Poverty Prospects in Europe : Assessing Progress towards the Europe 2020 Poverty and Social Exclusion Targets in New European Union Member States

European Council approved the Europe 2020 strategy, an economic growth and wellbeing improvement plan for the European Union (EU) in the ensuing decade. The strategy includes five interrelated headline targets to be achieved by the year 2020, encompassing employment, innovation, education, poverty and social inclusion, and climate/energy. An overarching goal of the Europe 2020 strategy is to reduce the number of poor and social excluded people by 20 million, with national level targets set by each of the EU Member States. The European council used three measures of poverty and social exclusion: at risk of poverty rate, a measure of relative poverty defined as the percent of the population with incomes less than 60 percent of the national median income after social transfers; the index of severe material deprivation, a measure of the percent of people who cannot afford a number of necessities that are considered essential in order to live decent lives in Europe; and low work intensity, which is the percentage of people living in households in which adults worked less than 20 percent of their potential. This paper sheds light on the impact of improving employment and education conditions on poverty and social exclusion indicators. This paper is divided into eight sections. Section one introduction, section two provides background information on poverty and social exclusion indicators in the ten countries in the New Member States (NMS) group, including their evolution since 2005. Section three describes the data sources used and defines the key variables of interest. Section four outlines the methodology used to simulate indicators of poverty and social exclusion. Section five first presents the results from a validation exercise in which data from 2005 are used to simulate the likely outcomes in 2008, and then compares the simulated 2008 values to the actual 2008 values. Section six presents the results of the simulation exercise for the ten countries in the study. Section seven provides an illustration of how the simulation model has been adapted to address policies on pre-schools in Poland. And finally, section eight offers a set of overall conclusions.