Moving in and out of in

Report

Moving in and out of in-work poverty in Spain

July 2022

Alba Lanau and Mariona Lozano, CED - CERCA (Government of Catalonia);

Project selected in the Call to support research projects on social inequality (LL2020_5)

Paid work is often described as the best way to exit poverty. But having a worker is not enough to avoid this situation for an increasing number of households. In-work poverty households are those considered to be living in monetary poverty despite having one or more workers. Spain has one of the highest in-work poverty rates in Europe, and this risk is concentrated in households with dependent children and especially in those with children and a single worker. The findings of this study suggest that moving in and out of in-work poverty is primarily associated with low wages and periods of inactivity or unemployment of one or more household members. Only 8% of entries into in-work poverty are associated with changes in household composition. Finally, the study highlights the need for dual income in the household in order to avoid in-work poverty.

Key points

1
A growing number of households in Spain are experiencing in-work poverty: 16% of working households are poor, one of the highest rates in Europe.
2
In-work poverty particularly affects households with dependent children and only one worker: 34% of these households found themselves in a situation of in-work poverty in 2018. Dual-income households are almost a necessity in Spain in order to avoid in-work poverty.
3
The risk of in-work poverty is also high in households comprising young people (21%) and in those headed by women (18%).

4
In-work poverty in Spain is the result of a combination of job instability, low wages and inadequate family policies. It is associated with low wages and/or unemployment in 65% of households, while in the remaining 35% of cases it is associated with an excessive burden on households.
5
Most households entering a situation of in-work poverty (six out of ten entries) were non-poor households with one or more workers in the previous year. On the other hand, finding a job does not ensure exiting poverty: more than half of poor households in which one or more members join the labour market remain in poverty.
6
Labour market events, such as periods of unemployment, fewer working hours or wage reductions, are more significant than changes in household composition when it comes to understanding entering in-work poverty. A greater number of people in the household accounts for only 8% of the factors for entering in-work poverty.

Households with children and only one worker are particularly vulnerable to in-work poverty