Orshansky, how poverty is measured in Trinidad

As long as money and income actually represent the key resource for securing the physical subsistence level and for participation in Germany, monetary transfers remain the means par excellence in the fight against poverty. The occasional reference to free resources specifically for low-income households is without empirical basis. In an initial approach to the phenomenon, it must rather be established that the social passports often cited in this context do not seem to exist in the majority of municipalities. A meritorious first study for the state of North Rhine-Westphalia shows that just 1/3 of the municipalities issue social passports, with a clear focus on recipients of transfer payments as the “minimal target group” and a clear focus on a culture passport as “Minimal solution for the scope of services”. (1) As with the family passes, it is often only about granting price reductions, but never about free use or entry. The same applies to the social tickets for local public transport. Only in the case of day-care centers can it be assumed that these are usually offered free of charge for recipients of social transfers, although a rather small group of the poor is addressed.

The so-called education and participation package, which was supposed to switch from monetary support for the participation of children and young people to benefits in kind in 2010, has failed. In the important extracurricular area, participation in the community through music lessons or participation in sports clubs or youth associations, just 15 percent of those eligible were able to use the services. (2) The reasons for this debacle are well known: At 15 euros a month, the grants are far too low to offset the actual costs and thus enable parents to claim them. The entire architecture of the education and participation package, which is characterized by a distinct “come structure”, as the educators call it, cannot work, especially for low-income families, as experts have long been emphasizing. (3)

The Paritätische therefore calls for a total reform of the failed education and participation package by means of a real legal right to participation for all children and young people in child and youth welfare law. (4)

The reference to the necessary infrastructure - from school lunches to clubs for the elderly - is required from a technical point of view, but is too often misused in order to play off a need-covering cash benefit in exchange for education or care. A good, inclusive school does not yet help poor families to survive the month without fear and comfort. Infrastructural services and offers are undisputedly extremely important, when it comes to organizing participation and promoting people in their development, and undisputedly they are particularly important for people in underprivileged living situations. But good health care, a good education system and a well-established youth, elderly or handicapped assistance do not provide poor people with an income, let alone that they could make an adequate income superfluous. Just as the German society works, namely primarily through money, infrastructure will never be able to replace income on a large scale, if it is about covering the subsistence level or about participation. In addition, the following applies: when important youth work, educational work, health advice or care for the elderly are often lacking in rural areas, when social facilities and services are significantly underfinanced or even threatened with closure in many municipalities, when groups in kindergartens are too large, There is a shortage of teachers in schools as well as nursing staff, if inclusion is practically non-existent in many places, then these are grievances that need to be remedied urgently and as quickly as possible, regardless of the poverty figures and trends. Sustainable social infrastructure and livable communities are not just based on poverty and the fact that too many people have too little income.

In the discussion about the fight against poverty, we repeatedly come across two assertions that are very plausible, but strictly speaking, they are wrong. At least they lead on a barely useful track. One reads “The best cure against poverty is education”, the other “The best cure against poverty is work”. There is absolutely nothing to be said against both theses as political goals. On the contrary: the marketability of one's own workforce, be it as an employee or as a self-employed person, is of central importance for most of their income in our working society. The marketability depends crucially on the level of education and the suitability of the acquired qualifications. A good and marketable education is therefore undoubtedly one of the most important instruments for poverty prevention. But it is also correct: of the poor over 25 years of age, almost two thirds have an intermediate or even high level of qualification. The level of education can at best be a necessary but not a sufficient condition for poverty avoidance.

And there is another part of the whole truth: Good education helps children from low-income families to pave the way out of poverty, to free them from a possible vicious circle of poverty, a lack of educational opportunities and, in turn, poverty. No matter how good an educational infrastructure, however, it cannot spare poor children their poor childhood as long as the family as a whole is poor. In this respect, it also makes no practical sense to want to gamble off money against contributions in kind, as is repeatedly attempted politically.

The other thesis, that the best means of combating poverty is a labor market policy that gets people (back) into work, is always put forward when inadequate transfer payments such as the standard rates in Hartz IV are not to be legitimized, or at least at least to be distracted from them. Empirically, however, this statement is not tenable, but quickly reveals itself to be an ideology.

The overwhelming majority of the adult poor are not unemployed, as we have seen. As a rule, they are gainfully employed or are retired. Contrary to popular belief, the working poor are by no means primarily mini-jobbers, but predominantly more than marginally employed, as the 2018 Joint Poverty Report showed. (5)

According to the current data, only 7.7 percent of the adult poor are actually unemployed. The social structure of the poor thus refers less to a labor market policy agenda than to necessities in the transfer system, especially for old people and children.

If we in Germany not only fight poverty theoretically and on the basis of false assumptions, but actually want to eradicate poverty, we cannot avoid a significant improvement in transfer payments, as the large proportion of old people and children among the poor shows.

This results in a clear political agenda, which we outline below.

New assessment of the standard rates in Hartz IV as well as in the basic security for old and disabled people

The standard rates are deliberately calculated below the socio-cultural minimum requirement, as the paritätische was only able to make clear recently in a corresponding report. (6) In order to really secure the subsistence level on the basis of the so-called statistical model favored by the Federal Government for deriving the standard rates, these would not have to amount to EUR 446 for a single adult from January 1, 2021, as recently decided by the Bundestag, but EUR 644. This also applies to benefit recipients under the Asylum Seekers Benefits Act. In addition, contrary to the status quo, electricity costs are to be taken over in full as part of the cost of accommodation, as it has been shown on the one hand that the flat rates calculated using the statistics are on average not adequate and electricity costs due to different prices and energetic framework conditions for a Flat rates are very unsuitable. For the purchase of so-called white goods, such as replacement purchases of refrigerators or washing machines, one-off services are to be granted instead of referring to small amounts theoretically to be saved in the standard rates or granting loans.

Strengthen unemployment insurance

Those who become unemployed today are typically not protected by unemployment insurance, but rather thrown back on Hartz IV. For about two thirds of the unemployed, unemployment benefits actually play no role. Unemployment insurance must be strengthened so that it can once again be the primarily responsible security system in the event of unemployment. One building block for this is the addition of a minimum security element to unemployment insurance - the minimum unemployment benefit. Anyone who worked full-time or was unable to work full-time due to the upbringing of their children or caring for relatives and who would be dependent on (top-up) benefits in Hartz IV in the event of unemployment should receive a minimum unemployment benefit above the Hartz IV level for a 1-person household receive. Furthermore, in order to stabilize the unemployment insurance again, the maximum duration of the unemployment benefit must be extended to up to 36 months in the future, depending on the previous contribution periods and the year of life. The maximum benefit period for unemployed people up to 25 years of age would be extended to 18 months, for 25 to 50 years to a maximum of 24 months and up to 36 months for older people aged 58 and over. (7) The so-called qualifying period, i.e. the time in which people must have been employed subject to social security contributions in order to be entitled to unemployment benefit I, is to be shortened from 12 to 9 months. The framework period within which these 9 months must be completed must be extended from 30 to 36 months in order to allow more unemployed people to claim this original benefit again.

Strengthen old-age pension systems

In order to counteract the extremely sharp rise in old-age poverty and, in particular, the poverty among pensioners, far-reaching measures in old-age provision are essential. The approved basic pension is not an effective instrument of poverty avoidance, but primarily serves to reward the so-called "lifetime achievement" in the pension insurance. To effectively combat poverty in old age, other measures are necessary: ​​Basically, the pension insurance, which, in contrast to private pension insurance, also regularly includes benefits for rehabilitation and reduced earning capacity, must be strengthened: the pension must be enough to live on. A tax-financed minimum pension that protects against poverty must therefore be introduced for long-term employees. In recent reforms, people who are already incapacitated have been severely disadvantaged. They are particularly often at risk of poverty. For this reason, all reforms of the past few years, which were decided only for newly retired insured persons, are to be made available to all disabled people. It is unfair that the pension has so far been fully offset against the basic security, unlike, for example, benefits from private or company pension plans. We therefore need an allowance for pension insurance benefits in the basic security. This ensures that older people will continue to benefit from their periods of insurance in the pension insurance in the future. In return, the tax incentives for private provision, from which particularly high-income people often benefit, are to be abolished in the future.

Introduce basic child benefits

Basic child security, as demanded by a large number of welfare and social associations, the German Trade Union Confederation and also by the parliamentary groups of Bündnis 90 / Die Grünen and the Left in the German Bundestag, would turn the family burden equalization “on its head on its feet” in terms of poverty policy. (8) As different as the present models are in detail, it is all about paying a living wage child benefit and, as the parents' income rises, melting it down to a minimum amount that takes into account the constitutional requirements for the tax subsistence level. (9) Such a model would ensure that no person would be dependent on state transfer payments simply because of the existence of dependent children. To put it bluntly: Nobody whose income is sufficient for themselves would only have to go to the job center because of their children. The basic child security could thus replace the social allowance in Hartz IV as well as the child allowance and even parts of the education and participation package and, for a long time, the BAFöG. The redemption of these four points would mean that income poverty, as it is usually scientifically measured, would in fact disappear. Only in a few cases would there be household incomes below 60 percent of the median income. The poverty rate would practically fall to zero. Income poverty would, by and large, be defeated.

The maintenance and the necessary expansion of relevant social infrastructure, in which all citizens and not only the poor participate, will present us with great challenges and probably also distribution issues in the next few years. The difference, however, would be: If the joint proposals to eradicate income poverty were implemented, no one would be excluded from participation because of insufficient income, no one would have to worry existentially about getting through the month. It is high time we finally eradicated income poverty.

Additional Information:

Download: Money helps against poverty. The Joint Poverty Report 2020.

Press release: Parity Poverty Report 2020: Poverty in Germany at a record high

Statement from Dr. Ulrich Schneider, General Manager of the Paritätischer Gesamtverband: "Money helps against poverty."

Interactive overview map: Regional poverty rates

Footnotes:

(1) Arp, Anna Liza 2021 (forthcoming): Social passports in North Rhine-Westphalia. Municipal design of an instrument to promote participation in poverty situations. Opladen, Berlin & Toronto. (2) The Paritätische Gesamtverband 2020: Empirical findings on the education and participation package: Participation rates in focus. Berlin. (3) Come structure means in pedagogy that there is an obligation to collect from the beneficiaries. The educator waits for the family to come. Pedagogues, on the other hand, speak of a walking structure when educational institutions or youth work associations actively seek out their clientele and submit low-threshold, often district-oriented offers. (4) For the entire concept for realizing a legal right to participation, see: Der Paritätische Gesamtverband 2010: Children earn more: Paritätisches concept for promoting the education and development of young people. Berlin. (5) According to this, based on the socio-economic panel, 69.4 percent of the economically active income poor were more than marginally employed, and 40.7 percent were even fully employed. See Der Paritätische Gesamtverband 2018: Who the poor are. The Paritätische Poverty Report 2018. Berlin. (6) The Paritätische Gesamtverband 2020: Standard needs 2021. Alternative calculations to determine the standard needs in the basic social security. Berlin. (7) See in detail on the proposals of the Paritätischer to strengthen unemployment insurance: Paritätischer Gesamtverband 2017: Courage to correct - a job market policy mandate. Berlin. (8) Jana Liebert and Marion von zur Gathen 2019: The basic child protection model. From the idea to the implementation of an independent livelihood security, in: Soziale Sicherheit 4/2019. (9) For reasons of constitutional law, the minimum child benefit in all models is based on the net effect of the child allowance in income tax for a top earner.