15 Crettaz E., Bonoli G., (5), 6; Strengmann-Kuhn W., (4), 4.

16 Coval C., Cutuli G., (5), 138.
17 Lucifora C. et al., Working poor: un’analisi sui lavoratori a bassa remunerazione dopo la crisi, CNEL, 1 June 2014.



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    Given all of this, the definition of “working poor” implies a certain amount of discretion.
However, it is worth noting that the concept of low-wage workers is somehow interrelated
with in-work poverty, as having a labour income below the low-wage threshold undoubtedly
increases the possibility for the individual’s household income to be below the “poverty line”,
especially if she/he is the only person who produces a labour income in the household (see
infra). Furthermore, and in more general terms, in social-policy analysis it is necessary to use
indicators and, of course, using official definitions facilitates comparisons18.
    Therefore, for the purposes of this research it is preferable to use the definition of
“working poor” as “in-work poverty”. Indeed, this approach has been officially adopted by
the European Commission starting from the definition of “working” and “poverty”. In
particular, for the EU a person is “working” if she/he has been worked for over half of the
year19, while is “at risk of poverty” when her/his equivalised net disposable household
income20 is below the “poverty line”, fixed at the 60 per cent of the national household
median disposable income21. Putting together these two definitions, according to EU, the
working poor are those who declared to be at work and at risk of poverty, namely with an
equivalised disposable income below the 60% of the national median equivalised disposable
income (risk of poverty threshold)22.


3. The working poor and the labour market.

As already mentioned, the working poor do not depend on the contractual typology.
However, in a juridical perspective, mapping the categories of workers involved can be
useful.
    The performance’s “time”, intended as working time and duration of the contractual
relationship, may play a role in classifying an employee as poor.
    About working time, part-timers are more at risk of poverty than full-timers23, both
because their wages are lower than those of the latter – being proportionate to the reduced

18 Crettaz E., Bonoli G., (5), 9.
19 Eurofound, (1), 5; Eurostat, In-work poverty in the EU, Eurostat-European Commission, 2010, 7; Crettaz E.,
Bonoli G., (5), 8; Eurofound, (11), 1.
20 The equivalised net disposable household income corresponds to the sum of the income of all household

members net of taxes then equivalised using the modified OECD equivalence scale (see amplius Decancq K.,
Goedemé T., Van den Bosch K., Vanhille J., “The Evolution of Poverty in the European Union: Concepts, Measurement
and Data”, in ImPRovE Methodological paper No. 13/01, 2013, 4), which assigns to the first adult member of a
household the coefficient of 1, while 0,5 and 0,3 for every additional adults and persons younger than 14,
respectively (De Vos K., Zaidi M.A., “Equivalence scale sensitivity of poverty statistics for the Member States of the European
Community”, in Review of Income and Wealth, 43, 3, 1997, 321).
21 Eurostat, “In-work poverty in the EU”, 2018, https://ec.europa.eu/eurostat/web/products-eurostat-news/-

/DDN-20180316-1, accessed 13 April 2019; Eurofound, (1), 5; Decancq K., Goedemé T., Van den Bosch K.,
Vanhille J., (21), 4; European Commission, Communication from the Commission Europe 2020. A strategy for smart,
sustainable and inclusive growth, 2010, 9, fn. 3; Eurofound (11), 1.
22 Eurostat, (21); European Commission, Social Europe. Many ways, one objective. Annual Report of the Social Protection

Committee on the social situation in the European Union (2013), Publications Office of the European Union, 2014, 72.
23 Eurofound, (1), 8; Blagoycheva H., (9), 12; Eurofound, (11), 9; Lohmann H., The working poor in European

welfare states: empirical evidence from a multilevel perspective, in Andreß H.-J., Lohmann H. (eds.), The Working Poor in
Europe. Employment, Poverty and Globalization, Edward Elgar, 2008, 61.

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working time – and due to two other factors. The first is the difficulty for part-timers to
access to social benefits where this is conditioned to working time or wage level24. The second
concerns the diffusion of involuntary part-time workers25, namely “Those who normally
work part time because of poor economic conditions or an inability to find full-time work”26.
   Regarding the contractual duration, temporary jobs are more likely to be poor than
permanent, due to the gaps between jobs27 and precariousness28. This category includes fixed-
term contracts and temporary agency work29, but also more insecure non-standard jobs as
seasonal and casual work30. The occasional character of casual performances and the low
wages granted on the basis of daily or periodic agreement put those workers at particular risk
of poverty31. A case in point is zero-hours contract: although a minimum of working hours
is not guaranteed, the worker is obliged, when called by the employer, to fulfil the
performance32. Another example is voucher-based work, where the employer pays occasional
performances through vouchers purchased from a government authority33, or the so-called
mini-jobs in Germany34, that are part-time jobs to which a specific tax and social security
contributions regime is applied if the labour income does not overcome the income ceiling
of EUR 450 per month or EUR 5.400 per year, or which benefit of the exemption of social




24 Eurofound, (1), 8; Leschke J., “Are unemployment insurance systems in Europe adapting to news risks arising from non-
standard employment?”, in DULBEA Working Papers No. 7, University of Brussels, 2007, 15. For example, the
UK’s Jobseeker’s Allowance is payable when at least 26 weeks of contributions have been paid, or treated as
paid, in one of the two years before the claim or at least 100 weeks in the two years before (sections 1, 2, 3
Jobseekers act 1995; Sartori A., Servizi per l’impiego e politiche dell’occupazione in Europa. Idee e modelli per l’Italia,
Maggioli, 2013, 77).
25     Eurofound, (1), 8; Herman E. (11), 431. According to Eurostat statistics
(http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfsa_eppgai&lang=en), the percentage of EU28 involuntary
part-time workers were the 27,7 percent in 2016.
26 Glauber R., “Wanting More but Working Less: Involuntary Part-Time Employment and Economic Vulnerability”, in Issue

brief No. 64, Summer 2013, Carsey Institute, University of New Hampshire, 2013, 2.
27 Eurofound, (1), 9; Blagoycheva H., (9), 12.

28 Herman E., (11), 431; Eurofound (11), 9.
29 Miscione M., “I lavori poveri dopo l’economia ‘a domanda’ per mezzo della rete”, in Il Corriere giuridico, 6, 2018, 822 ff.

30 ILO, Non-standard forms of employment. Report for discussion at the Meeting of Experts on Non-Standard Forms of

Employment, Geneva, 16–19 February 2015. Indeed, the working poor could be present in any kind of temporary
jobs (Balandi G. G., (2), 579).
31 This is also due to the absence of Trade Unions in these jobs, so that the employer can set wages, working

time and flexibility at her/his discretion (Di Bartolomeo A., Di Bartolomeo G., Pedaci M., “Chi sono i lavoratori
poveri?”, in Economia Marche Journal of Applied Economics, XXX, 2, 2011, 50).
32 Eurofound, Overview of new forms of employment 2018 update, Eurofound, 2018, 9; id., New forms of employment,

Eurofound, 2015, 55 ff. On zero-hours contracts see Adams A., Freedland M., Prassl J., “Zero-hours contracts» in
the United Kingdom: regulating casual work, or legitimating precarity?”, in Giornale di Diritto del Lavoro e di Relazioni
Industriali, 4, 2015, 529-553.
33 Eurofound, New forms of employment, Eurofound, 2015, 82. Voucher-based work is for example present in Italy,

especially in the touristic and agricultural sectors. Introduced by the so-called Biagi Reform (Decreto Legislativo
10 settembre 2003, n. 276) the rules of this contract are today contained in Article 54-bis Legge 21 giugno 2017,
n. 96, recently amended by Article 2-bis Legge 9 agosto 2018, n. 96.
34 Duell N., Case study – gaps in access to social protection for mini-jobs in Germany, European Commission, 2018, 27;

Eurofound, Overview of new forms of employment 2018 update, Eurofound, 2018, 9.

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security contribution if the worker does not perform for more than 70 days a year (so-called
short term marginal employment)35.
    Poverty is diffused also in self-employment. Here the working poor are overall self-
employed workers not employing staff36 but also dependent self-employed, who, unless their
formal status, perform under the directive and economic power of one or few clients37.
Regardless their substantial juridical status, these workers are generally low paid because of
the strong economic dependence on clients.
    Even gig-economy workers are working poor, due to the casual nature of their jobs,
performed on-demand and in exchange of low wages, and to the possibility they perform as
dependent self-employed38.
    In the light of this, flexibility seems to cause in-work poverty. Indeed, flexible contracts
and dependent self-employment, giving life to vulnerable jobs characterised by
precariousness, low wages, lack of labour and social protections, increase the risk of poverty,
which is particularly high in the agricultural and domestic sectors where informal and unpaid
family work are common39.
     But in-work poverty is present also among full-time and permanent workers40. For this
reason, in-work poverty cannot be explained only considering the nature of the labour
relationship, making necessary to seek for additional causes.


4. The individual and collective causes of in-work poverty.

   As seen above, poor labour protections and low wages can lead to in-work poverty but
they cannot explain exhaustively this phenomenon. Indeed, economists and sociologists
consider individual and collective factors which combined would be able to affect the
worker’s income. To identify those individual factors, understanding who the most at-risk-
of-poverty people on the labour market are is necessary.
   According to the most recent researches, the risk of poverty is higher for women,
migrants and youths, as those are often employed in precarious and low-paid jobs41.
   In particular, the situation of women deserves specific attention. The pay gap in respect
of men and the high presence of involuntary part-time and temporary contracts epitomise
the poverty risk for women42. One of the causes of this is the so-called “horizontal and
vertical gender segregation”, namely the concentration of women in specific sectors and in
discredited jobs characterised by low wages43. More generally, poverty for women results

35 On mini-jobs see the recent report carried out by Duell N., Case study – gaps in access to social protection for mini-

jobs in Germany, European Commission, 2018.
36 Eurofound, (1), 8.

37 ILO, (30), 2.
38 De Stefano V., “The rise of the just-in-time workforce: on-demand work, crowdwork, and labor protection in the gig-economy”,

in Comp. Lab. L. & Pol’y J., 37, 3, 2016, 471-504.
39 Herman E., (11), 428; Eurofound (11), 11; Lohmann H., (23), 61.
40 The 5 percent and the 6 percent of workers respectively (Eurofound, (1), 9).

41 Eurofound (1), 8; Blagoycheva H., (9), 14.

42 Eurofound, (34), 9; Herman E., (11), 430.
43 Di Bartolomeo A., Di Bartolomeo G., Pedaci M., (31), 51, fn. 20.



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from their weakness on the labour market as their careers depending often on having children
and on the interruptions of their jobs connected to childcare44.
    Also, migrants and youths are at particular risk of in-work poverty, because employed
with temporary, part-time and training contracts and involved in informal work.
     Another category framed in the working poor are disables, as in some countries45 they
are paid lower than those without disabilities having the same level of qualification and
because employed with short term and low-skilled jobs46.
    An additional in-work poverty individual factor is the low educational level47. Indeed, low-
skilled workers are more vulnerable than high skilled48. This could affect the position of the
categories mentioned, as women, young people and migrants49 appear to be less educated
and skilled than other workers.
    These factors seem to make the working poor coincide with outsiders. However, a similar
perspective cannot explain why some insiders, as full-time and permanent workers, are poor.
Undoubtedly, the existence of poor workers among the insiders can be connected to the
competition of non-standard jobs, able to reduce the contractual power of standard
workers50 but this explanation seems not fully exhaustive.
    Therefore, we have to consider collective factors, external to the labour market.
    Among these, the household composition is pivotal.
    Generally, the more the household is large, the more the risk of in-work poverty
increases51. The number of household members must be also combined with its work
intensity, namely the members who work. Thus, the higher risk of in-work poverty could be
found in single earner households, where only a person works while the others depend
economically on her/his work income52. For this reason, even standard workers may be poor,
if single earners. Conversely, although weaker categories of workers, such as women, are
often low-paid, they may be not poor when they are not single earners, as they could
contribute to the household income, helping in overcoming the poverty threshold53.
    Finally, it is worth noting that also the geographical context where the worker lives or
works is important. Here, the causes linked to the labour market structure and those external
to it are mixed together because poverty is affected by the social and economic characteristics
and policies as well as by the effectiveness of the welfare services present in the specific
area54.



44 Di Bartolomeo A., Di Bartolomeo G., Pedaci M., (31), 51.
45 See MacInnes T., Tinson A., Gaffney D., Horgan G. and Baumberg B., Disability, long term conditions and poverty,
New Policy Institute, 2014, for the UK.
46 MacInnes T., Tinson A., Gaffney D., Horgan G. and Baumberg B., ibid.

47 Eurofound, (1), 10; Herman E., (11), 430; European Commission, (22), 77.

48 Coval C., Cutuli G., (5), 143-144; Di Bartolomeo A., Di Bartolomeo G., Pedaci M., (31), 51.
49 Blagoycheva H., (9), 14; Eurofound (11), 10.

50 Di Bartolomeo A., Di Bartolomeo G., Pedaci M., (31), 43.

51 Crettaz E., Bonoli G., (5), 13; Eurofound (11), 8-9; Lohmann H., (23), 61.
52 Eurofound (1), 7, 10; Coval C., Cutuli G., (5), 149; European Commission, (22); Lohmann H., (23), 61.

53 Eurofound (1), 8; European Commission, (22), 76. In 2012, Women (8,4 percent) were less exposed to in-

work poverty than men (9,7 percent) in the EU27 (Herman E., (11), 430).
54 Di Bartolomeo A., Di Bartolomeo G., Pedaci M., (31), 51.



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5. The anti-in-work poverty instruments.

   Some studies related to in-work poverty55 have highlighted that the factors presented
could be summarised in two phenomena, namely “de-commodification” and “de-
familialisation”, which are considered as “institutional factors” of in-work poverty, able to
affect the individual and collective causes above mentioned.
   On the one hand, “de-commodification” is the degree to which workers depend on the
labour market to provide for their welfare56 and, obviously, the more a worker depend on
the labour market, because she/he is employed with precarious jobs, the higher the risk of
poverty is. Therefore, the possibility of finding working poor is higher in labour markets with
a considerable level of flexibility/precariousness57.
   Similarly, the number of working poor can depend on “de-familialisation”, that is how
workers rely on households to provide to their welfare58. The higher a worker relies on
her/his household income, the higher is the risk of being poor.
   In the light of this, the labour market and welfare structure affect the quantity of working
poor, having an impact on “de-commodification” and “de-familialisation”59.
   Taken into account all of this, it has to be verified which policies can be useful in order
to increase the degree of “de-commodification” and “de-familialisation” to combat
consequently the proliferation of in-work poverty.
   According to some socio-economic researches, “de-commodification” is firstly affected
by wages’ levels and inequalities. This happens especially in systems where the decentralised
collective bargaining is widespread60 and unionisation is low. However, the latter factor
mentioned is neutralised where the collective bargaining system is centralised and if collective
agreements have erga omnes effects61, due to the relevance of wage coordination - namely the
degree of harmony achieved in the wage-setting process by the players involved, such as
Trade Unions, employers and Governments62 – for the distribution of wages63. As a
consequence, the following are considered useful anti-in-work poverty instruments: a
centralised collective bargaining, because associated with less wage dispersion and less




55 Eurofound, (1), 10-11; Lohmann H., Marx I., The different faces of in-work poverty across welfare state regimes, in
Andreß H.-J., Lohmann H. (eds.), The Working Poor in Europe. Employment, Poverty and Globalization, Edward Elgar,
2008, 17-46; Lohmann H., (23).
56 Esping-Andersen G., Social Foundations of Postindustrial Economies, Oxford University Press, 1999; id., The Three

Worlds of Welfare Capitalism, Polity Press, 1990.
57 Eurofound, (1), 11; Lohmann H., Marx I., (55), 19-20; Lohmann H., (23).

58 Esping-Andersen G., Social Foundations of Postindustrial Economies, Oxford University Press, 1999.
59 Eurofound, (1), 10-11; Lohmann H., Marx I., (55), 19 ff.; Lohmann H., (23).

60 Lohmann H., Marx I., (55), 18-19; Lohmann H., (23), 50.

61 Lucifora C., Wage inequalities and low pay: the role of labour market institutions, in Gregory M., Slaverda W., Bazen

S. (eds.), Labour Market Inequalities: Problems and Policies of Low-Wage Employment in International Perspective, OUP,
2000, 9-34.
62 Kenworthy L., “Wage Setting Measures. A Survey and Assessment”, in World Politics, 54, 1, 2001, 75.
63 Lohmann H., (23), 50.



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income inequality64; the introduction of a legal minimum wage65, as able to face the problems
related to Trade Union’s representation and collective agreement effectiveness66; the
adoption of tripartite negotiations involving the Government and the social partners, with
the aim of improving the coordination of employment and wages’ policies67.
    About “de-familialisation” active policies directed to the social inclusion of vulnerable
people, as women, youths and disables, can be useful in order to let such people, when
depending on their families, to produce a labour income which contributes to the household
income, as this latter can overcome the poverty line. In this perspective, on the one hand,
the increasing use of work-life balance instruments is suggested68, with special reference to
women, while, on the other hand, the adoption of care services is recommended with the
aim of helping the individual in providing assistance to dependant family members69. Also
flexible hour arrangements are considered important, together with training and job search
measures, which are pivotal policies especially for young and low-skilled workers70.
    Some measures are then able to increase both “de-commodification” and “de-
familialisation”.
    Firstly, policies directed to reduce the labour market segmentation, introducing stronger
protections and a higher stability of labour relationships, would make workers less dependent
on the labour market. However, these instruments should be rationed to avoid that a rigid
regulation of protections for specific categories, such as women, youths and disables,
negatively affects the possibility to find a job71, discouraging employers to hire those people
and consequently increasing “familialisation”.
    The most popular policies aimed at guaranteeing independence from the labour market
and from the household – thus to reduce in-work poverty – are deemed without doubt social
transfers both in the form of in-work and unemployed benefits because the latter help the
household income to overcome the poverty threshold72.
    Among social transfer minimum income deserves to be mentioned, being its rationale to
reduce poverty and guarantee the so-called ius existetiae, namely the right of a person to have




64 Moller S. et al., “Determinants of Relative Poverty in Advanced Capitalist Democracies”, in American Sociological Review,

68, 1, 2003, 27.
65   Lucifora C. et al., (17); Boeri T., Lucifora C., “Salario minimo e legge delega”, 2014,
https://www.lavoce.info/archives/30187/salario-minimo-e-legge-delega/, accessed 21 April 2019; Lohmann
H., (23), 51.
66 Treu T., “Protezione sociale ed equilibrio intergenerazionale”, in WP CSDLE “Massimo D’Antona”.IT – 374/2018,

12.
67 Lohmann H., (23), 50; Moller S. et al., (64).
68 Recently also the European Parliament resolution of 24 October 2017 on minimum income policies as a tool

for fighting poverty (2016/2270(INI)), whereas K, has underlined the fundamental role of work-life balance,
especially with reference to single parents.
69 Eurofound, (1); Lucifora C. et al., (17), 99-100.

70 Eurofound, (1), 41-42.

71 Lohmann H., Marx I., (55), 20.
72 Lohmann H., Marx I., (55), 19; Lohmann H., (23), 63.



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a decent existence73. Some researches refer more precisely to basic income74, that is a
universal social transfer, addressed to all the citizens, although subjected to a means test, in
order to be granted to people with low incomes, but also unconditional75. Indeed, the recent
interest for basic income is linked with the increase of atypical jobs, digital technologies and
work-life balance76 that are factors able to affect the numbers of working poor.
   Furthermore, also housing support measures are pivotal to cope with in-work poverty77,
as a significant proportion of labour income is often employed to afford these costs, if we
only take into account that in 2014 the 29 percent of EU workers have spent at least a quarter
of their incomes in housing costs78.
   But the adoption of social transfers and unconditional measures could have collateral
effects because they could discourage the job search and encourage the so-called free riding79.
For this reason, it is generally suggested to use conditional social transfers, which make
working more profitable than being unemployed, guaranteeing that the labour income is
higher than social transfers, according to the “Making Work Pay” model80.
   Finally, fiscal measures, such as taxes’ and social contributions’ reductions are
recommended with the aim of cutting on labour costs and consequently increasing the net
labour income but also to encourage employers to hire new workers81. This objective could
be achieved through tax credits and special social transfers named “negative taxes”, which
decrease when incomes increase82.


6. The EU anti-in-work poverty policies.

   The European Union did not always cope with in-work poverty directly.
   Indeed, the working poor phenomenon has been studied mostly in the United States
where for decades, at least since the Sixties, scholars faced the problem of working household
in financial poverty83. Actually, the European Commission begun paying attention to this

73 Ravelli F., Il reddito minimo. Tra universalismo e selettività delle tutele, Giappichelli, 2018, 74. As noted by Treu T.,

“Trasformazioni del lavoro: sfide per i sistemi nazionali di diritto del lavoro e di sicurezza sociale”, in WP CSDLE “Massimo
D’Antona”.IT – 371/2018, 18, although the minimum income has been initially conceived to combat the poverty
in general, later it has gained the role of anti-in-work poverty tool involving wide categories of working poor.
74 Eurofound, (1), 40.

75 Ravelli F., (73), 37.
76 Bronzini G., “Il reddito di base e le metamorfosi del lavoro. Il dibattito internazionale ed europeo”, in Rivista del Diritto

della Sicurezza Sociale, 4, 2018, 705 ff.; OECD, Basic income as a policy option: Can it add up?, 2017,
https://www.oecd.org/els/emp/Basic-Income-Policy-Option-2017.pdf, accessed 30 April 2019, 1.
77 In particular, for young people (Treu T., (66), 13).
78 Eurofound, (1), 43.

79 Ravelli F., (73), 66.

80 Eurofound, (1), 40; Lucifora C. et al., (17), 97.
81 Eurofound, (1), 40. More generally, Treu T., (66), 13 speaks of measures directed to promote the youths’

autonomy and, consequently, to reduce their familialisation.
82 Lucifora C. et al., (17), 97.
83 Andreß H.-J., Lohmann H., (2), 1. According to Eurofound, Peña-Casas R., Latta M., (3), 6, the US have

been the first country to give an official definition of the working poor, that is the following: “[…] persons
who have devoted at least half of the year to labour market efforts, being either employed or in search of a job
during that period, but who still lives in poor families”.

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issue only in the context of the Lisbon Strategy and, in particular, mentioning it specifically
in the Employment Guideline on “Making Work Pay” and in the Guidelines for the
employment policies in the Member States on “Improving quality and productivity at
work”84, although conceiving the “working poor” as “low-paid workers”85.
    In-work poverty was not mentioned explicitly even in Europe 2020. Here, the targets of
increasing the quality and quantity of jobs, with the inclusion of vulnerable categories in the
labour market, as well as of reducing poverty are considered interrelated86. In particular,
Europe 2020 has provided a specific policy to face poverty in general and in-work poverty
specifically, named the “European platform against poverty”87. Underlining the increase in
working poor, in-work poverty is considered related both with the labour market and the
household composition and work intensity. The solution given is again to interconnect
employment, social and poverty policies. Moreover, the Agenda for New Skills and Jobs is
recalled, because intended to create less segmented labour markets and improving the
quantity and quality of jobs. In this context, the inclusion of people furthest from the labour
market is pivotal, helping also through “well-designed income support schemes [...] adequate
social services”, integration policies for migrants and anti-discrimination law88.
    Only with the European Pillar of Social Rights the EU has referred explicitly to in-work
poverty. Chapter II, paragraph 06, b), proclaims that “In-work poverty shall be prevented”89.
Also other principles of the Social Pillar deal with in-work poverty, although not exclusively.
Chapter II, paragraph 06 itself proclaims “the right to fair wages provid[ing] for a decent
standard of living”, together with the adoption of an “adequate minimum wages [...]”. We
can also mention: “the right to quality and inclusive education, training and life-long
learning” (Chapter I, paragraph 01); the right to gender equality and opportunities (Chapter
I, paragraphs 02 and 03); the fight against precariousness (Chapter II, paragraph 05, d); the
social protection of all workers regardless the typology of contract (Chapter III, paragraph
12); the proposal of a minimum income for workers (Chapter III, paragraph 14); the social
inclusion of disable people (Chapter III, paragraph 17). These remedies, however, are likely
to remain just “a declaration of principles or good intentions”90, not only due to the soft-law
nature of the Pillar, but also because of the limited competences of the EU in some fields
touched by the Pillar itself, as especially wages91.

84 European Council, Council Decision of 12 July 2005 on Guidelines for the employment policies of the Member States
(2005/600/EC), European Council, 2005.
85 Group of Experts on Making Work Pay, Making Work Pay. Facts, figures and policy options. Report to the Employment

Committee, 1 October 2003; European Commission, Joint report on social inclusion 2004, Office for Official
Publications of the European Communities, 2004.
86 European Commission, (21).
87 European Commission, Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions. The European Platform against Poverty and Social Exclusion:
A European framework for social and territorial cohesion, European Commission, 2010.
88 European Commission, ibid.

89 European Parliament, European Council, European Commission, European Pillar of Social Rights, Publications

Office, 2017.
90 Giubboni S., “Appunti e disappunti sul pilastro europeo dei diritti sociali”, in Quaderni Costituzionali, 4, 2017, 960.

91 As it is known, the EU cannot legislate on wages, because the subject of “pay” is explicitly excluded from its

competences by Article 153, paragraph 5, TFEU. Neither the European Social Partners can negotiate on wages,
as Article 155, paragraph 2, TFEU restricts Social Dialogue to the subjects of Article 153 TFEU. For these

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7. The minimum wage and the minimum income in the EU.

    Although, as we have seen, the EU has directly paid attention to the working poor only
in the last years, two of the most important anti-in-work poverty measures mentioned in the
Social Pillar, namely the minimum wage and the minimum income, have found space before
in the European debate.
    On the one hand, it is precisely for the increase of the workers at risk of poverty in the
aftermath of the financial and economic crisis of 2008 that the discussion around the
proposal for a common European minimum wage policy has been revitalised92. In particular,
the issue was discussed by the European Parliament93, in documents of the European
Commission94, as well as in the public declarations of its President, Jean-Claude Juncker95
and among the Social Partners96. Indeed, although the EU has not legislative competence on
“pay”, it would be always possible to recommend the increasing of minimum wages across
Europe in accordance to a standard to be agreed at EU level, following the same technique
used by the EU to cut or freeze de facto wages, in the scope of the European austerity
policies97. This could happen, for example, in the framework of the European Semester or




reasons, the adoption of hard law instruments, such as a Directive, requires the amendment of Article 153
TFEU or to negotiate “a brand-new treaty”, but at the moment the political consensus around this solution
seems to lack (Menegatti E., Il salario minimo legale. Aspettative e prospettive, Giappichelli, 2017, 24; id., “Challenging
the EU Downward Pressure on National Wage Policy”, in International Journal of Comparative Labour Law and Industrial
Relations, 33, 2, 2017, 195 ff.; Delfino M., Salario legale contrattazione collettiva e concorrenza, ES, 2017, 123 ff.; Ales
E., “Transnational Wages Setting as a Key Feature of a Socially Oriented European Integration: Role of and (Questionable)
Limits on Collective Action”, in WP C.S.D.L.E. “Massimo D’Antona” .INT – 63/2008, 5; Schulten T., Müller T.,
“Back on the agenda: a European minimum wage standard”, in ETUI Policy Brief, 8, 2014, 5.
92 Menegatti E., “Challenging the EU Downward Pressure on National Wage Policy”, in International Journal of Comparative

Labour Law and Industrial Relations, 33, 2, 2017, 195.
93 European Parliament, Resolution of 15 November 2011 on the European Platform against poverty and social exclusion,

2011, points 46 and 49.
94 European Commission, Employment and Social Developments in Europe 2011, Publications Office of the European

Union, 2012; id., Employment and Social Developments in Europe 2012, Publications Office of the European Union,
2012.
95 Campanella P., “Salari e contrattazione collettiva nel governo della crisi europea”, in Cultura giuridica e diritto vivente,

Special issue, 2015, 189; Ballistreri M., “La nuova contrattazione collettiva e il salario minimo legale in Italia”, in Revista de
Estudios Económicos y Empresariales, 25, 2013, 195; Kostaki I., “Juncker urged companies to adopt a minimum wage to help
counter “social dumping”, 24 January 2017, https://www.neweurope.eu/article/juncker-minimum-salary-country-
european-union/, accessed 30 April 2019.
96 ETUC, Solidarity in the crisis and beyond: Towards a coordinated European trade union approach to tackling social dumping,

2012, 5; Leonardi S., “Salario minimo e ruolo del sindacato: il quadro europea fra legge e contrattazione”, in Lavoro e Diritto,
1, 2014, 185.
97 See amplius Campanella P., (95); Giubboni S., “I diritti sociali alla prova della crisi: l’Italia nel quadro europeo”, in

Giornale di Diritto del Lavoro e di Relazioni Industriali, 2, 2014; Ricci G., “La retribuzione in tempi di crisi: diritto sociale
fondamentale o variabile indipendente?”, in WP CSDLE “Massimo D’Antona”.INT – 113/2014; Marocco M., “Il salario
minimo legale nel prisma europeo: prospettive per l’Italia”, in Giornale di Diritto del Lavoro e di Relazioni Industriali, 2, 2017;
Menegatti, Il salario minimo legale. Aspettative e prospettive, Giappichelli, 2017, 31 ff.; id., “Challenging the EU Downward
Pressure on National Wage Policy”, in International Journal of Comparative Labour Law and Industrial Relations, 33, 2,
2017, 200.

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through soft law instruments98, in the context of the “Open Method of Coordination”99 or
by means of the “voluntary” and “autonomous” agreements100 concluded by the Social
Partners, according to the “first route” designed by Article 155, paragraph 2, TFEU. In the
light of this, it has been proposed to coordinate national minimum wages at EU level, setting
a level of wages equal to the 60 percent of the median in each Member State101, namely the
threshold below which an individual, as we have seen above, is considered a low-wage worker
(see §2). This measure would be able to combat the spread of poverty-level wages as well as
the cross-borders wage dumping and to reduce the pay gender gap, but also, from a
macroeconomic point of view, to stabilise private demand and restrict deflationary
tendencies102. In other words, the European economic integration and the European Social
Model would benefit from the introduction of an EU minimum wage103. The proposal,
however, has been rejected by national Trade Unions of Member States where the minimum
wage is collectively agreed104, because giving the State the power to set minimum wages could
result in depriving Trade Unions of a fundamental function, undermining the national system
of industrial relations and, more generally, the existing national institutions and traditions105.
Indeed, if collective bargaining lost its traditional function in setting minimum wages, Trade
Unions would have less authority with negative consequences on their membership’s rates.
Moreover, some of these countries have low average wages so that a similar solution would
have additional depressing effects106 and would damage the competitive position of the
Member States, especially for those goods and services requiring low-skilled labour107.
Furthermore, also employers do not agree with the coordination of wages at EU level,
claiming that a similar intervention would be against the subsidiary principle108 while it is
difficult that the EU Member States can reach an agreement on what they consider an
appropriate level of minimum wage109.
    On the other hand, the debate around the necessity of introducing a minimum income in
the Member States dates back to the early Nineties. Specifically, before the conclusion of the
Maastricht Treaty the President of the European Commission at the time, Jacques Delors,
proposed unsuccessfully the approval of a European Directive providing for the adoption
of a minimum income in each Member State with the aim of combating social dumping in

98 Schulten T., Müller T., (91), 5.
99 Eldring L., Alsos K., European Minimum Wage: A Nordic Outlook, Fafo, 2012, 16; Schulten T., “Towards a
European Minimum Wage Policy? Fair Wages and Social Europe”, in European Journal of Industrial Relations, 14, 4, 2008,
431 and 435.
100 Fernández-Macías E., Vacas-Soriano C., “A coordinated European Union minimum wage policy?”, in European

Journal of Industrial Relations, 22, 2, 2016, 100.
101 Fernández-Macías E., Vacas-Soriano C., (100), 103. For other proposals about an EU minimum wage see

Schulten T., (99).
102 Schulten T. et al., “Theses for a European minimum wage policy”, in Transfer, 2, 2005, 258.

103 Fernández-Macías E., Vacas-Soriano C., (100), 100.
104 In particular by the Nordic (Eldring L., Alsos K., (99), 20) and Italian Trade Unions (Leonardi S., (96), 187).

105 Fernández-Macías E., Vacas-Soriano C., (100), 100.

106 Leonardi S., (96), 187.
107 Fernández-Macías E., Vacas-Soriano C., (100), 100.

108 Schulten T., (99), 435.

109 As noted by these authors the OECD, for example, recommends to set the EU minimum wage not higher

that the 40 percent of the median wage (Schulten T., Müller T., (91), 4).

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the European Community110. Anyway, a specific Recommendation was adopted in 1992111
so that the Member States recognised “the basic right of a person to sufficient resources and
social assistance to live in a manner compatible with human dignity as part of a
comprehensive and consistent drive to combat social exclusion”112. The principles of the
1992 Recommendation were reiterated and enhanced during the crisis with the Commission
Recommendation of 3 October 2008 on the active inclusion of people excluded from the
labour market. Then, in 2009 and 2010, two Resolutions specifically dedicated to the
adoption of a minimum income in the EU were carried out113. For the 2009 Resolution the
inclusion in the labour market must be not a “precondition” to be entitled to the minimum
income which has to be “available regardless of a person’s ability to participate in the labour
market” so that is the minimum income a “precondition” to access the labour market114. In
other words, the Member States should assess carefully to introduce conditioned or
unconditioned forms of minimum incomes, as conditionality could negatively affect the most
vulnerable people at the edge of the labour market115 and, in any case, if the choice is for a
conditioned minimum income, not every kind of work offered is appropriate to combat
social exclusion but only a “sustainable, high-quality work, which is adequately
remunerated”116. Moreover, one of the reasons why a minimum income should be adopted
by the Member States is explicitly “to tackle the growing number of ‘working poor’ and make
work a viable prospect for those distant from the labour market”117. For these reasons, the
“EU target for minimum income schemes and contributory replacement income schemes [is
to provide] income support of at least 60 % of national median equalised income”118, that is
considered, as we have seen above, the EU poverty threshold. The 2010 Resolution reiterates
these principles emphasizing the importance of the minimum income in including vulnerable
people, such as women, immigrants, disables and youths, in the society and the labour market
and taking note that poverty, social exclusion and the increasing number of the working poor
have a multidimensional nature119. As a consequence, the Resolution underlines the necessity
to put in action a system of coordinated policies in order to combat poverty with particular
reference to the relation between minimum income and minimum wage120 but also to set the

110  Bronzini G., “Reddito minimo garantito”, 2014, http://www.treccani.it/enciclopedia/reddito-minimo-
garantito_%28Diritto-on-line%29/, accessed 28 April 2019.
111 Council Recommendation of 24 June 1992 on common criteria concerning sufficient resources and social

assistance in social protection systems (92/441/EEC) (so-called Recommendation on minimum income).
112 Article I, A, Council Recommendation of 24 June 1992 on common criteria concerning sufficient resources

and social assistance in social protection systems (92/441/EEC).
113 European Parliament resolution of 20 October 2010 on the role of minimum income in combating poverty

and promoting an inclusive society in Europe (2010/2039(INI)); European Parliament resolution of 6 May
2009 on the active inclusion of people excluded from the labour market (2008/2335(INI)).
114 See whereas A and D European Parliament resolution of 6 May 2009 on the active inclusion of people

excluded from the labour market (2008/2335(INI)).
115 Ivi, whereas H.
116 Ivi, whereas I.

117 Ivi, point 10.

118 Ivi, point 6.
119 European Parliament resolution of 20 October 2010 on the role of minimum income in combating poverty

and promoting an inclusive society in Europe (2010/2039(INI)), passim.
120 See points 18 and 21 European Parliament resolution of 20 October 2010 on the role of minimum income

in combating poverty and promoting an inclusive society in Europe (2010/2039(INI)).

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minimum income level not below the poverty threshold, neither in general nor for specific
categories, such as children or young people, as this would result in a discriminatory
measure121. More recently, in 2017, the President Juncker encouraged again the adoption of
a minimum income in the EU122 and the European Parliament approved a further Resolution
for this purpose, not containing relevant novelties123.
    Anyway, taking an overall look at the Resolutions mentioned, the most important
emerging aspect is the qualification of the minimum income as a fundamental right required
in order to guarantee a dignified existence124. This principle is actually rooted in the broader
provision of Article 34, paragraph 3, Charter of fundamental rights of the European Union
which states that “In order to combat social exclusion and poverty, the Union recognises
and respects the right to social and housing assistance so as to ensure a decent existence for
all those who lack sufficient resources, in accordance with the rules laid down by Community
law and national laws and practices”. In this sense, the minimum income is one of the most
important instruments to guarantee the ius existentiae, extended to all those people
permanently living in the EU who are, as individuals, in a situation of need125. However, the
effectiveness and implementation of Article 34, paragraph 3 is questioned because, although,
according to Article 6 TUE, the principles of the Charter have the same value as the Treaties,
the latter has been used until now as an interpretation tool at EU level and the European
Institutions has given more priority to austerity than to social policies in the last years. Indeed,
the theme of minimum income has been treated, as seen above, only with soft law tools, the
last of which is the Pillar of Social Rights, and Article 34, paragraph 3 must respect “the rules
laid down by […] national laws and practices”, leaving in fact the regulation of this
instruments to the Member States, even due to the unanimity required by Article 153 TFEU
to take actions in social security at EU level126.


8. Some national answers to in-work poverty.

   Looking at the national policies of Member States, we can observe that in-work poverty
was not always treated as a priority by them. Only some Member States have addressed
explicitly it, taking actions on the labour market, the social security and the tax systems. Some
measures as legal minimum wage, minimum income or flexible working time arrangements
have been adopted by several Member States and are considered anti-in-work poverty tools127
even if established to cope with a plurality of problems (e.g. low wages, poverty in general
and work-life balance). Furthermore, separating working poor policies from those about


121 Ivi, points 40-41.
122 Kostaki I., (109).
123 European Parliament, (68).
124 This principle is stressed especially in European Parliament resolution of 20 October 2010 on the role of

minimum income in combating poverty and promoting an inclusive society in Europe (2010/2039(INI)),
passim.
125 Bronzini G., “Il reddito minimo garantito nell’Unione Europea: dalla Carta di Nizza alle politiche di attuazione”, in

Giornale di Diritto del Lavoro e di Relazioni Industriali, 2, 2011, 229-230.
126 Ravelli F., (73), 72.
127 Eurofound, (1).



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poverty in general and social exclusion is hard128. Given the difficulty to mention all the
policies related to in-work poverty, some national examples of recent tools closely connected
to this issue are listed.
    A first group of countries used fiscal measures. In Austria tax reforms adopted in 2015
and 2016 reduced the taxation of labour with advantages for poor workers129. The same
happened with the Hungarian Job Protection Act as social contribution tax allowance and
vocational training contribution tax allowance have been available, since 2013, for employers
in relation to five targeting groups: employees under 25 or over 55, the low-skilled, long-term
unemployed and mothers with small children130. Moreover, the Government and social
partners agreed in 2016 that social contribution taxes will be gradually decreases in the next
years131. Also, Latvia has reduced the tax burden on low-paid workers, acting as well on social
contribution rates since 2013132. In particular, in 2013 an agreement between the
Government and social partners acknowledged the importance of reducing income
inequality and supporting employees with children, so that in 2014 social contribution rates
were lowered while personal income tax basic allowance and allowances for dependants were
increased133. Then in May 2017 a new proposal to reform the labour taxation system was
approved and implemented in July 2017, on the basis of the suggestions of the social
partners, the EU Commission, the World Bank and the OECD, which highlighted the
necessity to lower more the tax burden, with specific regard to low-income earners134. Even
in Luxembourg there were some interventions aimed at improving the situation of low-
income earners. On 14 December 2016 the Parliament approved the bill on tax reform no.
7020, doubling the tax credit for wage earners and single-parent households with children135.
Still, a unique tax credit called Universal Credit was introduced in 2013 in the UK for low-
income workers (or unemployed)136. This allowance is granted to singles or members of
couples137, proportionate to the number of dependants138, the housing costs139 and other
circumstances140. Universal Credit is conditioned to the so-called Claimant Commitment141,
an agreement between the claimant and the workcoach, tailored on her/his individual



128 European Commission, (22), 88; Eurofound, (11), 14.
129 Eurofound, (1), 54.
130 Eurofound, (1), 54; Svraka A., Szabó I., Hudecz V., “Employment stimulating tax incentives in the Hungarian labour

market”, in Public Finance Quarterly, 4, 2013, 388.
131 Government of Hungary, National reform programme 2017 of Hungary, April 2017, 7.

132 Eurofound, (1), 55.

133 Šņucins I., Kondoliņa-Miglāne I., Reform of labour taxes in Latvia 2011-2013, in Financial Theory and Practice, 39,

4, 2015, 384.
134 Lace T., “Latvia is struggling to reduce the tax wedge for low income earners and to reduce the tax burden on labour”, in

ESPN Flash Report 2017/64, European Commission, July 2017.
135 Eurofound, (1), 55; IFAdvisory, “2017 Tax reform for individuals and new social parameters”, in IFAdvisory

Newsletter, IFGroup, Luxembourg, 16 January 2017.
136 Welfare Reform Act 2012 enacted with The Universal Credit Regulation 2013.

137 Section 1 Welfare Reform Act 2012.
138 Section 10 Welfare Reform Act 2012.

139 Section 11 Welfare Reform Act 2012.

140 Section 12 Welfare Reform Act 2012.
141 Section 14 Welfare Reform Act 2012.



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situation142. If the Claimant Commitment conditions are not met by the claimant – as to take
up an offered job - the benefit is reduced143.
    Some other Member States have focused their actions mainly on the labour market. This
is the case of Bulgaria. In 2003-2006 the Government carried out a National strategy and
two national plans against poverty and social exclusion. In particular, for the years 2007-2009
an official monthly poverty line was linked to minimum wages and social welfare144. Also
recently, Bulgaria coped with the working poor phenomenon mainly increasing the legal
minimum wage, following a system where the government’s primary criterion in determining
the minimum wage is that the net amount should be higher than the official poverty
threshold145.
    The fight against in-work poverty can be conducted also through social security tools.
Italy has recently adopted the Reddito di cittadinanza (Rdc)146, a sort of minimum income147
directed to combat poverty and to reduce the number of working poor. This instrument is
basically constituted by an allowance granted to claimants depending on the household
income and composition, which integrates the household income of the sum needed to
overcome the poverty threshold148. Like the UK Universal Credit, the Rdc is conditioned:
the household members have to conclude with social services an agreement (“patto per il
lavoro” or “patto per l’inclusione sociale”) identifying their needs, specific social actions and a plan
which they have to enact. In addition, the unemployed beneficiaries have to accept one of
the job’s offers received when the Rdc is provided and to perform community services, under
penalty of losing the allowance149. Moreover, Rdc can be granted also to retired people in
poverty (the so-called “Pensione di cittadinanza”) but without the rules on conditionality
mentioned. The Rdc has been inspired by the German so-called Hartz IV or Arbeitslosengeld
II, a means-tested allowance granted to poor unemployed people or low-wage workers
between 15 and 65 years and conditioned to the active research of a job and to training
activities150. However, the Hartz IV has not been sufficient to combat efficiently in-work
poverty thus, in 2014, a legal minimum wage was introduced in Germany151.
    Some other States have used social security and labour law instruments. Two recent
measures taken in France are worth mentioning: the “prime d’activité” and the “contract d’avenir”.
The “prime d’activité” is an in-work benefit, introduced by Article 57 LOI n° 2015-994 du 17

142   UK Department for Work & Pensions, “Guidance. Universal Credit and you”, 2018,
https://www.gov.uk/government/publications/universal-credit-and-you/universal-credit-and-you-a,
accessed 15 April 2019.
143 Section 26 Welfare Reform Act 2012.

144 Tomev L., Eurofound, “Working poor in Europe – Bulgaria”, 2010,

https://www.eurofound.europa.eu/publications/report/2010/working-poor-in-europe-bulgaria, accessed 15
April 2019.
145 Eurofound, (1), 54.

146 Through Decreto Legge 28 gennaio 2019, n. 4, converted in L. 28 marzo 2019, n. 26.
147 Actually, before Rdc there was in Italy another kind of minimum income called Reddito di inclusione (Rei),

introduced by D.lgs. 15 settembre 2017, n. 147.
148 Article 3 L. n. 26/2019. In particular, the allowance is calculated according to an equivalence scale and other

conditions, such as the fact that the beneficiaries live in a rented accommodation or have to pay a mortgage.
149 Article 4 L. n. 26/2019.

150 Sartori A., (24), 270.
151 Menegatti, (93), 52.



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août 2015152, aimed at encouraging poor workers to work and supporting their purchasing
power153. The general conditions of eligibility are: to be over 18; to be French or to have an
at least five-year residence permit allowing to work (with the exception of EU, European
economic area and Swiss citizens, as well as regular refugees); to be not in a training
contract154. The benefit is proportionate to the household composition, the dependent
children, and the household members’ incomes155. The “emploi d’avenir”, introduced with LOI
n° 2012-1189 du 26 octobre 2012, is a subsidised contract with the purpose of facilitating
the professional integration and access to qualifications of unemployed unskilled and poor
qualified youths between the ages of 16 and 25, through their recruitment in activities of
social or environmental utility or with a high potential for job creation156. Also in Romania157
the policies have been oriented to the labour market and the social security system. Here the
minimum income, regulated by Law 416/2001 and proportionate to the household
composition, results to be the principal tool against in-work poverty. Another important
measure is legal minimum wage158. Furthermore, the National Strategy on Social Inclusion
and Poverty Reduction provides specific social policies for working poor, such as those living
in rural areas, mainly employed in the agricultural sector159. In other cases, labour, social
security and tax policies have been combined. A case in point is Ireland where since 2010 tax
credits, increasing the national minimum wage, maximising job creation and providing social
welfare benefits have been used, often directly to contrast in-work poverty160.


9. Conclusions.

   The analysis carried out shows how in-work poverty has not been faced organically in the
EU. The policies explicitly directed to working poor vary according to the Member State and
some of them have not considered the problem yet.
   Undoubtedly in-work poverty depends on the labour market structure. As seen above,
flexibility (and precariousness) creates high levels of decommodification, so that policies
aimed at reducing the labour market segmentation would be necessary.
   However, in-work poverty is related to multiple factors. In this sense, labour law and
social security tools, such as minimum wage, minimum income and flexible work
arrangements, can help but should be combined with other measures. This means that social


152 Article L841-1-L847-1 Code de la sécurité sociale.
153 Article L841-1 Code de la sécurité sociale.
154 Article L842-2 Code de la sécurité sociale.

155 Article L842-3 Code de la sécurité sociale.
156 Article L5134-110 Code du travail.

157 Romania is the in-work poverty highest risk EU country, with 18.9 percent in 2016 (Eurostat, (21).

158-Ciutacu C., Eurofound, Working poor in Europe – Romania, 2010, -----------------------------------------------

https://www.eurofound.europa.eu/publications/report/2010/working-poor-in-europe-romania, accessed 16
April 2019; Articles 164-165 Romanian Labour Code.
159 Romanian Ministry of Labor Family, Social Protection and Elderly, National Strategy on Social Inclusion and

Poverty Reduction 2015-2020. Romania, Ministry of Labor Family, Social Protection and Elderly, 2015, 35.
Dobbins T., Eurofound, Working poor in Europe – Ireland, 2010,
https://www.eurofound.europa.eu/publications/report/2010/working-poor-in-europe-ireland, accessed 20
April 2019; Eurofound, (1), 54.

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policies cannot follow only one direction but should be built adopting a multidimensional
approach, considering many profiles such as poverty, the labour market, the social security
and the fiscal system161.
   Also, household factors are pivotal in determining in-work poverty. This element should
be well taken into account in building anti-working poor instruments, as the labour market
structures, the social security systems and social policies influence the degree of
defamilialisation. Thus, social inclusion policies, promoting the access to the labour market
and the economic independence of vulnerable people (such as women, youths or disables)
are fundamental. So, institutional factors, particularly the welfare regime adopted, cannot be
underestimated in this debate162.
   However, if we look at the national experiences analysed, different approaches to the
problem of in-work poverty emerge recently. Indeed, some countries have intervened mostly
on the tax systems, while others tried to face the issue through the traditional way of
reforming the labour market. Some other Member States have opted to interconnect
different kinds of social policies, mixing labour law instruments with social security and fiscal
measures. Among the others, it is also quite spread the use of social security instruments in
national contexts, often combined with active labour law policies, aiming at support incomes
and create work at the same time. This objective has been recently persecuted, as we have
seen, with the adoption of two main tools, the minimum wage and the minimum income,
whose fundamental role in fighting in-work poverty is well-established throughout the
European countries. Although the variety of European anti-in-work poverty policies proves
that the Member States are aware of the problem – regardless of the introduction of specific
measures – the national framework is quite fragmented and a common project against the
increase of the working poor clearly lacks. For this reason, coordinated actions at EU level
would be necessary163. Actually, even if the EU has not projected specific in-work poverty
policies yet, a multidimensional approach has been proposed in the last decade as showed
also by the EU Social Pillar which, for the first time, mentioned explicitly in-work poverty as
a theme to be coped with at supranational level. Furthermore, the two principal instruments
discussed at national level to combat in-work poverty, namely the minimum wage and the
minimum income, are undoubtedly central in the European debate, having found space in
the EU sources, in the public declarations of the President of the European Commission, as
well as in the Charter of fundamental rights of the European Union. Nevertheless, the EU
action seems to be still too weak, because taken, both for in-work poverty in general and
regarding minimum wage and minimum income, only through soft law. This choice is
certainly due to the lack of competence of the EU in some fields, such as pay. However, we
have also seen, on the one hand, that the EU have substantially influenced wages with its
austerity policies164 and, on the other hand, that intervening in social security is hard because


161 European Commission, (22), 96-97.
162 See Andreß H.-J., Lohmann H. (eds.), The Working Poor in Europe. Employment, Poverty and Globalization, Edward
Elgar, 2008; European Commission, (22); Crettaz E., Bonoli G., (5).
163 Blagoycheva H., (9), 15-16.

164 Further, it could be noted that these policies invited the Member States to reconsider the centralisation of

collective bargaining (see European Council, The Euro Plus Pact. Stronger economic policy coordination for competitiveness
and convergence, 24-25 March 2011), so that today decentralisation is quite spread in the EU, while one of the

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of the “unanimity rule” required by Article 153 TFEU. In other words, it appears that the
EU prefers at the moment to leave the initiative about in-work poverty to the single Member
State, proposing a soft coordination which confirms how the promotion of social rights in
the EU is definitely left to the “good will” of the Member States without precise obligations
for themselves.


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