Working Poverty in the European Union and its Main Determinants: an Empirical Analysis

There has been a widely accepted belief that employment growth is fundamental in the fight against poverty and social exclusion. The existence of working poverty proves that even if employment growth still represents the best way to avoid poverty risk it is not always enough, actions being needed to create not only more jobs, but also better jobs. The aim of this paper is to highlight the main causes and mechanism of working poverty in the EU countries, in the recent economic crisis and recovery period (2007-2012), in order to identify some possible measures that need to be taken so that in-work poverty reduces. The comparative analysis shows that the phenomenon of working poverty has been growing in sixteen EU countries and the prevalence of in-work poverty varies significantly across these countries. The correlation and regression analysis results suggest that gaps in the national human and economic development can be explained by disparities in working poverty rate. Vulnerable and precarious employment represents an important factor behind the high level of working poverty from the EU countries in the analysed period. By taking into consideration the cumulative influence of multiple socio-economic variables, for the (2007-2012) period, results of principal components analysis and cluster analysis highlight that there are common features and differences between the EU Member States according to their working poverty, employment performances, efficiency of welfare state system and the level of human and economic development. The findings of this study can be useful for policy makers in order to reduce the phenomenon of working poverty.