TransAct 59

TransAct statement

Not a targeted policy to fight poverty

A "new" way of implementing social policy – as can be seen from the coalition agreement, the finance minister's budget speech and various statements, the ÖVP and FPÖ government has come to power in order to govern in a "new" way. Social policy is also significantly affected by this. To what extent? The proclaimed aims run towards a decisive U-turn in social policy. I see the approaching, universal subordination of social policy to budgetary and economic policy priorities (zero deficit, safeguarding investment in Austria) as a core feature of the ideological profile of the new government. This marks out the ground for changes in the system of social benefits – in pensions, but also in other welfare measures such as unemployment benefit. This subordination has a close connection to the reorientation of the responsibilities and aims of the state: the state should be slimmer, which means, do less. In the words of the finance minister: "Our vision is a slimmer state which serves its citizens, where there is more freedom and fewer regulations and restrictions, more individual responsibility and less outside help, an open and democratic society of free citizens."

Consequently, the state should withdraw from the management of difficult situations. Those people should be helped "who are not sufficiently or not at all capable of helping themselves" (government policy statement p. 18). Or in the words of the finance minister, "Social justice is when those get help who really need it and not everybody who wants it" (budget speech, 21-03-2000). The desired repression of the welfare state correlates with the appeal for more individual responsibility and self-help – slogans which have been in the vocabulary of the ÖVP and FPÖ since the 1980's. The chances of them being put into practice, however, must be reckoned as considerably higher under the changed power structure.

On one hand, the social policy aims of this government, or of these government parties, are based on neo-liberal premises. Their similarity to Thatcherism cannot be overlooked. On the other hand, their policies have clearly discernible traditional characteristics, as can be seen by the demand for the classic nuclear family and the rejection of alternative family structures. What such a social policy can mean in reality can be seen from areas such as social targeting and measures against poverty.

Workless poor und working poor – In rich countries such as Austria, poverty does not mean "naked survival" but rather a substantial reduction in opportunities. This has various "faces": low income, reduced access to education and training, poor housing or homelessness, women and children in poverty. There is a consensus that those who are affected by poverty or at risk do not make up a homogeneous group, that poverty is often "delayed" and that the slide into poverty is often an accumulation of various problems. The causes of poverty are generally regarded to be unemployment, large households with a high number of children, the diminishing protection of the welfare state and a lack of welfare benefits or ineligibility for them. 

Even in Austria, the extent of poverty is considerable. The 1998 Social Report stated that approximately 11% of the population, around 900,000 people, had an income below the threshold of ATS 8,600 (60% of the average per capita income). "After including further indicators of social exclusion in the definition of poverty a total of around 4% of the population, approximately 330,000 people, can be described as living in poverty." Poverty is here understood to mean a low income combined with a lack of or limited reserves (such as being behind on regular payments, sub-standard housing or problems with heating the accommodation). From the point of view of the standard of living it is evident that those who do not work and the unemployed are most affected by poverty: 44% of the 20 – 60 year-olds living in poverty were unemployed or could not work for other reasons.

The following information from the Austrian AMS (Employment Service) shows what little basis there is for the assertion that unemployment benefit and income support are too high. In 1999, average unemployment benefit was ATS 9,077 (ATS 10,059 for men and ATS 7,445 for women) and income support was ATS 7,449 (ATS 8,224 for men and ATS 6,502 for women). When we see that the cost of living allowance for the same year (calculated over twelve months) was ATS 9,110, it is evident that the majority of those receiving unemployment benefit and, to a greater extent, those living from income support had an income which was below the amount of the cost of living allowance. This is regarded as one of the thresholds for measuring poverty in Austria.

In empirical research into poverty, there are increasing indications that there are not only workless poor but also working poor. In 1998 Georgi/Steiner wrote about Austria: "In the case of almost half of those living in poverty (excluding pensioners) the head of the household is in wage-earning employment, over a quarter are unemployed and approx. 10% are self-employed." A study in Tyrol by Gärtner et al. concludes for the same year that 13.6% of those in employment had an income below the poverty threshold. According to Wallner, the proportion of the working poor amongst those who make use of the services of Caritas (a large charity organization) in Austria is around 15%. Those in atypical employment – and their numbers have also increased in Austria over the last decade – part-time workers, those working just a few hours per week, temporary workers, contract workers and those apparently self-employed – often have not only worse working conditions but also a lower income. It is not only for example with part-time work that the income level is lower, part-time work with not enough hours does not provide enough money to live on. Part-time workers are in the low income groups who could be regarded as the working poor. Taken from the results of the income tax statistics for 1996, 20% of wage and salary earners (excluding apprentices) had a standardised gross income of less than ATS 12,000 per month. The negative consequences of forms of employment such as temporary work are primarily on the level of instability and discontinuity of employment – and therefore discontinuity of income.

Atypical forms of employment increase the risk of poverty for the individual. It is true that an individual risk of poverty does not always mean real individual impoverishment – when the income of other family members compensates for a low income or low or non-existent unemployment benefit. In spite of this, it is true that poverty always means that individuals cannot support themselves or cannot do so sufficiently. Against this background of conspicuous social problems, a debate about reform of the welfare state, especially about how social security systems are targeted, could easily provide the starting point for a closer consideration of poverty and policies aimed at reducing poverty.

An impetus for a policy in favour of the poor and socially disadvantaged? The intentions set out by the current government since spring 2000 provide no such impetus. There is not even a basic concept of a policy to fight poverty. The ÖVP/FPÖ government does talk about a policy to reduce poverty but is not implementing one. Instead, some of its policies are further increasing the risk of poverty in a very targeted way.

The "biggest and most demanding reform program for Austria" – as the government praised itself after its first 100 days in office – has little to offer the poor. The coalition government agreement states, "We recognise one of our most important tasks is the reduction of poverty – Pilot projects should test to what extent the application for and payment of social benefits can be carried out by one single social service at local level according to the 'one desk' principle of modern social security administration." The way this government sees its policy on poverty thereby fundamentally consists of one single point, and that is the networking and coordination of existing social benefits on state, provincial and local levels. The postulated claim that those receive help who really need it and the measures planned under the guise of "social targeting" are worlds apart. However, this is no coincidence. In the government program, social targeting is closely connected to massive reservations about abuse of the system by those receiving unemployment benefit and income support as well as to a strategy for reducing the budget deficit. Before the committee for increasing social targeting met for the first time, the government was assuming there was room for potential savings of ATS 3 billion. In the budget for the following years, the figure is already 5 billion and according to a cabinet decision on 19.9.2000, it is intended to save ATS 7 billion by cutting social benefits. It cannot be overlooked that in these strategies it is the budget which has priority and not more effective targeting of the social security system.

The findings of research into poverty are: the unemployed, single parent households and people in households with a large number of children are particularly affected by poverty. Planned government measures such as reducing family benefits and the introduction of a month's waiting period for unemployment benefit for people who leave a job in agreement with their employer as well as the termination of employment contracts after fixed periods increase the risk of poverty or poverty itself for a proportion of those affected. Those who have children and receive unemployment benefit and their partners who do not work are affected by the cuts in family benefits. A study of the situation of the long-term unemployed (1992) shows how important family benefits are for the material well-being of those on low incomes or low unemployment benefit. This was also underlined in the report from September 2000 of the committee "Increased targeting in the social security system": family benefits as a supplement to unemployment benefit make "and important contribution – in view of the low level of reserves – to reducing the risk of poverty even in cases of temporary unemployment". The planned reduction (from ATS 663 to ATS 400 per month) particularly affects those on low incomes and most of all single parents.

With regard to the introduction of a one-month waiting period, a considerable proportion of the unemployed will be affected – 30% of applications for unemployment benefit are from people who have left their jobs in agreement with their employers. The 1992 study of households of the long-term unemployed made clear that only some of those affected could cope with the cutting of unemployment benefit in the first month of unemployment without getting into financial difficulties, i.e. those who could rely on the income of other family members or those who had savings etc. Even this means nothing other than a transfer of the problem to other family members. Those in temporary employment will also be affected by the one-month waiting period regulation, particularly seasonal workers. More than 20% of applications for unemployment benefit come from people on temporary contracts. The financial difficulties of those in temporary employment will be further exacerbated by these measures. Working poor plus workless poor. That means that these measures will most seriously affect people on low incomes, those not in continuous employment, households with only one income and the households of the unemployed who have children. The consequences of the planned measures? Not the targeted reduction of poverty but a targeted increased risk of poverty. Prettifying talk of cushioning particular measures and retrospective questioning of certain details of the cabinet decision will change nothing of that.

In recent years, the question of poverty has been successfully put on the agenda of public and political perception. On the political level – as a result of the priorities of budget consolidation, safeguarding investment in the country and the propagation of more individual responsibility – little has been changed in this direction. The reorientation of social policy under the changed political power structure and the government's current aims give no grounds for optimism whatsoever. The stirring up of suspicion, the strategy of playing different groups off against each other, the massive use of negative solidarity (under the slogan "Everyone must accept cuts" although not everyone is affected) does not lay the ground on which a policy of solidarity is possible, especially not for the socially disadvantaged.

Targeting seen from a different point of view – The questioning of the current system with regard to social targeting could go hand in hand with making inefficiency and social imbalance public. It could also mean discovering gaps and areas where action is necessary and setting priorities. It can be empirically demonstrated that there are gaps in both the unemployment and pension insurance systems and that both are not efficiently targeted: many benefits are at levels below the poverty threshold.

In my view – and this is supported by the report of the committee "Integration not exclusion" from 1999 – the main question today is of a restructuring of social security in the direction of strengthening instruments which safeguard income. The system should be extended in areas necessary for the safeguarding of participation opportunities for those affected by poverty. It is not a question of improving status as it was in the post-war decades but rather of having a secure livelihood – under the conditions of a real uncoupling of work and the safeguarding of opportunities for participation.

Steps in this direction could be a unification of social security standards, a basic or minimum level of insurance for illness, unemployment and accident, a minimum rate for unemployment benefit and a basic retirement pension along Western European lines.

Emmerich Tálos
Institute of Political Science, University of Vienna
Research work on the welfare state, poverty, management and labour, fascism

Recently published: "NS-Herrschaft in Österreich. Ein Handbuch" ("Nazi Rule in Austria. A Handbook"), ed. Together with Hanisch, Neugebauer, Sider.