universidade de lisboa - pascal.iseg.utl.ptcesa/files/seminariojp22fev18.pdf · portugal),...

Universidade de LisboaISEG

Development Studies Seminar 2018

February 22, 2018

Human Needs and Income Adequacy in Portugal

José António Pereirinha (ISEG, Universidade Lisboa)

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“Adequacy” of living standard is a human right.

Universal Declaration of Human Rights, 1948, art. 25th

Article 25

Everyone has the right to a standard of living adequate for the health and well-being

of himself and of his family, including food, clothing, housing and medical care and

necessary social services, and the right to security in the event of unemployment,

sickness, disability, widowhood, old age or other lack of livelihood in circumstances

beyond his control.

Income Adequacy

Economic Security

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Adequacy of living standard implies “income adequacy”: sufficiency of disposable

income to assure human dignity, in a society where the satisfaction of needs is very

much dependent on private expenditure on consumption of economic goods.

European Pillar of Social Rights (April 2017) (adequate income for living in dignity)

6. Wages

Workers have the right to fair wages that provide for a decent standard of living.

Adequate minimum wages shall be ensured, in a way that provide for the satisfaction

of the needs of the worker and his / her family in the light of national economic and

social conditions, whilst safeguarding access to employment and incentives to seek

work. In-work poverty shall be prevented.


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14. Minimum income

Everyone lacking sufficient resources has the right to adequate minimum income

benefits ensuring a life in dignity at all stages of life, and effective access to enabling

goods and services. For those who can work, minimum income benefits should be

combined with incentives to (re)integrate into the labour market.

15. Old age income and pensions

Workers and the self-employed in retirement have the right to a pension

commensurate to their contributions and ensuring an adequate income. Women and

men shall have equal opportunities to acquire pension rights.

Everyone in old age has the right to resources that ensure living in dignity.


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relevance of such issues for the Portuguese population

low amount of the minimum wage (is it “adequate”?);

fragile Welfare State in Portugal: weak economic support of social rights + lowredistributive efficiency of social transfers + high risk of financial unsustainability;

“permanent austerity” since 2006 (Social Security Reform), reducing the risks offinancial unsustainability but also reducing income adequacy of pensioners;

Solidarity Supplement for the Elderly (non-contributory income support), created in 2006, intending income support of the elderly poor;

austerity packages of economic and social policies since mid-2010 (internal socialdevaluations);

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The need of widely accepted Reference Budgets as a normative guideline for the

decision on minimum incomes (minimum wages, minimum pensions, minimum social

benefits, etc)

Reference Budgets: patterns of expenditure for different types of households to live

at an acceptable level of well-being in the society; normative income threshold

monetary reference for citizenship rights

to identify poor people and to measure poverty in a society

to assess adequacy of social transfers

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Some relevant policy issues

who has legitimacy to say what is human dignity in some society?

what is a dignified living standard in that society?

how to calculate a consumption budget that corresponds to such a living standard

and, therefore, may be considered as a reference budget, with normative content?

how does it compare with the real consumption budget, how does it deviate from

the reference budget, and how to interpret such deviation?

how can this comparison help the design of social policies?

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Portugal

reference income thresholds

•EUROSTAT poverty threshold (60% median adult equivalent disposable income)

•IAS (Index of Social Support), originally linked to minimum wage

Minimum wage

created in 1974reference budget 1965, updated for 1969 (Ministry of Labor), following the conceptof “living wage” (influence of ILO) and the the concept of “vital minimum” (influenceof French sociologists and experience of the creation of SMIG)

before Minimum Wage

CRGE (1951; 1960) and CUF (1960) (big private firms, for their employees)

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two different methods to respond to some of these questions

raP project (Adequate Income for Portugal/Rendimento Adequado emPortugal), following method MIS, UK (CRSP, University Loughborough, UK), forPortugal 2012-2014, with reference to 2014, updated to 2017 (using CPI)

EU Reference Budget (Portuguese participation in the Reference BudgetsNetwork), following method IMPROVE (University Antwerp), for Lisbon 2015.

comparison of methods

comparison of (some) results (EU Reference Budget only for food baskets; notfor the same family types)


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reference budgets

“priced basket of goods and services that represent a given living standard”

Sec. XVII: William Petty: cost of a food budget required for urban survival in Ireland.

end sec. XIX/middle sec. XX: reference budgets built by Rowntree (1901, 1941, 1951), which were later used by W. Beveridge to estimate the amount of the social benefits; supported on experts´ opinions (physical survival according to doctors´ opinions); this method would last until the 1980s

1985: creation of the Family Budget Unit (FBU), a research centre of the York University;

In Family Budget Unit (FBU), J. Bradshaw has built reference budgets for the UK (for 1990)

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Family Budget Unit (FBU)

John Bradshaw

low cost but acceptable (LCA), very cheap reference budgets

modest but adequate (MBA), according to the current living standards, enough for health care, to take care of the children and participation in the society

reference budgets supported on surveys and, for some items (food, housing), although supported on experts´opinions

1990s: the Centre for Research on Social Policy (CRSP), University of Loughborough (UK) used the method of FBU but, instead of experts, the method consisted on using the dialogue among researchers and population (focus groups): the consensual approach: the Consensual Budget Standard (CBS)

Veit-Wilson, J. H. (1987). Consensual Approaches to Poverty Lines and Social Security.Journal of Social Policy, 16(2), pp. 183-211

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Centre for Research on Social Policy (CRSP), University of Loughborough

FBU was extinguished in 2011, and its scientific heritage was transferred to the CRSP

project MIS (minimum income standard)

it makes use of two methods:

what population think to be required to live with dignity in the society (needs, not wants), by the participation of selected people into focus groups and supported on consensual opinions got there;

experts´ opinions in some relevant areas (food, housing, health).

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Reference Budgets (RBs)

the methodological approaches to these questions fall into 4 major categories(my proposal, inspired on Bradshaw, 1994):

“top-down” methods (based on expert´s knowledge and supported on science)

“bottom-up” methods (what people think, on “focus-groups”)

mixed methods (a mixture of “top-down” and “bottom-up” methods)

statistical methods (large scale survey approach method)

In the history of research methods on RBs there are examples of these categories:Rowntree ( “top-down” methods); MIS (“bottom-up” methods); Bradshaw (statisticalmethods); IMPROVE (mixed methods).

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raP project


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raP (MIS) and EU-RB (IMPROVE): different approaches and methods

objective and scoperaP (MIS): focused on national-level living standard;EU-RB (IMPROVE): intended to serve cross-country comparative purposes.

legitmacy for decision on what is dignityraP(MIS): the concept of dignity is that consensually defined by ordinary peoplein the context of Focus Groups (“what people think”);EU-RB (IMPROVE): dignity means an adequate participation in society, a conceptsupported in scientific literature (theories of human needs) and experts´ knowledge (“what science says”), with some FG discussion.

remark: does “what science says” provide grounded legitimacy for a wide generalization in the EU about what is an adequate living standard without further discussion in FG, accounting for local (national) specificities?


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dignity in the raP (MIS)

"A dignified standard of living today, in Portugal, includes, in addition to food,housing and clothing, everything that is required for a person to be healthy,feel secure, relate with others and feel respected and included in society. Itenables free and informed choices about practical things of life and ways ofpersonal fulfilment, including access to education and work, culture andleisure."

assumption that human needs are best translated into a basket of goods andservices socially perceived as needed by using ordinary people commonknowledge (from the relevant family types) about what is required to have adignified standard of living in the society, in a context enabling discussion andnegotiation.

FG: which goods, quantity, duration, where are bought, etc

FG crucial role of negotiated consensus


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dignity in the RB-EU (IMPROVE)

dignity means to have adequate social participation in the society, which content issupported on human needs theory, with some FG discussion on social positionsthat correspond to such adequate participation;

“health” and “autonomy of agency” as universal human needs required for socialparticipation in order to play their social roles in the society (Doyal and Gough,1991)

there are ten intermediate needs that must be fulfilled to assure full participationin the society (healthy food, suitable clothing, …)

in the case of healthy food, there are international and national recommendationsand the judgments and opinions of experts on the economic goods that satisfythose needs.

FG a confirmatory role (not consensus). It is justified “to examine whether thebaskets are perceived as fair and purchasable and, if not, how they should beadapted” (Storms et al., 2013).


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EU-RB (on the food basket)

3 FGs with the same socioeconomic composition and aiming at the same results(to gain data saturation)

a reference household for discussion

discussion on social participation (what means an adequate social participationin the society) (list of social position that should be able to take in the society)

list of things people should be able to do or to have to function well to play suchsocial positions

to compare with the intermediate needs by Doyal and Gough

to discuss the acceptability of a previously made food basket (acc recommendations)

to discuss social functions of food (acc to social functions)

discussion of purchasing patterns, choice of shops and pricing

after FG, the experts amend the food basket


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raP

elderly people (age 65+), living alone or as a coupleworking age adults (age 18-64), no children, living alone or as a coupleworkig age adults (age 18-64) with children (age 2, 12, 24)

EU-RB

single man (age 40)single woman (age 40)couple (age 40). no childrensingle woman (age 40), two children (age 10, 14)couple (age 40), two children (age 10, 14)


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some results

adequate income in 2017 (raP method) and some minimum incomes

the consensual equivalence scales and comparison with OECD equivalence scales

some (possible?) comparison raP and EU-RB income


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some conclusive notes

both methods aim to obtain a reference budget that originates a minimumacceptable (adequate) living standard in the society (raP/national; EU-RB/intendingcomparative purposes

differences on the kinds of legitimacy for decision of what is acceptable, or adequate,as a living standard in the society (raP/consensually defined by ordinary people; EU-RB/scientific literature and experts for an adequate participation in the society)

the role of negotiated consensus for obtaining a consensual standard of social adequacy (rap/yes; EU-RB/confirmatory role of the people´s opinion)

the policy relevance of obtaining comparable reference budgets in the EU involvesto accept some analytical costs, what requires a deeper “national” research onhuman needs (cultural, social, economic and institutional diversity among countriesin the EU)

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The case of the elderly population


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the procedures

human dignity => satisfaction of human needs => satisfiers => economic goods

to identify human needs (FG)

for those needs, which are the satisfiers (individual or collective forms of being, ofhaving, of doing and of interacting)

to list the corresponding economic goods (the satisfiers require economic goods,depending on the culture in the society and the available resources in that society)

focus groups (FG)

Correia, A., Pereira, E., Costa, D. (2016), De que necessitam as pessoas idosas paraviver com dignidade em Portugal. Análise Social, 219, LI (2º), 366-401

FG: which goods, quantity, duration, where are bought, etc

FG crucial role of negotiated consensus


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how to read these figures

the highest values of expenditure required for living in dignity(food and housing, i.e, subsistence, but also leisure and culture)

annual amount less than for working age population(but higher for health care, for communication and also for domestic and personal goods)

comparing expenditure for couple with expenditure for single(economies of scale if the ratio < 2.0)

to compare adequate income with EUROSTAT poverty threshold

to compare actual income with adequate income (welfare gap)

to compare adequate income with minimum incomes in economic and social policy


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economies of scale (consensual)

ratio expenditure couple/expenditure single

housing = 1.28domestic goods and services = 1.22communication = 1.26transportation = 1.50

food = 1.77

dressing and footwear = 2.00health care = 2.00

some economic goods have some characteristics of public goods

the average cost of consumption reduces with the size of the household

reducing price effect of buying largerquantities of goods


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Poverty threshold in 2014

422 € /month

Adequate income for a single person age 65 and over, in 2014

617 € /month

422 = 617 * 0.684


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further research on the elderly population

to estimate poverty of the elderly using new poverty thresholds (using raPincome), and the corresponding amount of social deficit for the elderly

to analyse the adequacy of social minima in Portugal (lack of harmonization ofcriteria of minima in the various areas of social policy)

to improve the research on economic security (in the sense of Jacob Hacker) of the elderly population, meaning to study the degree to which the elderly are protected against economic losses or unexpected expenses


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Thank you !


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