EAST MEETS WEST: SOCIAL EXCLUSION, INCOME POVERTY AND HOUSING IN EU WELFARE STATES

Transcription

1 W14 East European Housing & Urban Policy EAST MEETS WEST: SOCIAL EXCLUSION, INCOME POVERTY AND HOUSING IN EU WELFARE STATES Henryk Adamczuk

2 East meets West: Social Exclusion, Income Poverty and Housing in EU Welfare States Henryk Adamczuk // University of Central England, Birmingham, UNITED KINGDOM Abstract It is now seven years since the European Council in Lisbon agreed to adopt an Open method of co-ordination in order to make a decisive impact on the eradication of poverty and social exclusion by The first National Action Plans (NAPs) covered the period , followed by further NAPs with ten new member states, eight in eastern Europe. These developments have allowed for fundamental questioning of the ends and means of welfare policy and a considerable comparative perspective to evolve, separating geographies of Welfare State. Housing policy sits uneasily in the context of changing or recomodifying welfare states, but it is timely to assess the impact on the drive to eliminate social exclusion on emergent housing policy. The first section considers the relationship between concepts of social exclusion and its housing dimension. Exploring the academic literature is helpful in examining the EU s determination of this term. Second, tenure profiles of member states in the east and west are explored to develop in relation to typology of welfare state systems in the European Union. Third, quantitative analysis of recently published EU social indicator data shows the extent that renting is associated with income poverty in different welfare states in the European Union. Terms: European Union, Social Exclusion, Housing System, Welfare State Typology 1 Introduction There is an extensive literature and considerable comparative data on social exclusion, based on the European Union process of intra national social policy development. This paper seeks to address the relationship between social exclusion and housing tenure and a tension point in Europe. Homelessness, considered as an acute form of social exclusion is one of many stands of EU policy making along with housing assistance, but the place of housing as a social policy sits uneasily within the EU remit with its employment orientated priorities. It is timely to revisit the fundamental concepts and assess the strength of relationships in the light of new families of welfare states adding to the familiar typologies of social democratic, corporatist, conservative welfare states. The first section of this article considers the relationship between the concepts of social exclusion its housing dimension. Exploring the academic literature on the subject is helpful in examining the European Union s determination of these terms. Can social exclusion be operationalised? Is the housing dimension amenable to tight

3 definition? The literature re-affirms repeatedly that the concept of social exclusion is contested, but housing also needs to be unpacked. The aim is to find out more about the nature of the relationships at the macro level between housing systems and dimensions of social exclusion. To do this, measurable variables are identified and analysed by country in section 3. Prior to the significance of social exclusion, poverty was a key concept at the centre of debates about equality and had the merits of being immediately recognisable as a common term. However there were considerable debates about how to measure poverty in the British sociological literature, heavily influenced by Fabian Society and other intellectuals on the left. Townsend s seminal publication (1979) covered post war social policy in the UK, but coincided with welfare retrenchment and the beginning of an unprecedented period of post war mass unemployment in the country. His key statements in the poverty definition were that Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the type of diet, participate in the activities and have the living conditions and amenities which are customary, or at least widely encouraged, or approved, in the society to which they belong. Their resources are seriously below those commanded by the average individual or family that they are in effect excluded from ordinary living patterns, customs and activities. (1979:31) Townsend s was a relative definition, contradicting the minimum income or absolutist approach and fundamentally concerned the lack of an adequate income. However, the phrase in effect excluded from appears when Townsend was not directly making links to the French tradition with l exclusion sociale. Daly traced the etymology of the latter term from continental debates on social cohesion in the late 1970s and the process of marginalisation of social groups, such as people with disabilities. Crucially, Daly suggests one defining part of the concept is failure to protect citizens as a causal factor, generating a social diagnosis in new types of policy framing in the European Union (Daly 2005:4). The notion of a social pathology in social exclusion is more than a metaphor, as some of the conditions of social exclusion relate to health status, including mortality statistics. The growing literature since the UK government signed up to the Social Chapter in 1997 and constructed its own shorthand definition, highlighting the social exclusion of unemployment, poor skills, low incomes, poor housing, high crime environments, bad health and family breakdown (SEU 1997). The emergence of widespread youth homelessness in the 1980s had been a continuous issue for previous governments in Britain where the definition of homelessness had excluded single people without vulnerability (Smith 1999). The relationship between social exclusion and housing (Anderson and Sim 2000) can be nested in a framework where housing is part of the wider social protection system in the Welfare State. The perspective taken to answer the opening question is specific to the policy making in the European Union, where a notion of social exclusion is closely aligned with maintaining social cohesion. In the EU terminology

4 Poverty and social exclusion take complex and multi-dimensional forms. They relate to income and living standards, access to good quality health services, educational and work opportunities. EU (2006a: 5) The EU conceptualization of social exclusion is that of a multi-dimensional process with several interrelated dimensions. Exclusion from the labour market is specified in all formulations but a housing element (such as homelessness or housing assistance) is only implied in some. Essentially, then social exclusion cannot be measured directly and instead the debate returns to Townsend and poverty with the key measurement dimension of income poverty (EU 2005). There is scope to explore income poverty, as a proxy for social exclusion and housing provision. Profiles of housing system in European states need to be addressed prior to this analysis. 2 Typologies: Housing and Welfare States The role of the state in changing both welfare states and housing systems has been explored extensively in the literature. One contemporary theme is the importance of globalisation and the neo liberal response (Doherty et al 2004) leading to a hollowed out housing system, such as the surrender of the housing system to the market. Yet the response of different European countries shows considerable diversity in adapting to the global pressure. The possibility of an Eastern European or post socialist welfare state was outside Esping Andersen s original formulation. Before 1990, the Eastern European social policy model was summarised aptly by Deacon as The old social-welfare contract, between the party-state apparatus, the nomenclatura, and the people, consisted of highly subsidised prices on food, housing, transport and basic necessities, guaranteed employment, adequate health and education and small differentials between the wages of workers, professional managers, in return for the political quietude of the population (2000:147). This system had catastrophic weaknesses, but housing provision was a fundamental support structure, provided within the context of a command economy and one party political system. After democratic reforms, this previous model was dismantled on the basis of market rules with considerable tension between a logic of a conservative, corporatist kind of welfare policy and a safety net, residualist, liberalism. One consequence of the erosion of the machinery of state and support for industry and employment was growing inequality in income distribution, including increased poverty among the most vulnerable members of society. If both welfare and housing systems in Europe contain extensive policy instruments, which are amenable to adjustment, how is it possible to characterise change in housing policy and relate such change to the fundamental ideological basis of the Welfare State? Manning (2004) was optimistic about the prospects for the eight Central and Eastern members within the enlarged Europe, but judged that privatisation of housing within the post communist states was a key component of change along with the use of payroll taxes to fund insurance based social security and health provision.

5 Hoekstra s application of Esping-Anderson s welfare typology in the case of the Netherlands (2003) is a relevant framework, which re-states the three Worlds of Welfare Capitalism. Variations in the way that the state intervenes across Europe are significant. One measure of the level of intervention or possibly de-commodification is the rate of owner occupation. The EU15 average level of owner occupation is 65% of all dwellings (Ball 2005:18). The highest owner occupation levels since the 1970s were in the Southern states, due to either minimal government intervention or that supporting owner occupation and the lowest owner occupation levels were found in Sweden, Germany, Denmark, Netherlands, France and Austria. The latter were influenced by sustained, long-term government subsidies to maintain integrated rental markets, in which households could access private renting and social tenure and (for Sweden and Austria) hybrid tenures such as co-operative renting and ownership. Such housing markets are theorised as unitary where competition exists between profit and non-profit housing providers (Kemeny 1994: 30). The UK developed council housing after 1946 as an alternative to private renting, but in the 1980s the right to buy at discount for council tenants, plus reductions in subsidy for house building and financial market liberalisation policies halted this mode of tenure. The UK approach, especially marked in the late twentieth century was considered as a dualist housing system, based on owner occupation as the normal tenure and social housing as the residual, last resort (Kemeny 1994: 26). During the post second word war socialist period, new state housing was developed in Central and Eastern Europe with successive and overlapping state sponsored tenures in urban areas, but owner occupation remained a permanent feature, especially in the countryside. In the period , Central Eastern European states initiated major privatisation of their state housing as part of their market liberalisation and economic restructuring; Hungary was a fast privatiser at the top extreme and at the lower end, the Czech Republic was slow. Central Eastern European housing privatisation however was more extensive than the UK right to buy (see Donner 2006:296). Lux using efficiency definitions and vertical/horizontal effectiveness criteria from Welfare Economics considered that many of the post 1990 new construction subsidies were poorly targeted and along with regressive income tax incentives helping higher income groups to increase their housing consumption. Privatisation was judged to present considerable problems of horizontal and vertical equity (Lux 2003). Both Lux and Donner have been critical of the lack of new housing providers in Czech and Slovak Republics and Hungary and Slovenia to replace the poor quality rental housing and new legal regimes to rebalance landlord and tenant relationships. As a result Lux assessed Poland to be most effective and efficient in both demand and supply subsidies. Donner argued from the point of view of the overall operation of housing markets and concluded that privatisation was carried out without a long term consideration of the impact on future needs. In 2003, therefore the housing systems in the EU25 were not just very diverse but were undergoing considerable change at different rates.

6 Groupings of similar housing systems reflect policy intervention over much of the post war period and can be linked to Welfare State category ideal types but remain consistent broadly with Esping Anderson s original classification of three worlds of welfare capitalism (1990). Barlow and Duncan (1994) created a new category for Central Eastern Europe, which was not conceptualized within the Three Worlds of Welfare Capitalism. Table 1 categories are influenced also by Ferrera s concept a family of nations (1996) which is a useful device for considering welfare states and housing systems together. Table 1 Owner Occupation in Occupied Dwellings by Welfare State Grouping EU in 2003 Northern Continental Southern Eastern Western Social Corporate- Residualist Post Liberal democratic Conservative Socialist Sweden 46 Germany 48 Greece 74 Czech R 47 UK 69 Denmark 53 Netherlands 55 Portugal 75 Poland 58 Ireland 77 Finland 63 France 56 Spain 82 Slovenia 74 Austria 58 Italy 83 Slovakia 75 Luxembourg 67 Latvia 79 Belgium 68 Estonia 86 Lithuania 91 Hungary 92 Sources: Eurostat 2004: Occupied dwelling stock by tenure except Italy, (Ball 2005: 92) and Slovakia (Donner 2006: 282) Note: Germany is ex GDR and new members; Cyprus and Malta have been excluded. Stevens and others (Scanlon and Whitehead 2004) grouped European owner occupied markets into the four bandings dependant on the size of owner occupation Dominant (above 80%), High (60-70%) and Majority (50-60%) and Low (under 50%). If the analysis goes beyond the ownership sector and includes the renting element then it is possible to argue four main housing systems as indicated in Table 1. Table2: Share and Differences in % Owner Occupation EU Countries EU 15 Country Home-ownership (%) Home-ownership (%) around around % EU 10 around around Difference Country % Difference Germany Czech Rep Sweden Poland Denmark Slovakia Netherlands Latvia France Slovenia Finland Estonia Austria Lithuania Belgium Hungary UK Note: Cyprus, Greece Malta omitted. Portugal Sources: Ireland Ball M (2005) Italy Lux M editor (2004) Spain Lux M (2006)

7 Market conditions over the whole of Europe were favourable as a result of the international fall in inflation with the advent of lower interest rates internationally (Stevens 2006:5). A consequence of these structural ownership changes since 1990 has been a reduction in stock of housing offered at below market rent. Across Europe, both the stock and new supply of below market rental units has been reduced and some countries have no safe haven for below market rental accommodation; instead housing allowance is used to support those on low incomes so even social housing is rented at near market rents. In general, the owner occupation tenure is most dominant in countries with least social protection. 3 Analysis What is the relationship between poverty and social exclusion and housing tenure? The Laeken indicators forming the basis of the EU matrix of target social data on social exclusion include one crude measure, which has been taken from the 2006 EU statistical data and has been disaggregated by tenure and to provide an initial quantitative answer across Europe. It is a secondary analysis of data prepared under the Laeken indicators process and there are some gaps but there is a broad interpretation relating an income poverty statistic to a fundamental tenure division. The EU poverty standard is an income related concept: Individuals are considered to be at risk of poverty if they live in households, where household income is below 60% of the national equivalised medium income. (EU 2006: 6) Table 3 Incidence of Poverty by Tenure Owner Occupation Renting EU 15 Netherlands 5 22 Sweden 7 19 Denmark 8 18 Finland 8 20 Germany Austria France Belgium United Kingdom Italy Ireland Spain Greece Portugal EU 10 Slovenia 9 24 Hungary Malta Lithuania Latvia Cyprus Estonia Source: EU 2005 Methodical Notes and Statistical Tables Annex 1 to the Common Indicators Report Common Indicators of social exclusion and poverty Table 5 page 20.

8 Notes: 1. Czech Republic, Luxembourg, Poland and Slovakia were not available in the original source. 2. Author s own ordering In 2003 the average income poverty in the EU was 16%. The lowest level at 8% in the Czech Republic and the highest level at 21% for Ireland, Portugal and Slovakia. Each member state has an independent calculation related to the income profile of the population. Breaking down the income poverty measure into two simplified tenure categories for each member state provides information of a first order approximation. In particular it provides a profile of the EU 15 and new member states polarized in terms of ownership and renting (Table 3). Only Greece and Portugal are exceptions to the general finding of a higher poverty income for households who rent as compared with owner occupation. Greece is the only nation in Europe with negligible social renting and Portugal is also low (Scanlon and Whitehead 2004). Where social support has been extensive historically, such as in the Northern and Corporate-Conservative Welfare States, there is still a greater level of income poverty for households in renting than in owner occupation. The variance between the Netherlands, within the corporatist conservative category and the social democratic members, such as Sweden reflect relative poverty risk within the housing system. New member states have a similar but less intensive profile that EU 15 members so the housing system appears to have a marked effect there. The next step of the analysis is to consider the impact of owner occupation on the distribution of poverty risk. This measurement takes account of the numbers of at risk households within each main tenure classification. Table 4 Distribution of Poverty by Tenure EU 15 Owner Occupation Renting Netherlands Sweden Denmark France Finland Austria Belgium UK Italy Ireland Portugal Greece Spain EU 10 Malta Latvia Poland Slovenia Cyprus Estonia Hungary Lithuania 92 8

9 Source: EU 2005 Methodical Notes and Statistical Tables Annex 1 to the Common Indicators Report Common Indicators of social exclusion and poverty Table 5 page 20. Note: Data for Germany, Luxembourg, Poland and Slovakia were not available in the original source. Table 3 presents the contemporary dilemma for EU policy makers struggling with implementation of a wider housing remit, following the changes in stock ownership. Although there are greater risks of poverty for households in the rented sector, poverty is also associated with home ownership, especially so in the Southern, Central Eastern Europe and Liberal Welfare States. To progress beyond homelessness policies into a broader housing policy for the at risk groups, member states must review access arrangements to support households in different housing tenures. Greater analysis of both private and social rented sector access problems is suggested so by this aggregate finding. Scanlon and Whitehead (2004) and Stevens (2006) have both examined the response of providers in the owner occupied market to enable access to reach middle income groups. Member states in combating the social exclusion of homelessness will increasingly address come against lending criteria in the private sector and risk analyses mechanisms. They will encounter political difficulty of finding forms of subsidy to support below market rents by landlords and supporting owner occupiers (sometimes with mortgages outstanding). The problems of changing housing policy within their own political context let alone within open coordination are considerably greater than following a toolkit for homeless people as illustrated responses to homelessness. 4 Conclusions The housing dimension of social exclusion could be theorised in this EU context alongside other social protection systems. This paper has linked contemporary ideas about social exclusion with previous formulations on the related concept of poverty Taking the income poverty variable used for addressing social exclusion policy in Europe, the paper has synchronised inter-relationship of the housing system with notions of Welfare State in different geo-political contexts. Despite considerable problems of definition and comparability of data in the housing field, there are common trends within the groupings of Welfare State. The housing system groupings in the literature could be refined bringing together families of nations with comparable situations and broad societal structures. The EU income based definition of poverty is a crude both conceptually robust as a measurement index. The same could not be said of the tenure, subdividing households into renters and owners, when there are considerable variations in tenure between states. However, as a first level approximation, there is a regularity, which turns on that part of the housing system which reflects social division. The crude finding that housing tenure and the poverty variable of low income are related is not new. It is significance of the total profile of relationships across many different countries and the ways in which this pattern relates to our general concepts of the functioning of both welfare states and housing system. Tenure groupings could be more precisely defined to increase the accuracy in future analytic work, so that the particular area in the housing system where income poverty persists can be further explored in a more targeted way to meet the Lisbon objectives.

10 The housing tenure and poverty relationships across Europe could be refined further by member states and local government through dis-aggregation drilling down to smaller geographical units such as larger and smaller settlement size, urban versus rural area for more procession. More detailed analysis, exploring the fuzzy concept of tenure with new subdivisions, taking up different modes of renting and ownership including hybrid tenures would produce more subtle results. However, the general thesis needs further testing in terms of the direction of causation; do specific types of housing advantage and disadvantage predispose households into income pathways? There is a complexity in the notion of social exclusion and the use of an income proxy applied to each dimension could be helpful to develop a future quantitative model. A mathematical model of the social system in European countries appears to be feasible where housing and other dimensions of social exclusion are represented by measurable variables. These are independent data sets, which seem to relate well to ideal types and theoretical constructs, so the changing patterns could form consistent guides to further theoretical development and a valuable aid in the EU process of reducing social exclusion. Social exclusion could be considered within the totality of relationships between income and the social constructs of employment, education, housing and health. It is possible theoretically to develop a general mathematical model covering individual countries and all member states, using EU data sets and then set out to define the conditions of social exclusion. Notes 1. Equivalised income includes a measurement ratio applied to the calculation designed to take account of variations in household size. 2. Income is a narrow definition avoiding the need for estimating imputed rent payment for owner occupiers. 3. The definition of homeownership applied in the EU statistics analysing includes households living rent free, which might have some grounds on the basis of comparability from an economic perspective but is wholly anomalous from a sociological perspective. However the proportion of households living rent free is typically less than 1% so any correction is correspondingly small and does not fundamentally alter the analysis. REFERENCES Barlow J and Duncan S (1994) Success and Failure in Housing Provision: European Housing Systems Compared. Oxford Elsevier Science. Castles FG and Ferrera M (1996) Home Ownership and the Welfare State: Is Southern Europe Different? South European Society and Politics Vol 1 No 2: Daly M (2005) Social Exclusion as Concept and Policy Template in the EU. Centre for European Studies Working Paper 135. Deacon B (2000) European Welfare States: the impact of globalisation. Journal of European Social Policy Vol 10(2): Doherty J, De Decker P, Busch-Geertsema V, O Sullivan E, Sahlin I, Tosi A, and Donner C (2006) Housing Policies in Central Eastern Europe: Czech Republic, Hungary, Poland, Slovenia and Slovakia. christian@donner.at.

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