Social Europe Financial distress in households as a timely indicator of social trends

Social Europe Main Topics DG EMPL interest in BCS data on HH financial situation "Financial Distress" indicator Review of national time series Type of outputs and analysis Comparison FD to standard indicators of social situation Use as advanced indicator of social developments

Social Europe Why DG EMPL interested in BCS data on HH financial situation? Timely info on trends in population facing financial difficulties Signalling growing social problems –rise in HH financial difficulties in MS (e.g. ES, IT, EL) Quartile breakdowns trends for diff income groups Current main source (EU-SILC) has considerable delays Used in "Employment and social situation quarterly review" (quoted by BBC and Wall Street Journal) As advanced indicator of traditional social indicators?

Social Europe "Financial Distress" indicator Based on monthly question Q12: Which of these statements best describes the current financial situation of your household? + + we are saving a lot + we are saving a little = we are just managing to make ends meet on our income we are having to draw on our savings we are running into debt N don't know. Breakdowns by income quartile

Social Europe Review of national time series: typical form

Social Europe Strong intermingling/reversal of income quartiles

Social Europe Problems in a specific period

Social Europe Financial distress: Belgium in FD until 2008, then general decline (broadly since start of crisis) Diff FD lowest and highest quartiles over most of period Recently among lower quartile and among upper quartile

Social Europe Financial distress: Germany FD broadly, only temp worsening due to crisis Continued falls, although signs of bottoming out mid-2011 Improvement over recent years similar across diff income quartiles

Social Europe Financial distress: Spain Since late 2007, accelerated worsening in FD improvement over 2011 for upper quartiles but worsening for lower quartile widening of gap during latest months trends reverse

Social Europe Comparison of FD with traditional indicators of social situation Social indicators from EU-SILC (2004–2010) Fin strain indicators share of popn in situations of inability to make ends meet share of popn in arrears on utility bills share of popn in arrears on mortgage or rent payments Key social indicators popn share in severe material deprivation at-risk-of poverty rate (AROP) at-risk-of poverty or social exclusion rate (AROPE)

Social Europe Correlations of av. annual financial distress and degrees of inability to make ends meet (SILC) For 2/3 quite good strong (>0.65) 10 MS medium for 6 MS for 1/3 MS less +ve For 5 (AT, CZ, DE, MT, RO) weak 5 others (BG, CY, FI, FR, PT) opp sense to expected => what being measured?

Social Europe Correlations of FD and (a) share of people in arrears on utility bills and (b) the share of people in arrears on mortgage/rent payments Good on at least one of arrears items in 2/3 of MS For a few MS, no clear same-sense relation (AT, BE, CZ, FI, FR & PT) => for these no clear link to financial situation in SILC

Social Europe Member States for which financial distress indicator correlates well with the key social situation indicators Overall, FD advanced indicator of at least one key social indictor in 15 MS No clear correlation with any of key social indicators for BE, BG, CZ, FR, FI, DE, EL & HU

Social Europe Correlations of financial distress and key social indicators for Netherlands and Poland

Social Europe Conclusions Financial distress data can provide useful and timely info on trends in popn facing financial difficulties => useful for signalling growing social problems FD can be used to some extent as advanced indicator of established social indicators in many MS, although actual hard indicators it can "foretell" depends on particular MS For some MS no clear correlation with any of key social indicators reviewed (BE, BG, CZ, DE, EL, FI, FR, HU) Further investigation: need access to detailed response categories for Q12 & national questionnaires need national data providers to check data series to ensure consistent / no gaps

Social Europe Thank you for your attention