1. Fighting child poverty across the OECD: is work the answer? Presentation: Joint OECD/Korea Regional Centre on Health and Social policy July 2006, Seoul Willem Adema and Peter Whiteford (www.oecd.org/els/social/)

2. How does Korea compare in terms of female labour force participation, family support and child poverty? Is a ‘benefit’ or a ‘work’ strategy the most effective way of fighting child poverty? Reducing barriers to parental employment Outline

3. In recent years, female employment growth has been strongest in Europe…, Female employment population rates

4. Family spending in Sweden and France has a more ‘active’ focus than elsewhere Public social expenditure on family support as a percentage of GDP, 2001 Public support as child allowances, parental leave benefits and childcare support; spending for Australia, New Zealand and the UK includes income support for (sole) parents, while other countries typically record similar payments as ‘social assistance’. Spending on health and housing support also assists families, but not exclusively, and is not included here.

5. Progressivity of family assistance payments is most pronounced in Australia and the USA Ratio of family cash benefits received by poorest quintile of working age to benefits to richest quintile

6. Australia and France are very effective in reducing child poverty Difference between market and disposable income poverty, percentage points

7. On average across the OECD, about one in eight children lives in poverty

8. Parental employment reduces poverty risk… Child poverty rates (%) for couples with children by parental employment status

9. …particularly for sole parent families. Child poverty rates (%) among sole parent families by parental employment status

10. Child poverty is on the policy agenda in all OECD countries Key issue is to find the appropriate balance between: –‘ benefits strategy ’ : increasing the adequacy of benefits for low income families with children –‘ work strategy ’ : promoting policies to increase employment among poor families.

11. Redistribution strategies Targeting If tax/benefit systems in OECD countries could be as effective as the third best performing country in percentage point reduction of child poverty – Australia 14 percentage points, then child poverty would be reduced from around 10 to 6 %. Spending If tax/benefit systems in OECD countries could be as effective as the third best performing country in proportional reduction in child poverty - Sweden, 77% - then child poverty would be more than halved from about 10 to 4.5%. NB Public spending on family benefits amounts to only.1% of GDP in Korea.

12. Redistribution strategies (continued) Simply taxing and spending more is not the answer. Sweden has a very low level of joblessness while market income poverty is about 80% of the OECD average. Countries wishing to be as effective as Sweden would have to spend considerably more than Sweden, or spend more and target it better. All the countries with very low levels of child poverty combine low levels of joblessness with effective redistribution.

13. The ‘benefit poverty gap’ for jobless families Difference between 50% median poverty line and benefit entitlements, per cent of median income

14. The ‘poverty gap’ for working families Difference between 50% median poverty line and disposable income at minimum wage of median income

15. Reducing joblessness has the biggest impact on child poverty in English speaking countries Percentage point difference in poverty rate

16. More dual earner couples has the biggest anti-child poverty effect in Ireland Percentage point difference in poverty rate

17. Increased parental employment leads to a substantial reduction of child poverty Percentage point difference in poverty rate

18. Caveats Different poverty lines lead to different size of effects; different equivalence scales lead to different results. Poverty line held constant, even though changes in joblessness and employment would shift the line. Assumes people who get jobs on average are paid as much as people who already have jobs. Would require very large increases in employment – for sole parents by 30 percentage points in Australia, Ireland and the Netherlands and more than 20 in New Zealand and the UK

19. Policy directions It is not sufficient to rely on just a ‘ benefit ’ or a ‘ work ’ strategy, but different countries need to do different things. Reducing joblessness among families will have a particularly strong effect on reducing poverty in Australia, Ireland, New Zealand and the UK Increasing dual earnership in couple families is particularly important for Ireland and Southern Europe Policy needs to facilitate paid employment for parents in Korea.…..

20. The Korean labour market should give women and mothers a fair chance Gender earning gap for full-time employees at bottom (20%) and high earning levels (80%), 2003 or latest year available

21. Very young children in Korea do often not participate in childcare,…

22. this is also true for children of pre-school age

23. Implications for Korea Women have to choose between children and paid work: investment in human resources goes to waste Give mothers at the Korean labour market a fair chance: –Reduce barriers to mothers returning to regular employment –Performance-related pay –Improve childcare support Prioritise supporting low-income families, including in-work payments Use elements of both ‘benefit’ and ‘work’ strategies