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Sunday, 8 December 2013

“Poverty in The Netherlands soared in 2012, will stabilize slightly in 2013”. My take on the ‘Annual Poverty Survey 2013’, by the SCP and CBS.

On 3 December 2013, the Dutch Social Cultural Planning Bureau and Central Bureau of Statistics presented their "Annual Poverty Survey, edition 2013". 

The conclusions of this survey were disturbing for the unprepared eye and a tell-tale signal of:

a. the depth of the economic crisis that is enrolling currently in The Netherlands;
b. the fact that Dutch politics must take decisive action, in order to prevent a large group of really poor people from growing in The Netherlands, without ever disappearing anymore.

This is the reason that I show this press release almost in full, accompanied by my comments, where applicable. 

I invite everybody to download the full report in Dutch or the extensive summary in English at the aforementioned link.

One more thing: there are always people, who declare that poverty in The Netherlands is totally different than poverty in say, Bulgaria or Moldavia. These people are right: nobody will die in The Netherlands from starvation, exhaustion or freezing to death.

On the other hand, if you reckon that The Netherlands is one of the three richest countries in the European Union, you will agree that the emergence of a large group of poor people is disturbing.

Persons and household in poverty
Table courtesy of: Social-Cultural Planning Bureau
Click to enlarge
Main conclusions:
  • The poverty rate in the Netherlands increased sharply in 2012, as in 2011. Estimates suggest weaker growth in 2013 and a further reduction in 2014. 
  • Long-term poverty also rose in 2012.
  • The risk of poverty is highest for single-parent families, single persons aged up to 65, non-Western households and people on social assistance benefit. The poverty rate rose sharply in all these groups in 2012.
  • Child poverty has increased substantially since 2007.
  • Poverty is concentrated in the major cities. The postcode districts with the most poverty are in the cities of Leeuwarden and The Hague.

Poverty thresholds

The report uses two main criteria for measuring poverty:

  • CBS discusses the risk of poverty on the basis of the low-income threshold. This threshold represents a fixed level of purchasing power and is adjusted annually only on the basis of price changes. CBS describes the risk of poverty primarily at household level. 
  • SCP describes poverty on the basis of the modest but adequate criterion.This is an amount based on the minimum necessary expenditure for food, clothing, housing and social participation. SCP measures poverty primarily in terms of individual persons. 

Sharp rise in poverty in 2012

The economic crisis which began at the end of 2008 initially had only a modest impact on the extent of poverty. It was not until 2011 that the poverty rate began to rise substantially according to both thresholds, and the increase was even greater in 2012.
Based on the low-income threshold, 664,000 households (9.4% of all households in the Netherlands) were at risk of poverty in 2012. This represents a sharp increase compared with 2011 and 2010, when 575,000 (8.2%) and 514,000 (7.4%) households, respectively, had a low income. A total of 1.329 million persons were on a low income in 2012.

The number of persons with an income below the modest but adequate criterion in 2012 was 1.197 million (7.6% of the Dutch population). The number of people in poverty rose by 152,000 in 2012, after having already grown by 100,000 in 2011. There were 551,000 households living below the modest but adequate criterion in 2012 (7.8% of all Dutch households).

My comments: Both criteria are (in my humble opinion) good ways to measure poverty, but using these criteria combinedly can be confusing.  Personally, I would have preferred one definition and one method for measuring poverty.

It is clear that there was a substantial growth of poverty in 2011 and 2012.

In the first years of the crisis (2008-2010), this crisis largely seemed to be an “American” problem and a problem of the financial industry: a huge hickup of the economy, as a consequence of boundless trade in mortgage backed securities and other securitized products, which brought banks and financial institutions in the US and (later) in Europe and the rest of the world to their knees. 

After the US and European governments had pumped billions of dollars and Euro’s into the system, by rescuing numerous large banks and insurers, it seemed initially that this crisis would be over, before it had even really started.

In spite of the economic slump in 2009, the effects for unemployment in The Netherlands had been kept artificially low. This happened, due to the Part-time Unemployment Benefit and the initial reluctancy of companies to lay off their excess personnel, afraid as they were that good personnel could become scarce when the economy would start to grow again.

However, halfway 2011 it became not only clear that the crisis had been transfered from the financial industry to the (European) governments, but also that a series of bubbles all over Europe and the rest of the world had popped violently: 
  • the Spanish Commercial Real Estate bubble; 
  • the Irish housing bubble; 
  • the Greek debt bubble; 
  • the Dutch housing and CRE bubble. 

Besides that, the PIIGS-countries (Portugal, Ireland, Italy, Greece and Spain), as well as France, had shown that their economies offered too little autonomous growth potential and that they were too dependent on imports from The Netherlands and Germany. 

The economy in these countries slumped (especially in Greece, Spain and Portugal) and unemployment soared dramatically. This led to dropping imports in these countries, which had dramatic results for the Dutch exports and employment.

At that time, it became clear that the former banking crisis was so much more than a simply solvable hickup of the economy. It was here to stay in The Netherlands and, as a consequence, people would be laid off by the masses.

This is (imho) the reason that poverty has risen dramatically, since 2011.

Growth in poverty set to weaken

The estimates indicate that the poverty rate will continue to rise in 2013 according to both criteria, but to a lesser extent than in 2012. According to the modest but adequate criterion, the poverty rate is likely to decline slightly in 2014, whereas on the basis of the low-income threshold it will continue to grow in 2014, but less strongly than in 2013.

According to the modest but adequate criterion, the number of people in poverty is expected to rise by 16,000 in 2013, to 1.213 million persons (7.7% of the population). This total is likely to decline by 35,000 in 2014, taking the total number of people in poverty to 1.178 million (7.4%), slightly fewer than in 2012.

Based on the low-income threshold, the number of households in the Netherlands at risk of poverty will increase by almost 40,000 in 2013, taking the total to 703,000 (9.9% of all Dutch households). The estimate for 2014 suggests a slight increase of 14,000, which would mean 717,000 households with a low income (10.1%).

My comments: In these SCP/CBS estimates,the slightly improving poverty situation in 2013 and 2014 seems to be based upon the assumption that the economy in The Netherlands will improve slightly during these years, when compared to 2011 and 2012.

I have serious doubts about this assumption, as especially unemployment has soared in 2013 and it will probably further rise in 2014. According to me, all the signals for prospective improvement have been based upon ‘a mirage’.

Households, companies and the local and central goverments are still unwinding their debt and try to save money with ferocious austerity measures: 
  • Consumption almost came to a stand-still; 
  • The central and local governments are taking one tax-hike after another; 
  • Companies are trying to do more with less and much cheaper personnel. 

There have been some greenshoots lately, but in my opinion these are outliers in a general trend that still points downward, instead of upward.

Also sharp rise in risk of long-term poverty

More than 170,000 households had lived on a low income for almost four successive years in 2012, 17,000 more than in the previous year. This means that the share of households living below the low-income threshold long term rose from 2.4% to 2.7%.

Long-term poverty also increased in 2012 according to the modest but adequate criterion, from 2.2% to 2.7% of all people in the Netherlands.

My comments: In spite of all the VVD bleating (the liberal-conservative party of PM Mark Rutte) about the ‘participation society’, there is a growing group of people which is dropping out from ‘our’ society. 

Although these people are probably not 'poor' to Moldavian eyes, they are nevertheless much poorer than the rest of the Dutch society.

Instead of spurring them with draconic measures, concerning their welfare payments, mini-jobs and VVD-propaganda about the participation society - in order to get them into a poorly paid job without further development possibilities - it would be better to actively help these people. 

People should be helped to get a good job, by giving them free, additional vocational education, courses to teach them new skills and hands-on experience, through interships at companies.

Of course I am not much in favour of putting energy in helping people, who don’t want to be helped at all and sabotage all attempts to get them on the right track again. Unfortunately, I know that these people exist. 

Still, although I disapprove of such behaviour, I think that these people should receive a welfare payment after all, of which they can live properly.

On the other hand: most people are of good will and would cherish it when someone would lend them a hand, without grabbing a part of their welfare payments with the other hand. 

These people of good will should be helped and supported by the local and central governments. And people that can’t work, because of a physical or mental disability, should be treated with respect and empathy: not as 'spongers upon society'.

Further increase in poverty among at-risk groups
In all groups which have traditionally been at high risk of poverty, the share of households with an income below the low-income threshold increased further in 2012.

The percentage of households in receipt of social assistance benefit which had an income below the low-income threshold went up from 69% in 2011 to almost 74% in 2012; for single-parent families the increase was from 28% to 30%; for singles aged up to 65 the figure increased from 18% to 20%; and for non-Western households the increase was from 25% to just under 29%. The risk of poverty among non-Western households in 2012 was substantially lower for members of the second generation (just under 20%) than for the first generation (31%).

The poverty rate measured on the basis of the modest but adequate criterion was also highest in 2012 for social assistance benefit recipients (47%), single mothers (24%) and migrants (from Poland: 18%; from Turkey: 19%; from Morocco: 21%).

My comments: too often you hear stories that companies – and Human Resource departments – are biased towards the minority groups, which are mentioned here. The government should be focused on this problem, in order to prevent that poverty becomes mainly an ethnical problem in The Netherlands.

On the other hand, ethnical groups should work on their control of the Dutch language (which is paramount for everybody) and should stop with hiding themselves behind counter-productive ethnical and religious rites and symbols, which go far beyond what can be considered normal. 

The best way to get a job is by being fit for this job, in any kind or way.

Adults who are poor are often in work; more than half are of Dutch origin

In absolute terms, adults in poverty are often in employment. Based on the modest but adequate criterion, there were 348,000 working poor in the Netherlands in 2012 (of whom 165,000 were self-employed, both with and without staff). At that time, there were 255,000 poor social assistance benefit recipients and 79,000 people aged over 65 in poverty. The majority are also of Dutch origin: of the 813,000 adults in poverty in 2012, 488,000 were natives.

My comments: The government should thoroughly investigate the issue of poor freelancers, without a sufficient source of income. It should also investigate underpaid jobs in all kinds of industries.

It is a bad development that people can have a job and still be poor at the same time. In my opinion, this phenomena has soared during the last few years, due to the influx of people from the eastern European countries, who were willing to work for much lower (and sometimes even illegal) salaries. 

This phenomena was reinforced by the diminishing inspections and assessments coming from government institutes, like the labour inspection.

All these institutes had to deal with vigourous austerity measures, which almost made it impossible for them to do their job properly. 

Too often these indispensable inspections were left to ‘the market’ and to ‘self-regulation’ of the industry: the latter has proven to be a eufemism for the government doing nothing!

Strong growth in child poverty

The number of children in poverty in the Netherlands has increased by over 100,000 since 2007; according to the modest but adequate criterion, the number of children aged up to 17 years rose to 384,000 in 2012 (11.4% of all children in the Netherlands, +3.4 percentage points). One in three poor people are aged under 18. Child poverty is however still below its peak in 1994.

My comments: Especially among children, poverty is a harsh phenomenon. 

These children can’t participate in school-holidays, swimming education, sports and other necessary extras for children. They often get bullied by other childrend for looking peculiar and wearing the wrong clothes. 

On top of that, they run a substantial risk for serious health, growth and learning problems, as a consequence of being underfed due to poor nutricion.

Financial difficulties

Households at risk of poverty often face financial difficulties. Eight out of ten households with an income below the low-income threshold reported that they had insufficient money in 2012 for things such as food, clothing, furnishing their home and holidays. During that year, 11% of households with a low income were behind with their rent or mortgage payments. That is a much higher figure than in 2008 (7%) but is slightly lower than in 2011 (13%). The share of low-income households who felt forced to get into debt grew from just over 5% in 2008 to almost 8% in 2013.

My comments: This is the economic crisis sneaking up to people. People with little income have often largely similar expenses as upper and middle-class families have.

Especially local governments are the champions of imposing (hidden) taxes on people, through:
  • Housing taxes;
  • Taxes on drinking water and energy;
  • Increased parking costs;
  • Increased costs for all kinds of permits;
  • Increased costs for passports, driver’s licenses, wedding arrangements, extracts from the population register and other municipal services, that people can’t go beyond. 

Besides that, the central government (especially the VVD) has declared the ‘war on social renting’, by increasing the monthly rent payments and lowering the threshold for social rent houses.

The main victims of this doomed, mindless policy are the lower middle class people, who earn ‘too much money’ for a social rental house, but much too little money for a ‘free sector’ rental house or an owner-occupied house.

These people get financially stuck and might fall into poverty, due to their excess housing expenses.

Summarizing, the ‘Annual Poverty Survey 2013’ has been an alarming report, which showed that the government must take action, in order to prevent that the group of poor people becomes bigger and more out of control.

Nevertheless, the situation in The Netherlands is still much better than in other European countries. Let’s keep it that way, please!

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