Social exclusion: exploring cumulative disadvantage

One of the headline targets of the Europe 2020 Strategy is to lift at least 20 million people out of the risk of poverty or exclusion. The indicator used is a combination of three indicators: people living in households with very low work intensity, those at risk of poverty and those experiencing severe material deprivation. The 20 million target refers to people who are identified by any of these as socially excluded: thus, those with either low incomes or low work intensity, or those who are deprived.

The EU-SILC for 2009 suggests that overall 113 million people in the EU are at risk of exclusion on the basis of at least one of those indicators (being at risk of poverty, being severely deprived or living in a household with very low work intensity) (see Figure 21).

The largest group among these are those with income below 60% of the national median - some 80 million people (as against 39 million who are materially deprived and 33 million who live in households with low work intensity).

Figure 21: Overlap between those at risk of poverty, suffering severe material deprivation and with low work intensity, number of people (millions), 2009

Some 6.5 million people, or 6% of the total defined as at risk of exclusion, are deprived according to all three indicators. Only a minority, therefore, can be defined as suffering from severe cumulative disadvantage.

There is limited overlap between the measures of the risk of poverty and severe material deprivation (about three-quarters of the former are not severely materially deprived). The main reason is that the former indicator is based on country-specific thresholds, while the latter uses the same criterion across EU countries. As a consequence, material deprivation captures absolute rather than relative income differences across countries, and is highest in the lowest-income countries.

The majority of working-age people who live in households with low work intensity tend to be at risk of poverty. On the other hand, only a quarter of those at risk of poverty are affected by low work intensity (note that those aged 60 and over are excluded). 

There is a stronger relationship between low work intensity and the risk of poverty than there is between low work intensity and severe material deprivation. Low work intensity affects earnings and therefore incomes, but may be only a temporary phenomenon. Material deprivation is more likely to reflect purchasing power over the longer term (since it includes possession of consumer durables, which may have been purchased in the past, when the household had a higher income level).