Policy relevance of persistent-risk-of-poverty indicator

The measure of the persistent risk of poverty indicates the number of people who consistently have an income below the poverty threshold, thus distinguishing those who are at particular risk of social exclusion. In combination with the risk-of-poverty rate for the survey year, it also provides an indication of two further aspects of the social situation in particular Member States. First, the number of people at persistent risk of poverty, relative to the number at risk in the survey year, indicates the ease or difficulty that households have in increasing their income above the poverty threshold. If the relative number at persistent risk represents a large proportion of those at risk, the implication is that it is relatively difficult to escape from the risk of poverty and attain a higher level of income, since there is a relatively high probability that someone at risk will also be at risk the following year and the year after that.

This, however, is only the case if the overall proportion at risk of poverty remains much the same over the period. If it increases, then there is clearly a lower probability that those at risk in the survey year were at risk in earlier years, whatever the ease or difficulty of escaping from the risk over the long term. If it declines, then the reverse is the case, and the figures for the survey year will not include those who have already increased their income above the poverty threshold previously. Again the ratio of the persistent risk to the risk in the survey year will tend to give a misleading view of the ease or difficulty with which households can increase their income above the poverty threshold.

Secondly, by the same token, the ratio of the number at persistent risk to those at risk in the survey year gives an indication of the overall proportion of the population that is likely to experience being at risk of poverty, and of the extent to which such a risk is confined to a 'hard core' of people, whose income is consistently below the poverty threshold (as opposed to being spread more widely across the population). For any given proportion of people at risk of poverty, therefore, the larger the proportion at persistent risk, the smaller the proportion of the population who have experienced being at risk over the four-year period, and vice versa. Again, however, this is only the case if the proportion of people at risk remains reasonably constant over the period.