Risk of poverty affects 17.2%, even without social support

  • Lusa
  • 3 March 2021

According to the report "Portugal, Social Balance 2020," over 12% of the Portuguese population was in a situation of persistent poverty in 2019 and 17.2% at risk of poverty.

More than 12% of the Portuguese population was in a situation of persistent poverty in 2019 and 17.2% at risk of poverty, a percentage that would skyrocket to more than 43% without state social support, according to a report released on Wednesday.

The data is contained in the report “Portugal, Social Balance 2020 – A portrait of the country and the effects of the pandemic” by the Faculty of Economics of Universidade Nova de Lisboa, NOVA SBE.

The report was produced by the economist and professor of the institution, Susana Peralta, in co-authorship with Bruno P. Carvalho and Mariana Esteves and is publicly presented on Wednesday.

It makes a statistical portrait of the socio-economic situation of families centred on the period between 2016 and 2019, but focusing mainly on the years 2018 and 2019.

The statistical portrait is based on data from the Survey on Living Conditions and Income, applied annually in the country by Statistics Portugal (INE), but used by Eurostat for European comparability purposes of social cohesion indicators.

Noting the interruption caused by the period of external assistance to Portugal, the report points to the downward trend in the at-risk-of-poverty rate in the country over the last decade. However, the percentage was still 17.2% in 2019, above the average for the European Union of 27, but would be much higher without state support.

“Social transfers are important instruments to reduce poverty. In 2019, the proportion of people in poverty, before social transfers, was 43.4%,” the report said.

Speaking to Lusa, Susana Peralta stressed the link of poverty to low wages, which is the reality in Portugal and the relationship with the labour market.

According to the report, the unemployed are the group with the highest poverty rate in 2019 (42%) and working full-time is also no guarantee of getting out of poverty – 46% of the poor population lives in households where adults work more than 85% of the time, that is, practically full-time, adding that in addition to the unemployed, poverty is also more prevalent among single-parent families and individuals with lower levels of education.

“Portugal is a country of low wages and has one of the highest levels of labour market precariousness in the OECD (Organisation for Economic Cooperation and Development). This makes people have relations with the labour market that do not protect them from poverty,” said Susana Peralta.

The economist pointed to the example of independent workers, the so-called ‘Recibos Verdes’ (‘green receipts’) and part-time workers as an important part of the poverty figures among those who work, earning incomes below the National Minimum Wage, a benchmark for incomes above the poverty threshold.

It is also necessary to consider the weight of dependents without income in the household, such as children and the unemployed, which is reflected in another indicator, that of labour intensity, which measures the full-time working time of adults in a household.

The report states that the proportion of households where adults aged 18-59 work less than 20% of the time. That is, the percentage of people with very low labour intensity increased between 2008 and 2014. That year, it peaked at around 12% and returned to pre-crisis levels in 2019 when it stood at around 6%.

The report also portrays the evolution of the persistent poverty situation in Portugal: in 2019, it was 12.5% for the general population, 11% for children, 8% for workers and more than 33% for the unemployed.

Between 2016 and 2019, almost 60% of the unemployed were in poverty for at least one year, which affected 36.5% of children and 25.1% of workers. Overall, the rate stood at 31.2%.

The material deprivation rate, which measures people’s ability to cope with unexpected expenses, to afford one week’s holiday a year away from home, or to be able to keep their home warm, among other indicators, stood at 15.1% in 2019, after having already been at 23% in the previous decade, in 2008. The severe material deprivation rate fell in the same period from 9.7% to 5.6%.

“Between 2008 and 2019, the number of people who say they are unable to secure the immediate payment of an expense without resorting to a loan has increased. For the population at risk of poverty, this figure rose from 47% to 64%,” the report added.

The poverty gap, i.e. the distance between a household’s income and the poverty line, has also increased from 2.1% in 2008 to 2.3% in 2019. Last year the poverty line was 6,014 euros per year, 1,045 euros more than in 2008.

Poverty impacts access to and quality of healthcare, with almost 25% of people in poverty rating their health as poor and reporting greater difficulties accessing dental care, which is not available in the country’s national health service.

Housing deprivation among the poor was 26% in 2019, double that of the general population. The poorest are also the ones who most live in overcrowded accommodation (18%) and the ones who most consider their housing costs to be excessive: 38% of poor households in Portugal have housing costs that exceed 40% of household income (compared to 16% of the total population).

The report pointed out that poverty creates inequalities in civic and democratic participation, reducing the representativeness of citizens’ interests in political choices. The proportion of poorer people who show little or no interest in politics is 60%, double the richest proportion.