It all started in February 2001 when the Social Protection Committee was appointed with the task of improving indicators in the field of poverty and social exclusion. This followed from the political agreement reached at the European Council in Nice, defining appropriate objectives in the fight against poverty and social exclusion. That came as a necessity derived from the social chapter of the Amsterdam Treaty (1997) but also would be an important tool for monitoring the results of the goals set in the Lisbon treaty to make a decisive impact on the eradication of poverty by 2010, to improve the understanding of poverty and social exclusion.
After eight years of using micro-data from the European Community Household Panel survey (ECHP) which was launched in 1994, Eurostat was introduced with a new instrument in 2003, EU statistics of income and living conditions (EU-SILC.)This new tool has the capacity to adapt the content and timeliness of data production to reflect current political needs. The living conditions and welfare survey, including data from 1993-2005 shows a relatively representative image of the levels of poverty, the housing conditions, the household expenditure across European Union. It could possibly show the real impact of European social and other policies upon everyday life co-valued with other economic measures.

WHAT MAKES THE DIFFERENCE?

In order to measure the inequality between the poor and the rich ones, Eurostat calculates the following ratio; the 20 percent total equivalised income received by the 20 percent of the population with the highest income in relation to that received by the 20 percent of the population with the lowest income. Well, in the EU-25 and EU-15 level, things seem to be quite harmonised while the 20 percent of the EU-25 population with the highest income received almost five times as much income as the 20 percent of the population with the lowest income in 2004.
The highest inequality is recorded in Portugal (7.2), Latvia (six), Greece (six) and Estonia (six) while the Nordic Member States, the Czech Republic (2003) Hungary (2003) and Slovenia (2003) reported the lowest inequality ratios (between 3.1 and 3.5.) As far as new members are concerned, Romania stands one point above the EU-25 average while Bulgaria is one point below. Turkey had by far the worst performance; the inequality stands at almost 10 points as measured in 2004.

POVERTY RISK

In 2003, some 72 million people in the EU (which accounted for almost 16 percent of the population) were found to be at risk of poverty. To measure the proportion of people that are at risk of poverty, a threshold is set at 60 percent of the median equivalised income. Below that threshold, a person is considered to be at risk of poverty. The proportion of people at risk of poverty (after social transfers) had been the same during the period 1998-2003 at 15 percent at both the EU-25 and EU-15 level. In 2003, the highest figure among the member states was recorded in Greece, Ireland and Slovakia (21 percent) while the Czech Republic (eight percent,) Luxemburg (10percent,) and Slovenia (10 percent) presented the lowest figures.
In terms of genre, Slovakia (21 percent) and Ireland (21 percent) present the highest percentage of males being at risk of poverty while the Czech Republic (seven percent,) Luxembourg (nine percent) and Slovenia (nine percent) presented the lowest ones. On the other hand, 22 percent of the female population in Greece was found to be at risk of poverty, followed by Slovakia (21 percent,) the Czech Republic (eight percent,) Luxembourg (11 percent) and Slovenia (11 percent) once again had a great performance, recording the lowest scores. However, the impact of the social transfers upon the poverty rates shouldn’t by any means be underestimated. Transfers have an important redistributive effect that helps reduce the number of people who are at risk of poverty.
In the hypothetical absence of the social transfers, the percentage of people being at risk of poverty rises from 16 percent at the EU-25 level to 25 percent in 2003. The impact of social transfers on poverty rates was most apparent in the Czech Republic and the Nordic Member States (where poverty rates were reduced by more than 60 percent.) Their effects were least apparent (with a reduction of 20 percent or less) in the southern Member States of Greece, Spain and Italy. When it comes to Romania and Bulgaria, figures are somewhat below EU averages (14 and 17 percent each) despite the fact that social transfers had a very poor effect on poverty rates (10 percent reduction for Bulgaria and 22 percent for Romania.) Poverty rate should be co-valued with the monetary value in purchasing power standards of “at risk of poverty” rate. That is the threshold expressed in monetary value.
Under that certain limit people are exposed to poverty risk. The generally much lower level of the national poverty thresholds reflects the poorer living conditions which prevail in the former countries than in the EU-15 Members States. Countries with the lowest poverty risk tend to have the highest poverty threshold and vice-versa. For example, Luxembourg and Nordic countries which present the lowest poverty rates have at the same time much higher poverty threshold in terms of purchasing power standards (above 20,000 Euro,) while the new members Romania and Bulgaria have a considerably low poverty threshold (below 5,000 Euro) even though in the previous rating they stood below the EU average. That is the case too for most of the 10 new member states. The EU-25 average threshold stands somewhat above 15,.000 Euro.

JOBLESS HOUSEHOLDS

Almost 10 percent of children aged up to 17 years old at the EU-25 and EU-15 level and the Euro area were found to be living in jobless households in 2005. The UK (over 15 percent) recorded the highest figure, followed by Slovakia (close to 15 percent,) Hungary and Belgium (almost 15 percent.) Only two percent of children in Slovenia live in jobless households while Greece and Luxembourg hardly reach four percent.
All other member states present figures between five and 10 percent except Luxembourg, Portugal and Cyprus, that fall below five percent. As far as adults between 18-59 years old are concerned, figures turn to be more pessimistic. At the EU-25, the proportion of people living in jobless households slightly exceeds 10 percent. Poland ranks first with 15 percent of people living in jobless households, followed by Belgium, Hungary (between 10-15percent,) Germany, Finland, the UK, France and Slovakia with figures slightly exceeding (but still over) 10 percent. It should be mentioned that the figures of the rest member states vary between 10 percent and five percent with Portugal and Cyprus recording the lowest scores (five percent each.) As for Romania and Bulgaria, both figures for adults and children stand between 10 percent and 15 percent but still higher than the EU-25 average.