Opinion of the Economic and Social Committee on the 'Costs of poverty and social exclusion in Europe'
Date: 1998-07-01
Institutions: European Economic and Social Committee
Subjects: aid to disadvantaged groups, fight against unemployment, marginalisation, poverty, social cost

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grammes and industrial cooperation centres should be
set up to stimulate the exchange of technological
know-how and promote technological agreements
(licences, transfer of patents ...), between enterprises.
The Committee recommends that the resources of Phare,
Tacis and MEDA be mobilized to this end.

9.2. Notwithstanding the priority given to the appli-
cant countries, our other neighbours and the Euro-
Mediterranean Area, it is desirable for the European
Union to join forces with our main developed partners
in promoting the opening up of networks for the
promotion, exploitation and provision of information

on RTD on the basis of the principles of reciprocity and
mutual interest.

Schemes could be launched with the developing
9.3.
countries, and more especially our partners under the
Lomé Convention, to create favourable conditions for
the dissemination of technologies geared to the needs
of their economies and particularly SMEs and local
craft-based industries. In its opinion on the Green Paper
on the future of the Lomé Convention (1), the Committee
had proposed horizontal instruments for cooperation
and the dissemination of technological
innovations
under the new European Development Fund.

(1) OJ C 296, 29.9.1997, p. 65.

Brussels, 1 July 1998.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on the ‘Costs of poverty and social exclusion
in Europe’

(98/C 284/07)

On 11 July 1996, the Economic and Social Committee decided to draw up an opinion, in
accordance with Rule 23(3) of its Rules of Procedure, on the ‘Costs of poverty and social
exclusion in Europe’.

The Section for Social, Family, Education and Cultural Affairs, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 18 June 1998 (the
rapporteur was Mr Burnel).

At its 356th plenary session held on 1 and 2 July 1998 (meeting of 1 July), the Economic and
Social Committee (ESC) adopted the following opinion by 130 votes to six, with 14 abstentions.

I. THE ECONOMIC AND SOCIAL COMMITTEE
CALLS ATTENTION TO THE SEVERITY OF THE
SITUATION

— Interim programme to combat poverty (3).

— Specific action to combat poverty (4).

1.
The ESC has always paid considerable attention
to inequality and injustice; it has therefore always been
concerned about poverty and its extreme manifestation,
namely social exclusion. The following opinions and
reports issued by the ESC serve to demonstrate its
concern for this issue:

— Programme of pilot schemes and studies to combat

poverty (1).

— Modifications to the programme of pilot studies to

combat poverty (2).

(2) OJ C 263, 17.11.1975.
(3) OJ C 180, 28.7.1977.

— Amendment to the decision on a specific Community

action to combat poverty (5).

— Information Report on poverty (March 1989) (not

published in the Official Journal).

— The economic and social integration of the least-

privileged groups (6).

(4) OJ C 113, 7.5.1980.
(5) OJ C 25, 28.1.1985.
(6) OJ C 263, 20.10.1986.
(7) OJ C 159, 26.6.1989.

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— Own-initiative Opinion on poverty(1).

— Alternate resources and social assistance in the social

protection systems (2).

— Own-initiative Opinion on social exclusion (3).

— Action programme to combat exclusion and promote
the economic integration of the least-privileged
groups (4).

The Committee’s vigilance is not reflected solely in
2.
its documents on specific issues. Some of the Committee’s
opinions deal indirectly with the causes and conse-
quences of poverty. Attention is drawn in this respect to
the opinions on the economic and social situation,
unemployment, young people, the elderly, training,
information, social cohesion and integration; and the
opinions dealing with groups and individuals who are
liable to be victims of the ‘accidents of life’ and history.

3.
Particular mention should be made of the cam-
paigns undertaken by the ESC to enhance civil rights;
these campaigns were predicated on the vital need to
recognize everyone’s political, social, economic, cultural,
individual and family rights and responsibilities.

4.
The Member States are taking measures — geared
to their respective situations, resources and political
approaches — to stifle poverty and tackle its effects.

5.
The EU is also playing an active role, by means of
both general programmes and specific action, such as
measures to combat long-term unemployment, promote
training and reintegration in society and develop ailing
areas and sectors of activity.

6.
Public institutions and private bodies and move-
ments dedicated to combating poverty are full of
enthusiasm for their task.

7.
Associations — which often have to make do with
inadequate and insecure resources — are stepping up
their work at the ‘sharp end’ of the problem. The
churches and the bodies which stand up for human
rights are drawing attention to the principles of freedom,
justice and solidarity, whilst, at the same time, taking
concrete action.

POVERTY IS, HOWEVER, CONTINUING TO
8.
SPREAD AND WORSEN. The ESC thus raises its voice
loudly and forcefully in support of all those who are
sickened by poverty and calls attention to the severity
of the situation.

(1) OJ C 221, 28.8.1989.
(2) OJ C 14, 20.1.1992.
(3) OJ C 352, 30.12.1993.
(4) OJ C 52, 19.2.1994.

II. AN APPRAISAL FOCUSING ON THE COST OF
POVERTY AND SOCIAL EXCLUSION

1.
The approach which the Committee has chosen to
adopt presents it with a difficult task given the diverse
situations and the shortage of information.

2.
There are two ways in which the term ‘costs of
poverty and social exclusion’ can be understood: the
costs to the victims, and the costs to those engaged in
combating poverty and social exclusion.

3.
Poverty and social exclusion exact a toll on their
victims by lowering their quality of life. It should not be
completely impossible to measure this loss of quality of
life. The legal concept of pain and suffering can be
calculated as a monetary value and compensation may
be paid.

This loss of quality of life also brings about a sharp
reduction in the extent to which the everyday needs of
households can be met.

4.
The shortfall in consumption does not penalize
only the poor. It penalizes the economy as a whole:
business turnover suffers, workers lose out because
fewer new workers are taken on, and the state and the
social security systems suffer as a result of the decline in
(a) tax revenue linked to the level of income and
consumption; and (b) social contributions geared to
the level of business activity. Consumers with low
purchasing power turn to cheaper products, which
frequently means products imported into the EU.

The cost of poverty and social exclusion also
5.
includes the cost of public and private help provided by
society to the victims of these phenomena: preventive
measures, social back-up measures, various benefits in
cash and in kind, etc.

6.
The question of what the term the ‘high cost of
the measures to combat poverty’ means to a Member
State or Community should be addressed. Are such costs
brought about by the existence of a large number of
poor people? Are they the result of a vigorous policy
and strong action to prevent poverty and to tackle
poverty?

7.
It is not just the public authorities which are
working to combat poverty. By educating their children,
with a view to promoting their interests, parents invest
part of their time and resources for the good of the
country and society. By carrying out their family
responsibilities, parents help to educate children and
young people and thus help to ensure that they have a
stake in society. This parental contribution is one of the
reasons why family policies need to be expanded.

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8.
Associations and movements specifically dedicated
to the prevention and treatment of poverty play a very
important role by showing solidarity and demonstrating
a close concern for real issues. These associations largely
rely on unpaid volunteers; the work of such volunteers
represents one of the ways in which solidarity is
expressed in practice. The work of these associations is
funded from grants, charitable appeals and members’
contributions.

There is no clash between the predominant role played
by social workers and professional teachers and the role
played by voluntary workers. One of the key ways in
which social reintegrations can be achieved is by teaching
— or re-teaching — the potential or actual victims of
social exclusion to ‘stand on their own two feet’; this
task requires personal attention and patience on the part
of support workers and thus places a high demand on
the availability of individuals. Bearing in mind the whole
range of consequences of poverty and social exclusion
and the very severe risks which they pose to individuals
and society, everyone must realize that they have to take
action, at their respective levels and in the light of their
respective skills and resources.

statistical definition and analysis of social exclusion;
and the quality of assessments and reports. The goal
pursued here by Eurostat is to set up a procedure for
providing regular briefings on social exclusion and
poverty addressed to the EU Member States. The first
report should be published at the end of 1999. These are
very important decisions.

2.3. Most of the statistical data referred to in this
opinion is taken from a survey carried out by Eurostat
in 1993.

2.3.1.
States; Austria, Finland and Sweden joined in 1995.

At that time the EU comprised 12 Member

It is quite likely that changes have since taken
2.3.2.
place regarding the level of poverty in one or other of
the states covered by the 1993 survey. Such changes will
not however detract from the importance of the data set
out below.

III. SOURCES USED

IV. BEFORE ADDRESSING THE QUESTION OF
THE COST OF POVERTY WE NEED TO BE AWARE
OF THE ACTUAL SITUATION

This opinion draws mainly on four sources of

1.
information:

inter alia, by providing answers to the four questions
set out below:

— the work carried out by Eurostat and national

statistical institutes and bodies;

1. How can poverty be defined and measured?

— opinion polls;

2. How can social exclusion be defined?

— conceptual observations and some national data
compiled with the assistance of members of the ESC
study group;

— information based on the experience of bodies which

help to combat poverty and social exclusion.

3. What is the actual number of poor people in the EU?

4. Why are people poor and how do they become poor?

2.

Three observations immediately spring to mind:

1. Definition and statistical measurement of poverty

2.1.
There is a considerable shortage of data relating
to the costs of poverty as described above; such data is
also not necessarily available in the same form in the
various Member States.

1.1.
If they are to be meaningful, the various phenom-
ena associated with poverty have to be measured using
the yardstick of ‘households’ (1). It is thus assumed that
all the members of a household share the same standard
of living.

2.2.
Eurostat and the national statistical institutes
have a very important role to play in providing strategic
back-up to political decisions and in helping to assess
follow-up action. Whilst regretting, therefore,
that
Eurostat did not have sufficient resources to enable it to
meet its requests, the Committee notes with keen interest
that steps were taken on 15 April 1998 to set up a task
force to examine the question of statistics in respect of
social exclusion and poverty. Recommendations are to
be put forward in the autumn of 1998 in respect of: the
adoption of comparable concepts and definitions in
respect of income; an analysis of financial poverty; a

Statistical ‘households’ should not be confused with
‘families’, which comprise a couple or a single adult,
together with their children. A family may well be divided
between several statistical households. A statistical
household, on the other hand, may include persons not
related in any way.

(1) The international statistical definition of a ‘household’ is:
‘a single person or group of persons usually living in the
same accommodation’.

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1.2.
The EC Commission has drawn up a statistical
definition of poverty. This definition is based on average
expenditure per unit of consumption or equivalent
adult. (1) Households are classified as ‘poor’ if their
income falls below 50 % of this average figure; this
represents the ‘poverty line’.

In view of all the consequences which poverty
1.3.
has on the lives of its victims this phenomena has to be
measured as close as possible to the areas in which
people live. The table below thus sets out the poverty
lines set by each of the individual EU Member States;
the figures are given in the respective national currencies
and are based on total recorded income in the respective
Member States:

1.5.
The richer the overall number of inhabitants of
a country is, the higher the poverty threshold. To quote
an example, when a Luxembourg household slips below
the national poverty threshold it has a purchasing power
which is three times higher than that of a Greek
of Portuguese household slipping below the poverty
threshold in their respective countries.

1.6.
There are variations within one and the same
Member State, in addition to the significant differences
in standard of living between Member States. To quote
an example, the same level of income will not ensure
the same standard of living in different regions, the
centre of large cities, various urban areas, suburbs or
villages.

State

Poverty thresholds
calculated on the basis
of average income,
expressed in national
currencies

Comparison of
poverty thresholds
(and average standards
of living) expressed
as an index.
Weighted average
of the thresholds of
the 12 EU states = 100

Luxembourg
Germany
United
Kingdom
Belgium
Denmark
Netherlands
France
Italy
Ireland
Spain
Greece
Portugal

38 750 LFR
1 248 DM

378 £UK
22 930 BFR
5 328 DKR
1 175 HFL
3 716 FF
667 600 LIT

294 £IRL
48 090 PTA
67 990 DRA
42 580 ESC

202
115

111
110
108
106
106
84
82
77
66
64

1.4.
The standard of living in the various EU Member
States varies considerably. With a view to comparing
poverty lines, the sums involved in the various national
currencies have been converted into a single currency
using exchange rates which take account of differences
in general price levels between the various states; the
differences in levels of income in respect of the twelve
poverty lines thus reflect the differences in the purchasing
power of the households concerned. The use of these
exchange rates ensures ‘parity of purchasing power’.

(1) Under the ‘Oxford scale’ for assessing units of consump-
tion: the first person, generally an adult, counts as one unit
of consumption; subsequent persons aged 14 or over count
as 0,7 of a unit; each person aged under 14 counts as 0,5
of a unit. Under the scale used by Eurostat and a number
of national institutes: the first person is counted as under
the Oxford scale; persons aged 14 or over count as 0,5 of
a unit; persons under 14 count as 0,3 of a unit. By way of
example, if we take a household comprising two parents,
a child aged 15 and two children aged 10 and 7, the number
of units of consumption are as follows: — Oxford scale:
3,4 units — Other scale: 2,6 units.

2. Definition of ‘social exclusion’

2.1.
The Committee has already set out its views on
social exclusion in an own-initiative opinion drafted by
Miss Maddocks. This opinion was adopted unanimously
on 30 September 1993 (2).

2.2.
Poor households display different levels of pov-
erty; this is of course the result of different levels of
income but is also sometimes brought about by other
factors, such as: the psychological state of the persons
concerned, the quality of their family relationships, their
general situation as regards relationships and social life,
the rules governing access to social measures and social
support, and whether or not they can turn to associations
for help. It is not necessarily possible to place a financial
value on all of these factors but they have a considerable
impact on the way in which poverty starts and develops.

2.3.
The term ‘severe poverty’ has thus been intro-
duced to describe the situation of individuals and
families who have reached the verge of marginalization
or have already crossed the dividing line. All victims of
marginalization run the risk of sinking into social
exclusion, sooner or later, if appropriate measures are
not taken as soon as possible to ease their plight.

‘Complete’ social exclusion is the final culmi-
2.4.
nation of a series of specific exclusions from basic rights.
The rights in question here include: the right to receive
training; the right to have a job; the right to decent
accommodation; the right to live as a couple and lead a
responsible family life; the right to have access to social
protection and care services; and the right to enjoy a
reasonable standard of living. Victims of social exclusion
— be they individuals or families -Generally speaking,
people descend into a state of social exclusion quite
quickly i.e. they cease to be regarded by society as
persons who enjoy those rights and characteristics which
are fundamental to human dignity, as expressed by
social, economic and cultural
integration and civic
recognition. Victims of social exclusion are no longer
able legitimately to exercise their basic rights in the
normal way. They are effectively without rights and
without a voice.

(2) See OJ C 353, 30.12.1993.

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2.5. Not every victim of poverty is, however, bound
to suffer marginalization or social exclusion. In the same
way, whilst victims of poverty and social exclusion may
take to crime and violence, it is not by any means all
such victims who are involved in such extreme action.
What is true, however,
is that poverty, and social
exclusion may give rise to legal measures, educational
schemes and programmes to check these phenomena
which are costly to society;
there is also a need
to highlight the cost of acts of violence to victims,
perpetrators and their respective families. Children
cannot be held responsible for the acts of their parents;
they should also not suffer as a result of those acts.

2.6.
In the same way, all victims of social exclusion
cannot be classified as ‘poor’. Some forms of social
exclusion derive mainly from causes which are of a
physical, psychological, social, ethnic, cultural, religious,
political, etc. nature and other forms of social exclusion
are linked to handicaps; such situations are not necess-
arily accompanied by financial deprivation (though this
is frequently the case).

2.7. Whilst it has been possible mathematically to
establish the threshold for poverty, it is, however, more
difficult to establish the dividing line between ‘first
degree poverty’, if one dares use the term, and social
exclusion. Only the most extreme form of social
exclusion, namely homelessness, can be readily iden-
tified. It is, however, clear that if adequate or timely
action is not taken to combat poverty, there is a risk
that it may lead — sooner or later — to marginalization
and social exclusion.

2.8.
The victims of marginalization and social
exclusion are not properly covered by statistics. Most
of the persons concerned do not enjoy conventional
living conditions. A large proportion of them live in:
hostels, social readjustment centres, temporary shelters,
bed and breakfast accommodation, shantytowns, cara-
vans, or, worst of all, they have no fixed address,
sleeping in the open, in railway stations or under bridges.

The final stage in the process of social exclusion
2.9.
is moral collapse which may lead people to suicide,
which represents the final cry for help which goes
unanswered. Suicide is one of the major causes of death
and it is on the increase, particularly amongst young
people, the very lonely and the elderly.

3. How many poor households and individuals are

there in the EU?

Eurostat has calculated the poverty thresholds
3.1.
for the various Member States, based on half the average
income per unit of consumption; as was pointed out
above, these units of consumption were established
using a different scale to the traditional Oxford scale (1).

(1) Under the ‘Oxford scale’ for assessing units of consump-
tion: the first person, generally an adult, counts as one unit
of consumption; subsequent persons aged 14 or over count
as 0,7 of a unit; each person aged under 14 counts as 0,5
of a unit. Under the scale used by Eurostat and a number
of national institutes: the first person is counted as under
the Oxford scale; persons aged 14 or over count as 0,5 of
a unit; persons under 14 count as 0,3 of a unit. By way of
example, if we take a household comprising two parents,
a child aged 15 and two children aged 10 and 7, the number
of units of consumption are as follows: — Oxford scale:
3,4 units — Other scale: 2,6 units.

3.1.1.
The reason why the yardstick of half the
average income was chosen was in order to maintain
continuity with the estimates of the level of poverty made
earlier by the Commission. As will be demonstrated at
a later stage, the use of this yardstick provides a much
higher proportion of poor people than if the yardstick
of half the median income were used to determine the
poverty threshold.

3.1.2.
Reference to income rather than expenditure
leads to a sharp increase in the number of poor
households. The use of a different method of establishing
units of consumption produces only a very slight change
in the percentage of poor households in the overall
population; it does, however, slightly reduce the pro-
portion of poor households in the category of large
families while increasing the proportion amongst house-
holds comprising just one person.

3.1.3.
In the table below the figures in the left hand
column indicate the percentage of poor households,
calculated in accordance with the criteria described
above (2), in each of the 12 Member States which made
up the EU in 1993.

State

percentage of
poor households —
reference criterion:
half of average income

percentage of
poor households —
reference criterion:
half of median income

Belgium
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Portugal
United
Kingdom

13
9
13
24
19
16
21
18
14
14
29

23

EU-12

17,3

9
5
10
18
11,5
11
6
13
7
10
19

14

12

3.1.4.
As was the case with all the other tables the
purpose of these statistics is of course not to set out a
‘league table’ in respect of the various Member States;
this would be insulting to poor people, the Member
States and their governments which are having to tackle
difficult situations using the measures which they deem
appropriate.

It is interesting to compare the above figures
3.1.5.
with the figures for the percentage of poor households
in each of the 12 Member States listed above established
on the basis of half the median level of income rather

(2) See point 3.1.1.

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than the average level of income. These figures have
been calculated by the French Institute for Statistics and
Economic Studies and are set out in the right hand
column of the table.

poor households when the reference basis used is the
median level of income (or standard of living) in the EU,
rather than the median living standard in the respective
states themselves.

3.1.6. When there is a considerable discrepancy
between the two sets of percentages this implies that the
state concerned has a particularly large percentage of
persons having very high income levels (this results in a
significant difference between the figure represented by
half the average income and that represented by half the
median income).

Irrespective of whether the calculations were
3.1.7.
made on the basis of half the average income or half the
median income, the figures for the percentage of poor
people in the respective Member States have so far
always been established on the basis of the standard of
the individual state
living (average or median) of
concerned. As the standard of living varies from one
Member State to another, a household regarded as poor
in one Member State would, if it retained its standard
of living, not be regarded as poor in another Member
State. In the light of this observation there is a need to
determine the percentage of poor people in each Member
State of the EU measured on the basis of half the average
or median income in the EU, i.e. regarding the EU as a
single economic entity. These figures are set out in the
right hand column of the table below. The reference
criterion used was half the median level of income in
the EU-12 in 1993; this figure was determined on the
basis of recorded levels of income in each of the Member
States, expressed in a single currency using exchange
rates which ensured ‘parity of purchasing power’.

Percentage of poor households

State

calculated by reference
to half the median
income in the respective
state (%)

calculated by reference
to half the
median income
in EU-12 (%)(*)

Belgium
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Portugal
United
Kingdom

Average
of EU-12

9
5
10
18
11,5
11
6
13
7
10
19

14

12

7
5
7
36
25
10
25
19
1
9
44

13

13,7

(*) These figures were calculated by the French National Institute for
Statistics and Economic Studies (INSEE) using data from the 1993
Eurostat survey.

3.1.8.
The states having a standard of living — and
consequently also a poverty threshold — below the
median level for the EU have a higher percentage of

3.1.9. On the basis of the 1993 survey, the total
number of poor people in the EU-12 was 57 million,
using the reference criterion of half of average income,
and 38,7 million, using the yardstick of half of median
income.

Austria, Finland and Sweden, joined the EU two years
after the 1993 survey had been drawn up.

On the basis of careful extrapolation and in the light of
information obtained from various sources, it may be
conjectured that the total number of poor people in the
EU-15 could be approximately 59 million or 39,5 million,
depending on the reference criterion used. This would
mean that one person in six, or one person in nine, was
poor.

After having made an appraisal of poverty in the
3.2.
EU it would be helpful to briefly examine the facts
which are known about the gravity of the situation in
the world as a whole.

People in many countries are striving for
3.2.1.
development. These nations look towards the European
Union with a mixture of envy and hope, sometimes
backed up by a more or less objective understanding of
the situation in European countries. We must not
disappoint the legitimate expectations of these peoples
since to do so would be to contravene the principles set
out in the Universal Declaration of Human Rights.
Article 1 of the declaration states that ‘all human beings
are born free and equal ... and should act towards one
another in a spirit of brotherhood’.

3.2.2.
In 1994 4,3 billion people — three quarters of
the world’s population lived in the Third World.
According to the figures for 1992, 57 countries — with
a total population of 3,7 billion — had an annual per
capita GNP of less than $ 675. Over a billion human
beings have to live on less than $ 1 a day.

Even bearing in mind the impact — which is difficult to
assess — of the ‘informal’ economies, the discrepancy
in wealth between the EU and the Third World is of the
order of 25:1.

The reason for drawing attention to this harsh
3.2.3.
reality is not to try to convince poor people in the EU
that it would be very wrong of them to complain, since
other continents have billions of people who are much
poorer than they are. The aim is rather to highlight a
dual responsibility:

— a responsibility towards our fellow citizens who are

living in poverty and misery;

— a responsibility towards people living in countries
which remain underdeveloped and with which some
Member States have historic ties; people in these
countries want to see an improvement in their living
conditions, or in the case of many such people, they
simply want to avoid dying of hunger. Indifference
or even the use of force, are not the weapons

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which should normally be used to combat poverty;
ritualistic statements of pity for the victims of
poverty are equally inappropriate;

— retired persons who are former unskilled manual
workers or non-manual workers aged over 75 and
the widows of these retired persons;

— these observations underline the importance of the
North-South dialogue and the urgent need for
humanitarian reasons and on grounds of maintaining
geo-political balance, for talks on world economic
issues and trade to cover also the wretched situation
of people living in severe poverty.

4. Why are people poor or why do they become poor?

4.1.
The direct causes of poverty are all aggravated
by situations which considerably, and in a lasting way,
restrict the prosperity of households to the point where
the exercise of household rights, the fulfilment of
household responsibilities and the quality of the life of
the household are seriously jeopardized.

4.1.2. On the basis of the statistics provided by
Eurostat, four main factors in the development of
poverty may be identified. The first two factors are
unemployment and lack of vocational qualifications.
These two factors are frequently interlinked. People
who lack vocational qualifications find it difficult to
secure stable employment and even those with jobs
command only inadequate wage levels. The other two
factors are large families (four or more children) and
age (persons aged over 75). The latter factor is to a large
extent generation-related: the oldest people do not
always have levels of pension equivalent to those secured
by later generations.

4.1.3.
By combining a number of criteria (socio-
economic categories, the skill level of the ‘head of
household’, the length of time people have been unem-
ployed, family sizes and age) it is possible to identify
types of households among which there is a strong
probability of finding a high proportion of poor people.
The characteristics of such households are as follows:

— households (couples with or without children and
single-parent families) in which all the adult members
are unemployed;

— persons who have been unemployed for long periods
(over a year and, in particular, over two years) and
who are aged over 25, irrespective of their level of
skills;

— unemployed persons — particularly people who
have been unemployed for long periods — who are
aged under 25, and who do not live with their
families;

— workers who have jobs but receive low rates of pay
because they are poorly qualified, are obliged to
work part-time or work intermittently;

— households comprising only one wage-earner, who
is an unskilled manual worker or non-manual
worker;

— farmers engaged in mixed farming or livestock farm-
ing whose holdings are of such a type (small size, poor
yields, producing unprofitable products) that they
provide only a low level of income, in cases where
such households do not have additional sources of
income, such as those obtained by wage-earners;

— families having four or more children, in cases where
the head of household is a manual worker or a
non-manual worker — irrespective of whether the
person is employed or unemployed — having a
spouse who is not in gainful employment or who is
unemployed;

— single-parent families in which the head of household

— most frequently a woman — is unskilled.

4.1.4.
Amongst the causes of poverty, unemployment
has a particularly strong impact even though it is
invariably not the main cause of poverty. All unemployed
there are an
persons are not, however, poor but
increasing number of poor people amongst persons
working in semi-skilled or unskilled jobs who conse-
quently are on low incomes and whose jobs are frequently
insecure.

4.2.
Poverty may also have a number of causes which
are more indirect than those mentioned above. Examples
of such causes are inadequate or inappropriate training
which makes it difficult to find and hold down jobs,
particularly at times of recession or rapid technological
change. Further examples of such causes are poor health
and the inadequate or non-existent care; these situations
may give rise to job instability or may even make it
necessary for people to give up work altogether.

4.3.
The influence of living conditions should be
highlighted. Insecure living conditions are frequently
brought about by poverty but these conditions them-
selves may also trigger poverty or represent a factor
which accelerates a slide into poverty, marginality or
social exclusion.

Accommodation has a considerable influence
4.3.1.
on the quality of life, the happiness of couples, the
bringing up of children. Those who are homeless have
no foothold in society, it is rarely possible for them to
find stable employment. Accommodation is a factor in
determining social esteem. People who are homeless
may sometimes lose all their civic entitlements and even
their civic rights. Some states have, however, taken steps
to enable homeless people to vote.

Housing conditions vary according to location. The
location of housing has a bearing on most items of
household expenditure: transport, educational expendi-
ture, shopping conditions, and hence the cost of shop-
ping; it also sometimes influences social relationships.

4.3.2. Owning one’s own accommodation is tanta-
mount to having an additional source of income. With
a view to measuring actual standards of living more
effectively, many countries, therefore, add to the income
or expenditure of home-owning households a notional
income designed to give a monetary value to this
advantage. The poverty threshold is thus raised to a
higher level than would otherwise be the case and this
results in a slight increase in the proportion of poor
households.

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4.3.3.
A number of households are in the process of
buying their homes. They have to repay mortgages and
make interest payments — some of which are excessively
high — and this factor may have a negative impact on
their quality of life. An excessive level of debt may
trigger the slide into poverty or considerably worsen
the situation. Objective information and help with
decision-making before committing oneself to the pur-
chase of property is thus a necessity, as is a policy on
the provision of high-grade rented social housing.

4.3.4. On 18 March 1997 the European Parliament’s
Committee on Employment and Social Affairs adopted
a draft resolution in which it pointed out that there were
no less than 18 million people in the EU who could be
regarded as homeless or who were reduced to living
in housing which lacked adequate facilities or was
overcrowded. The draft resolution went on to state that
housing had to be regarded as the cornerstone which
underpinned all the other basic social rights (1). The ESC
shares the Parliament’s appraisal and its conclusion.

4.4.
Following the above objective appraisals of
poverty, consideration should now be given to the
lessons to be learned from opinion polls, i.e. what they
tell us about how poverty is viewed.

4.4.1. Opinion polls conducted amongst households
with a view to securing a subjective assessment of
poverty, based on the appraisals by households of
their own levels of prosperity, yield results which are
sometimes different from analyses based on essentially
objective data, such as household expenditure. The
sharpest contrasts occur when the target groups are
retired persons and large families.

4.4.2.
Retired persons tend to consider themselves to
be poorer than their standard of living would indicate.
In the case of some retired persons this may be put down
to the following factors: fear for the future; lack of
occupation; isolation; failure to take account of the
value of services that they sometimes receive either free
of charge or at a reduced cost.

4.4.3. Members of large families are frequently more
content with their lot and their relatively low standard
of living than are people living alone and even childless
couples having much higher standards of living. The
reason for this is because of their children, large families
have a very high degree of resilience to poverty (2); it
should also be noted that in the case of the poorest large
families the children frequently represent the family’s
only hope.

4.4.4. Opinion polls also confirm the overriding
importance of having a job, as a factor in determining
whether or not people are optimistic and feel part of

society. Households which, on the basis of mathematical
criteria, may be classified as ‘poor’ declare themselves
not to be poor if at least one person in the household
has a stable job providing gainful employment; on
the other hand, households which, on the basis of
mathematical criteria, cannot be defined as ‘poor’
declare themselves to be poor if no member of the
household is in gainful employment.

4.4.5.
Self-assessed levels of poverty are therefore
influenced by considerations other than standard of
living. The fact that people are employed, elderly or
lonely brings home to them their vulnerability and
triggers distressing questions relating to their value to
society and what fate has in store for them.

V. HOW CAN WE MEASURE THE COSTS OF
POVERTY AND SOCIAL EXCLUSION?

1. Preliminary observations

1.1.
If we are to calculate the costs of poverty and
social exclusion we must first of all agree on what is
meant by these words and be able to describe the persons
and numbers of persons concerned.
In the above
paragraphs an attempt has been made to carry out an
appraisal and provide some broad figures.

1.2.
In order to proceed to the following stage there
is a need to (a) determine the cost of tackling situations
of poverty and social exclusion and implementing
prevention measures and (b) measure the impact on
production, employment, fiscal revenue and social secu-
rity contributions of the reduction in the level of
consumption attributable to poor people and victims of
social exclusion.

1.3.
This is a complex and difficult task. By way of
an example, although it is recognized that unemployment
plays a role in the development of poverty, the total cost
of unemployment cannot be included in the cost of
poverty. In the same way, it cannot be assumed that all
family benefits help to prevent poverty. A further
question which needs to be answered is whether poor
families receive assistance because of their family status
or because they are poor. Quite apart from consider-
ations of accountancy, the answer to this question is
important from the point of view of defining the nature
of family benefits (do they represent compensation or
assistance?) and from the point of view of specifying
where necessary, which families are entitled to receive
benefit. It should be noted that in the case of very poor
families and individuals, welfare payments frequently
represent their only resources on which they can rely, if
not their only source of income.

(1) PE 219.267/fin Part A — rapporteur: Mr Brian Crowley,

MEP.

(2) Large families frequently receive assistance from associ-
ations which stress the need to learn how to acquire or
regain dignity in all its forms: parental dignity, social
dignity and civic dignity.

1.4. On a more general note, whilst it may seem
possible to quantify the cost of some measures explicitly
designed to tackle the consequences of poverty (specific
benefits and services), it is more difficult to pinpoint,
within overall budgets, the costs of specific poverty-

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prevention measures in fields such as education, training,
information, accommodation and health. All policies
are implicitly preventive. Education involves measures
to combat illiteracy and medical care improves the state
of public health by treating individual patients, and
vice-versa.

these costs: (a) by estimating the costs of the production
which would be achieved by partially or wholly unem-
ployed poor people if they were provided with work;
(b) by estimating the level of overall demand if the
unfulfilled needs of poor people were met.

1.5. On the basis of partial data acquired from
various sources one fact is already clear: poverty and
social exclusion exact a heavy economic cost and this
cost is tending to increase. As has already been noted,
Eurostat is at the present time unable to provide full
information, established on a harmonized basis, on the
costs of poverty and social exclusion. The ESC does not,
by itself, have the means to draw up an exhaustive table
setting out the costs of poverty and social exclusion.
With a view to carrying the appraisal a stage further,
however, the Committee has set out below an outline
method for calculating these costs, together with exam-
ples. The ESC does not seek, though, to prescribe a
particular course of action. Flexible implementation of
this method by members of the study group set up by
the Committee’s Section for Social Affairs — some of
whom have already compiled information on the subject
— should help to enable further progress to be made at
a later stage.

2. The Committee’s contribution towards the estab-
lishment of an outline method of calculating costs

The costs of poverty include (a) real expenditure

2.1.
and (b) a shortfall in revenue or loss of income.

The cost can be calculated under the following four
headings:

(a) aid — in cash or in kind — provided by
2.1.1.
states, regional authorities and social or public health
bodies to the victims of poverty in order to enable them
to bring some improvement, however slight, to their
situation and (b) the collective costs assumed by society
in respect of: finding jobs for victims of poverty; bringing
about their reintegration into society; and in making
good the damage sometimes caused by people suffering
from poverty;

2.1.2.
poverty or social exclusion;

the cost of carrying out policies for preventing

the losses incurred by the public purse as a
2.1.3.
result of the shortfall
in taxes and social security
contributions brought about by under-employment and
the reduced levels of income and consumption of
poor households and, of course, the victims of social
exclusion;

2.1.4.
the ‘cost’ to the productive apparatus of the
loss of production caused by under-employment and the
low level of purchasing power of poor people; there are
two ways in which attempts can be made to calculate

2.2.
It should by now be possible to calculate, in
every Member State, the costs listed under the first
heading. The costs could be calculated on the basis of:

2.2.1.
a list of the social benefits which are, as
a general rule, paid only to disadvantaged groups
(minimum living wages and a number of paid benefits,
subject to means-testing) and a list of the benefits
— generally paid to a broader group of beneficiaries —
where part of these benefits is paid to poor households
and poor individuals, even though it is difficult to assess
the percentage involved;

2.2.2.
surveys, involving a sample of households who
are asked to compile, with the assistance of a member
of the survey team, a list of their income (both income
from work and income from transfer payments). Using
this method it is possible to identify poor households
— according, for example, to the definition used by the
Commission — and to calculate their incomes from
various welfare payments.

2.3.
If we opt to calculate the costs of the benefits
normally earmarked for poor people or which may be
paid to them, the following payments could be included:

— unemployment allowances, known as ‘solidarity’
payments, paid to the long-term unemployed; these
allowances should be distinguished from ‘unemploy-
ment insurance payments’;

— retraining allowances and job-seekers allowances
paid to the long-term unemployed, in particular
young people and elderly workers;

— minimum subsistence payments (such as income
support) paid to persons without income or savings;

— welfare payments paid to children from deprived
backgrounds, young people who are in difficulty
and low-income handicapped persons;

— means-tested family benefits paid to families having
at least three children; payments made to lone
parents; payments made to low-income families;

— minimum subsistence payments made to old people,
welfare payments or home-helps for old people who
have no income or savings;

— medical grants paid to low-income sick people,
invalids, handicapped persons and, more generally,
people who do not benefit from social protection or
have only a very inadequate level of protection;

— means-tested housing benefits paid to persons whose
level of income is such that it does not enable them
or their families to live in decent housing conditions;
the provision of accommodation for deprived
the provision of
persons or homeless persons;

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shelters for young people in difficulty; the provision
of shelters and hospices for elderly people who have
no income or savings;

— additional schooling for children from deprived
areas or backgrounds; literacy courses; rehabilitation
programmes for young people who are in difficulty;
— price reductions or free access to certain services
provided by the community:
transport, meals,
heating, information, recreation, cultural services,
etc.;

— the payment of social workers caring for: poor
people in all age groups; young people experiencing
difficulties; the long-term unemployed; etc.; invest-
ments and the operating costs in respect of the
departments employing these social workers;

— operating costs for measures to prevent and curb
certain crimes, the causes of which can be attributed
to poverty; these measures include treatment for
alcoholism and drug addiction linked to poverty.

These benefits go under different names in the
2.3.1.
various Member States. The above reference list is not
absolutely exhaustive but it nevertheless covers a broad
area. Our goal is to ascertain, through reference to the
accounts of the bodies responsible for distributing
benefits, the overall cost of each of the benefits con-
cerned; in cases where the benefits are also paid to
people not strictly classified as ‘poor’, an estimate should
be made of the proportion of the benefits which actually
do go to poor people.

2.3.2. One of the weaknesses of this method lies in
the fact that aid is often directed towards individuals
rather than households; the situation may thus arise that
a person in receipt of a given benefit may in fact be
living in a household which is not poor. It is therefore
possible that the overall cost of the benefits listed above
will, when taken at face value, exceed the total value of
the benefits paid to the victims of poverty, in the strict
sense of the word.

2.3.3.
A questionnaire covering, to all intents and
purposes, all of the abovementioned costs has been
forwarded to members of the ESC study group, with the
request that they endeavour to obtain the information
concerned from the competent bodies in their respective
countries. Replies have been received in respect of
Austria, Belgium, Spain, France, Germany, Greece, Italy
and the UK. Information, sometimes very comprehen-
sive, has been provided concerning the number and the
characteristics of employed persons and, in a number of
cases, the allowances they receive and the various other
social protection measures. In most cases, however, it
turned out to be almost impossible to identify the
proportion of the allowances and benefits concerned
paid exclusively to poor people. If reliable figures are to
be obtained in this respect, long, painstaking, specific
research would be necessary involving a large number
of institutions and requiring a considerable amount of
coordination in each of the respective countries.

2.3.4.
Very few attempts have been made to provide
a general view of the situation. Attention is drawn,
however, by way of example, to the work carried out
by Dr Rudolf Martens in Germany. Dr Martens who

estimated that in 1994 the cost to the public purse of
providing allowances for the long-term unemployed,
social assistance, and various forms of care and therapy
amounted to approximately DM 70 billion (or some
ECU 37 billion).

A further general indication is provided by the fact that
at the beginning of 1997 the French Ministry for Social
Affairs announced that it would be earmarking FF 126
billion (ECU 19,5 billion) for measures to combat
poverty and social exclusion in the course of that year.
figure was boosted by expenditure by local
That
authorities which was of the order of FF 40 billion (ECU
6 billion).

An alternative basis on which to assess the costs
2.4.
of measures to combat poverty is to carry out surveys
of household sources of income. In 1993 Eurostat carried
out a survey based on a panel of EU households; the
information which this survey provided on the number
of poor people has been used in of this opinion. The
French Ministry for Social Affairs has endeavoured to
utilize the data in this survey relating to the income of
poor households in France; the findings are set out
below, solely by way of an example.

2.4.1.
Surveys of households tend to have a number
of weaknesses, such as the risk of under-assessing income
in the case of rich households (or households described
as ‘not poor’) and poor households. Poor households
may, despite the diligence of survey workers in helping
them to provide objective answers, be tempted to keep
quiet about the existence of certain sources of income
for fear of losing that income, particularly in the case of
means-tested benefits. This stance is based more on fear
than a desire to defraud.

A further source of under-assessment — for which this
time the households taking part in the survey cannot be
held responsible — is linked to the deliberate disregard
by the survey of healthcare ‘in kind’. Another area not
taken into account is the costs resulting not from the
payment of welfare benefits to households themselves
but rather from, for example, the salaries paid to social
workers and teachers or costs linked to the provision of
free, or reduced cost, access to certain services provided
by the community (e.g. transport and meals).

2.4.2.
An additional drawback of direct surveys of
‘ordinary’ households is the imperfect picture which
they provide of the situation of those who are at the
‘bottom of the heap’. In the case of the survey under
review, the persons carrying out the survey found it very
difficult to question people belonging to the social
groups hardest hit by poverty who are not only poor
but also victims of social exclusion (1). For this reason,
in connection with its report on poverty which was to

(1) The survey did not cover, for example, poor people resident
in hospitals or public or private ‘institutions’ in general.

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be presented by Mrs Geneviève de Gaulle, the French
Economic and Social Council was obliged to commission
the Centre for Research and Documentation on Living
Conditions (CREDOC), to carry out a special survey of
a sample of persons living at the ‘sharp end’ of poverty.

In the analysis of the data in the Eurostat
2.4.3.
survey, the poverty threshold was set at half the median
household income per unit of consumption. On the basis
of
this criterion 11 % of French households were
considered to be poor in 1993, as against 16 % on the
basis of a poverty threshold set at half the average
income.

The reference basis for calculating units of consumption
was the Eurostat scale. The use of this scale gives a
slightly increased figure for the percentage of poor
households in France as against the figure obtained
using the Oxford scale (10 % instead of 9,6 %) but the
figure for the number of poor individuals is reduced
(9 % instead of 10,4 %).

2.4.4.
Using the abovementioned criteria, the author
of the study carried out by the French Ministry for
Social Affairs found that income from welfare payments
received by poor people in 1993 totalled — if we
rely strictly on the data provided by the households
questioned in the Eurostat survey — FF 63 billion, or
slightly less than ECU 10 billion. The total figure does,
however, rise to approximately FF 130 billion (ECU
20 billion) if we (a) correct the total to take account of
the effects of under-assessment, which involves crediting
to each household the benefits which it did not declare
despite the fact that it doubtlessly received them, given
the rights enjoyed by households and the current
practices pursued by the administrative bodies respon-
sible for welfare payments, and (b) supplement the
assessment by including in the calculations the costs of
implementing measures to combat poverty not covered
by the Eurostat survey.

If, instead of using the criteria adopted in the
2.4.5.
abovementioned analysis of the recent Eurostat survey,
we use the criteria of half the average income rather
than half the median income and if we use the ‘Oxford’
scale, rather than the new scale, the total income from
welfare payments currently received by poor people
amounts to FF 115 billion (if we rely strictly on the data
supplied by the households questioned in the survey). If
we correct the figure to take account of the effect of
under-assessment the estimated total could be between
FF 180 and 200 billion (approximately ECU 30 billion).

2.4.6.
It will be noted that account has not been taken
of the cost of help provided to people in need by private
associations and bodies. At the present time too little
statistical information is available to enable an overall
assessment to be made of this cost. In view of the
important social role played by these bodies, it would
be a useful exercise to question these bodies at local
level.

Turning to the question of appeals to public generosity,
these are generally more effective with regard to help in
combating certain illnesses (such as cancer, myopathy
and AIDS) than in drives to combat poverty; in the latter
case it is not always easy to make a distinction, in the
case of funds collected by the associations concerned,
between the amount of funding spent on helping
combat underdevelopment in countries situated in other
continents and the amount spent on helping poor people
in Europe.

2.4.7.
The Committee urges that account be taken of
transfer payments made between family members and
between generations, such as payments made to young
people in difficulty as a result, for example, of unem-
ployment. These transfer payments play a significant
role in preventing poverty and helping to combat
worsening poverty. In a study carried out four years ago
the INSEE estimated that the sums involved in transfer
payments between family members amounted to FF 140
billion (ECU 23 billion approx.). 80 % of these payments
are made by older persons to young persons and 20 %
in the opposite direction. It would be useful to have this
type of information for each Member State.

2.5.
It is more difficult to determine the cost of
preventive measures than the cost of direct aid to people
who are poor here and now and the cost of other help
required to alleviate the present situation of these people.
If we are to calculate the cost of preventive measures,
we need to determine what proportion of the allowances
designed to (a) partially offset the expenses incurred by
families, (b) fund health expenditure (e.g. measures to
safeguard the health of mothers and children) and (c)
make payments to particular categories of pensioners,
should be regarded as serving to prevent poverty and
social exclusion. We should also endeavour to calculate
the percentage of total expenditure on basic training
and ongoing training which can be regarded as expendi-
ture on preventing poverty and social exclusion. To
quote an example, should we classify as expenditure on
preventive measures the funding of all nursery schools
and primary schools in the suburbs of large cities, in the
light of the pupils which they look after, or should only
a part of this funding be so classified? As far as we are
aware no such calculations have so far been made; it
would be no easy task to make them.

2.6.
A third area of study to which very little attention
has been paid is the measurement of the cost of the last
two elements of the cost of poverty, namely the loss of
tax revenue and social security contributions and the
loss of production as a result of the lower level of
consumption by poor households.

In the study on the situation in Germany carried
2.6.1.
out by Dr Rudolf Martens it is estimated that in 1995
the shortfall in the public sector budget caused by the
loss of tax revenue and social security contributions due
to the number of persons officially recorded as being
unemployed amounted to DM 65 billion (ECU 35 bil-
lion); this shortfall was approximately evenly divided
between the loss of tax revenue and the loss social
security contributions. If we equate poor people with
only the long-term unemployed, the loss of tax revenue
security contributions brought about
and social

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by unemployment amongst poor people would be
DM 13 billion (ECU 7 billion), assuming that when
calculating the loss of tax income and social security
contributions, the figures in respect of long-term unem-
ployed persons are based on those of an ‘average
unemployed person’.

Turning to the production shortfall brought
2.6.2.
about by unemployment, the German Labour Market
and Employment Research Institute (IAB) has estimated
that (1) the figure for the Federal Republic of Germany
in 1987 amounted to DM 190 billion (ECU 92 billion);
this figure was based on the total number of unemployed
persons calculated by the IAB, which included persons
both officially registered as unemployed and those not
officially registered. For the purposes of the calculations
it is assumed that each unemployed person has a notional
productivity equivalent on average to 75 % of the
productivity of persons actually in gainful employment.
We are dealing here, however, with unemployed persons
as a whole and not just those unemployed persons who
may be classified as ‘poor’. If we venture to estimate
that the latter category comprises a fifth of the overall
number of unemployed persons — be they registered or
not — the production shortfall caused by unemployment
would be of the order of DM 38 billion (ECU 18 billion).

The value of the shortfall in social security con-
2.6.3.
tributions in France brought about by unemployment in
1991 has been estimated at FF 138 billion (ECU
21 billion) (2). The following estimates have been made
for loss of tax income: (a) loss of income tax revenue — FF
25 billion (ECU 3,8 billion) and (b) loss of VAT revenue
— FF 14 billion (brought about by a shortfall in the level
of consumption), which amounts to an overall shortfall
of FF 39 billion (ECU 6 billion). Bearing in mind that not
all unemployed persons may be classified as ‘poor’, the
proportion of the overall number of unemployed persons
who may be classified as ‘poor’ has been estimated at
25 % for the purposes of these calculations. This figure
probably represents a minimum proportion. These
people generally earn less than half the average wage. On
thebasisofthesetwocriteriatheshortfallinsocialsecurity
contributions alone for 1991 could be estimated at some
FF 25 billion (ECU 3,9 billion approx.).

The

two above-mentioned case

studies
2.6.4.
— referring to the situations in Germany and France
are intended to serve only as specific examples; no
conclusions, or, more importantly, no generalization
should be made in respect of the other Member States
on the basis of these examples.

VI. CONCLUSIONS: DO WE WANT AN EU
WHICH WORKS TO PROMOTE THE INTERESTS
OF MANY OF ITS CITIZENS OR AN EU WORKING
ON BEHALF OF EVERYONE?

1.
In posing this concise question EC Commissioner
Pa´draig Flynn got to the heart of the matter. This is an
issue which transcends the field of the prevention and
treatment of poverty, however important these issues
may be.

(1) Figures taken from a document provided by Dr Martens.
(2) Initial general review drawn up by the French Ministry for

Employment — 16 November 1994.

1.1.
The EU seeks to constitute a strong political,
economic, social and cultural entity; it does, however,
wish to avoid being ‘dominating’ since it is a body
founded on the principals of humanism and democracy
and therefore dedicated to respecting basic human rights.

Is it not a fact that in any democratic society the goal of
all activity is to improve living conditions, promote
the common good by seeking to bring about fair
improvements, based on freedom and responsibility,
bearing in mind that, in the interests of justice, solidarity
and respect for human dignity, priority has to be given
to concern for the most vulnerable?

1.2. We are duty bound to opt for the second of the
two alternatives proposed by Commissioner Flynn;
failure to do so would constitute a breach of faith with
the founders of the EU and would be tantamount
to rejecting the principals underlying the Universal
Declaration of Human Rights.

In the light of the situation as regards poverty and
2.
social exclusion we have to recognize that we have failed
in this respect; whilst we have perhaps failed in respect
of some policies, the chief failure has been in observing
human rights.

Whether the number of poor people amounts to 40 mil-
lion or 60 million — which does of course represent a
considerable difference from an arithmetical point of
view and it is the victims of misfortune and poverty who
can best testify to this — the offence to human dignity
is essentially equally as grave, from a moral and civic
standpoint, bearing in mind the ethical requirements
and standards which should be met by a society founded
on moral principles.

2.1.
Depending on the reference criteria used, at least
one person in nine in the EU is poor, according to the
statistical data.

The total number of victims of social exclusion is
estimated to be around 4 million people.

In the age group up to 16, one child in five lives in a
poor household.

And yet, taken overall, our society is highly developed
and our culture is founded on lasting humanitarian
values.

Can we be content with the situation whilst there is even
one human being who has been deprived of his dignity?

There are significant differences in the level of
2.2.
poverty between the individual EU states. If we are to
achieve a higher level of solidarity between the peoples
of the EU, the requisite Community measures will have
to be consolidated.

2.3.
If this goal is to be achieved, there will have to
be a stronger political will amongst the citizens of each
of the Member States to transcend the narrow, secure
area of our own immediate personal and group interests
in order to embrace solidarity rather than self-interest.

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2.4.
Firm action needs to be taken everywhere without
delay against both the manifestations of poverty and
social exclusion and also against the causes of these
phenomena. Any procrastination would be harmful to
the victims of poverty; it would also damage the image
and cohesion of the EU. Who would be prepared to take
such risks?

2.5.
The Committee endorses the desire expressed by
the European Council in the appendices to the Treaties
of Maastricht and Amsterdam to make measures to
combat social exclusion one of the goals of EU social
policy.

3.
The Committee would welcome the introduction
of procedures which would enable us to gain an accurate
picture of both poverty and social exclusion. Detailed,
specific studies should be made out of the situation in
each of the EU Member States; these studies should be
updated in the light of national surveys. The studies
should be drawn up in accordance with rules laid down
in agreement with the EU authorities so as to ensure
statistical conformity. If successful action is to be taken
to tackle poverty, the situation needs to be analyzed in
a reliable, objective way.

This necessary improvement in the understanding
4.
of the situation should be backed up by an interactive
drive to educate all those involved in providing social
assistance. To this end action needs to be stepped up in
the following areas:

4.1.
the ‘poverty and social exclusion dimension’
should be brought into all debates and policy statements,
at both national and EU level, in the following fields:
politics, education, training, information, employment,
health protection and social welfare, housing, access to
healthcare, development of new technology, etc.;

4.2.
the development of courses in civics and an
understanding of ethical values, with a view to increasing
respect for all people and social groups, particularly the
most vulnerable and all those whom misfortune, fate or
circumstances have been made different from their
fellow citizens;

4.3.
training should be provided for social workers,
teachers, healthcare workers, magistrates, members of
police forces, etc. in how to make contact with, receive
and help people belonging to poor and vulnerable social
groups;

the exchange of experience between Member

4.4.
States and bodies engaged in combating poverty;

emphasizing the role of ‘social dialogue’ as a
4.5.
highly pro-active means of ensuring respect for human
dignity and promoting human dignity;

proper recognition and real help needs to be
4.6.
given to social bodies, charitable associations and all
organizations engaged in combating poverty; this should
lead to the provision of practical support for unpaid
workers by, for example, providing training for volun-
teers. The work of volunteers provides a vital back-up
to the work of professional social workers and teachers,

whose expertise should be valued more highly and more
fully recognized than is sometimes the case at present;

4.7.
victims of social exclusion should be given a
collective voice; to this end they should be helped, by
organizations which they readily regard as sympathetic.
Victims of social exclusion could in this way regain or
find freedom by learning how to stand on their own two
feet, which is one of
the fundamental aspects of
citizenship.

In addition to pursuing measures designed to
5.
improve the living conditions of poor people and victims
of social exclusions, there is a need, at the same time, to
step up work in the field of the prevention of poverty.

5.1. Measures to combat unemployment are of prime
importance to the prevention and treatment of poverty,
a fact which the ESC is constantly emphasizing. Admit-
tedly not all unemployed persons are financially poor
but many, if not all, are psychologically, socially and
emotionally damaged. Unemployment — and especially
long-term unemployment — invariably brings a deterio-
ration in the living conditions, and hence the quality of
life, of a large number of households. No-one would
refuse to give their active support to the drive against
unemployment given the risks which this phenomenon
poses for human beings. The right to have a real job is
a fundamental right.

5.2.
Upstream measures are necessary to prevent
poverty; such measures need to be taken by society as a
whole in the fields of education and training. It is vital
to provide people with a general education which paves
the way to language skills (reading, writing, speaking,
mathematical skills, etc.) and initial and ongoing
vocational training. The ESC has always attached
considerable importance to these matters.

5.3. Help with the parental roles of educating and
looking after children and young people (e.g. through
the provision of high-grade child-care systems) are also
key factors in promoting social integration and the
teaching of responsibility, thereby helping to prevent
marginalization. One of the goals of family policies and
education is to enable families and teachers fully to
carry out their roles and meet their responsibilities.

5.4. Measures to strengthen housing policy — in
particular social housing policy — and to monitor the
health of the most vulnerable members of society are
very important factors in preventing poverty and social
exclusion.

6.
The role played by the EU institutions is more
significant than would at first sight appear to be the
case. They are for example involved in specific measures
to combat poverty and social exclusion and other
contributory measures enacted in the fields of employ-
ment, housing, education, public health, family life,
young people, etc. The public should therefore be better
informed of this role, particularly in view of the fact
that action in this field is less noticeable than that in

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other practical fields, such as motorway construction or
support for economic activities.

7.
The drive to combat poverty and social exclusion
justifiably hinges on solidarity. Is it not the case that, at
times,
the progress of developed societies — and
consequently the progress of society in the EU — over
the last 15 years has, to a greater or lesser extent, been
marked by promotion of the interests of the strongest
members of society, which has sometimes led to a
deterioration in the situation of the less well-off and the
disregard for the weakest members of society? As a
result the rich are getting richer and the poor are
becoming both poorer and more numerous.

Is it not also a fact that a number of political decisions
and decisions in other fields are tending increasingly to
lead, inter alia, to a gradual reduction in the level of
social expenditure, whilst at the same time passing on
to private solidarity bodies responsibilities formerly met
by community solidarity? The pretext sometimes given
for such decisions is that they seek to give maximum
leeway to market forces believing, no doubt in good
faith, that this is the best way to safeguard business
competitiveness, which is a necessary factor for combat-
ing unemployment and, by extension, a decisive factor
in preventing poverty. Can we, however, develop a
society which gives real freedom to everybody in a
‘universe’ in which a large number of people suffer
insecurity and injustice? The answer is clearly no.

The challenges posed to all decision-makers and
8.
members of the public by the increase in poverty and
social exclusion do, however, call for a response based
on something more than merely providing assistance.
Such measures represent just one part — which should
be of only a temporary nature — of an overall policy
aimed at achieving economic and social progress. Regret-
tably, there is an increasingly large number of both
individuals in all age groups and families for whom
welfare payments represent virtually the only regular
sources of income.

8.1. Whilst we clearly have to throw out a lifeline to
people who can no longer keep their heads above water,
social policy must not, however, represent only a sort
of first aid station responsible for offsetting and patching
up strategic and political mistakes and errors in eco-
nomic, social and education policy. Social policy does
indeed have to provide protection and compensation
but it also has to seek to promote the rights and duties
of all individuals and of society as a whole.

9. Helping the poor by taking from the ‘less poor’ is
not the right approach. This would be both unfair and
ineffective.

9.1.
The provision of welfare assistance to combat
poverty is undoubtedly an expensive business but it has
to be recognized that this cost can, to a large extent, be
laid at the door of an inadequate level of growth. This,
in turn, is a result of insufficient internal demand,
particularly from those social groups which have the
highest level of unsatisfied needs but who are at the
same time least able to pay their way. The number of
people in this social group is also tending to increase.

All this represents a vicious circle, which it should be
possible to break. The social dialogue helps to set out
fair and realistic lines of approach; this dialogue needs
to be strengthened.

9.2.
If we are to provide effective assistance to those
people who are currently poor and victims of social
exclusion and if we are to prevent their numbers from
increasing in future, we will need resolutely to pursue
an economic policy of promoting internal growth. This
policy should take account of the need to find the
optimum way of meeting the needs of households whose
requirements have been the least well met in the past,
namely social groups on low or average incomes. This
objective is ultimately in the interests of everyone,
including those who belong to prosperous social groups.

10. Highlighting the vital importance of growth does
not by any means imply a failure to recognize the need
for social support in all its various forms. These two
measures go hand in hand. Commissioner Pa´draig Flynn
echoed this view when he pointed out that: ‘Economic
growth and progress in the EU Member States constitute
a prerequisite for social cohesion but these are clearly
not the only prerequisites.’

Commissioner Flynn rightly calls for a policy of pro-
viding back-up services, otherwise ‘the process of estab-
lishing an ever closer union between the peoples of
Europe will remain nothing more than a dream’. The
ESC fully shares this view.

11.
All public and private bodies need to combine
their efforts, otherwise the gap between rich and poor
is very likely to increase. Society in the EU would thus
move faster towards a form of dualism which would
increase tensions within individual EU Member States,
within the EU itself and in the world at large. Everyone
has to be taught to realize that they have an ongoing
responsibility for the construction of a fair and harmoni-
ous society.

The Committee therefore refuses to accept that poverty is
an inescapable phenomenon, representing a consequence
of, if not to say a precondition for, a ‘future society’ no
longer capable of reconciling its tremendous capacity
for scientific and technological progress with a respect
for the ethical values which it so ardently espouses. Poor
people must not always have to pay the price for
economic progress which benefits only a fraction of
society.

12.
There is a high price to be paid for poverty and
social exclusion and it is primarily the victims of these
phenomena who have to pay the price, even though they
are very often not responsible for their plight.

A high price also has to be paid, however, by the
Member States, the EU and consequently also by
members of the public in their capacity as tax-payers.

The economy is therefore penalized.

13. We need to be aware of all these costs. Sticking
one’s head in the sand has been shown in many fields as
an ineffective way to tackle problems.

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An understanding of the true situation brings only
benefits. No poor person wants to continue to live in
poverty. The solution thus lies in a fair and realistic
shared responsibility for the prerequisites for develop-
ment and a fair and realistic allocation of the fruits of
development.

The ESC urges that the proposals outlined in
14.
this opinion be implemented without delay. Initial
assessments — admittedly very limited — demonstrate,
if proof were needed, that poverty represents a serious
social and economic problem, quite apart from the
ethical, moral and civic aspects of this issue. Everyone
is involved. No-one can be unconcerned for themselves

or their children, either now or perhaps in the future,
nor can they fail to be concerned about the future of
society in the various Member States and the protection
and promotion of the values which they espouse.

15.
The Committee made the same observations in
1989 in its information report. The above observations
do not imply that nothing has been done in the meantime
— far from it — what they do imply, however, is that
the situation has worsened and that resolute, realistic
policies, based on consensus, are needed to tackle it.

This is an issue which fully concerns every single one of
us in the European Union.

Brussels, 1 July 1998.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on ‘Genetically modified organisms in
agriculture — impact on the Common Agricultural Policy’

(98/C 284/08)

On 11 December 1997, the Economic and Social Committee, acting under the third paragraph
of Rule 23 of its Rules of Procedure, decided to draw up an opinion on ‘Genetically modified
organisms in agriculture — impact on the Common Agricultural Policy’.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee’s
work on the subject, adopted its opinion on 15 June 1998. The rapporteur was Mrs Sa´nchez
Miguel.

At its 356th plenary session (meeting of 1 July 1998) the Economic and Social Committee
adopted the following opinion by 145 votes to two with six abstentions.

1.

Introduction

1.1.
The use of modern biotechnology in agriculture
offers new solutions which are, at first sight, guarantee-
ing yields, helping to cut the use of plant health products
in combating pests and diseases, and creating quality
products. A debate is opening up within the EU on the
use of transgenic organisms in farming, reflecting views
on the possible undesirable medium- and long-term
effects on consumer health and the environment of their
application to the plant sector. Meanwhile, genetically
modified produce from non-EU countries, the US in
particular, is being marketed.

According to estimates for 1998, transgenic
1.1.1.
plants occupy 30 million hectares of cultivated land

around the world (compared to 14 million in 1997),
essentially concentrated in the United States (some
88 %), South America (Argentine cotton; 6 %) and
Japan (also 6 %). The area under cultivation in China
is unknown, but thought to be considerable. It is
calculated that worldwide, 60 million hectares will be
under this form of cultivation by the year 2000, only
1 % of which will be in Europe.

1.2.
This opinion sets out to adopt a flexible position
which, nevertheless, constantly takes account of all
those concerned, farmers, consumers and agro-industry,
and to reach conclusions. It will focus in particular on
the effects which the cultivation of transgenic organisms
would have on the CAP and, consequently, on final
product prices, with a view to the possible impact of
their widespread presence on the international market.