WP 13 – Reference budgets for social participation leading the way to a social inclusive society

It has been explained that current European poverty indicators define the poverty line in an arbitrary way, neglecting cross-national differences in the availability of public goods and services as well as income in-kind (Tsakloglou et al, 2010). Similarly, the indicators do not take full account of differences in needs across households and persons. As a result, the validity of the indicators can be questioned (cf. WP 12). However, people identified as being poor are very different depending on the indicator used (Fusco et al., 2010). Therefore “Reference budgets need to be constructed with the aim to make visible what is needed for active inclusion, full participation in society and to live a life in dignity” (EAPN, 2010). Reference budgets translate essential (universal) human needs into (country-specific) concrete goods and services that people need to fulfil their different social roles in daily life. More precisely, they consist of a broadly accepted (by politicians, experts and citizens) priced list of items required as a minimum by households of various types (families with and without children, lone mothers, elderly, etc.), living in various socio- economic circumstances, in order to reach a socially acceptable standard of living.

In this work package we will go beyond a mere improvement of the existing indicators and we will explore the feasibility of constructing cross-nationally comparable ‘reference budgets for social participation’ in the European Union. For reference budgets to work as a policy tool in an EU context, it is crucial that they are based on a common theory and methodology (Storms and Van den Bosch, 2009a). The aim of this work package is to develop a common methodology, based on the experiences in Belgium (e.g. Storms and Van den Bosch, 2009b; Van Thielen et al., 2010), Finland (Lehtinen, Varjonen, Raijas, Aalto & Pakoma, 2010) and the UK (e.g. Bradshaw et al., 2008, Hirsch, 2009) and on the outcomes of a peer review, recently organised by the European Commission on this topic. In order to fine-tune the methodology, we will construct, for the first time, cross-nationally comparable reference budgets for Belgium, Finland, Greece and Hungary – four countries with very different welfare state arrangements. In addition, thanks to our voluntary partners, reference budgets will be developed using the same fromework in Italy and Spain.

Besides a common methodology, expected outcomes are: a comparison of the poverty figures for the five countries based on these newly developed outcome indicators with the poverty figures based on national and EU-wide poverty lines. In doing so, we will perform an empirical test of the relative character of poverty in the European Union. This work package interacts very closely with the first part of work package 12. Results will also feature in other work packages, and especially in work packages 1 and 6 in which the level of minimum income protection will be compared with the reference budgets. The research associate will contribute to this work package with a paper on how reference budgets can be used for measuring poverty.

This work package will be carried out by the teams from CSB, AUEB, TARKI and UTURKU. In addition, PSiTIC participates in this work package as a voluntary partner for developing reference budgets for Spain, using the same theoretical and methodological framework. The team from UTURKU is supported by Anna-Riita Lehtinen from the National Consumer Research Centre in Finland. The work package is led by Bérénice Storms and Karel Van den Bosch from the Herman Deleeck Centre for Social Policy (CSB).