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Social Europe Financial distress in households as a timely indicator of social trends.
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Transcript of Social Europe Financial distress in households as a timely indicator of social trends.
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 debtN don't know.
• Breakdowns by income quartile
Social Europe
Review of national time series: typical form
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UK: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile
Social Europe
Strong intermingling/reversal of income quartiles
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Cyprus: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile0
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Greece: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile
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Hungary: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile0
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Ireland: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile
Social Europe
Problems in a specific period
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Italy: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile0
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Spain: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile
Social Europe
Financial distress: BelgiumBelgium
0
2
4
6
8
10
12
14
16
18
janv.
-200
0jui
n-2
000
nov.
-200
0av
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.-2
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l.-2
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déc.
-200
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% of
resp
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Belgium: Reported financial distress in households (2000-2012)
Total Long term av H-P Total
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
0
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Belgium: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile0
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% of
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s
Belgium: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Bottom quartile
Upper quartile
• ↑ 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
Germany
0
2
4
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Jun-
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% of
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Germany: Reported financial distress in households (2000-2012)
Total Long term av H-P Total
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
0
5
10
15
20
25
30
Jan-
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Apr-2
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3Oc
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ar-2
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Jan-
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Jun-
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Nov-2
005
Apr-2
006
Sep-
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Feb-
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Jul-2
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Dec-2
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t-200
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010
Apr-2
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Feb-
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Jul-2
012
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Germany: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile
0
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Jan-
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Jun-
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000
Apr-2
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Aug-2
004
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Jun-
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Nov-2
005
Apr-2
006
Sep-
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Feb-
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Jul-2
007
Dec-2
007
May
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8Oc
t-200
8M
ar-2
009
Aug-2
009
Jan-
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Jun-
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Nov-2
010
Apr-2
011
Sep-
2011
Feb-
2012
Jul-2
012
% of
resp
onse
s
Germany: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Bottom quartile
Upper quartile
Social Europe
Financial distress: SpainSpain
0
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% of
resp
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s
Spain: Reported financial distress in households (2000-2012)
Total Long term av H-P Total
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
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ût-2
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janv.
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0av
r.-2
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% of
resp
onse
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Spain: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Joint harmonised EU consumer surveys & DG EMPL calculations. Note: 3 month centred moving average figures
Bottom quartile
Upper quartile
0
5
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janv.
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0jui
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0av
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févr.
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l.-2
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2ma
i-2
003
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3ma
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août
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v.-2
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v.-2
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c.-2
007
mai
-200
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t.-2
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mars
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9ao
ût-2
009
janv.
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0jui
n-2
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nov.
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0av
r.-2
011
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-201
2jui
l.-2
012
% of
resp
onse
s
Spain: Reported financial distress in households by income quartile of household (2000-2012)
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Bottom quartile
Upper quartile
• 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)
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
BG CY FR PT FI AT CZ RO DE MT LT BE LU UK LV SK HU DK SI NL EL IT SE EE ES PL
Corr
elati
on
Note: Countries ordered by share of population making ends meet with great difficulty
Correlations of the average annual financial distress indicator (average of the 12 months figures for a given year) and the SILC-based inability to make ends meet
Households making ends meet with great difficultyHouseholds making ends meet with difficulty or great difficulty
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
BE DE DK ES EL IE IT NL LU UK PT AT SE FI BG CY CZ EE HU LT LV MT PL RO SK SI FR
Mortgage/rent -0,52 0,55 -0,41 0,92 0,16 0,40 0,72 0,49 -0,37 -0,62 -0,37 0,77 -0,40 -0,21 0,95 -0,32 0,66 0,54 0,40 0,72 -0,12 0,95 0,29 0,55 0,47 -0,53
Utilities 0,02 -0,21 0,17 0,81 -0,57 0,65 0,97 0,72 0,94 -0,43 -0,28 0,28 -0,09 0,89 -0,29 -0,31 0,94 0,45 -0,61 0,80 0,06 0,92 0,55 0,70 0,64 -0,60
Mortgage/rent -0,28 0,56 0,35 0,86 0,69 -0,27 -0,04 0,77 0,52 -0,49 -0,80 0,77 0,20 0,24 0,80 0,30 0,24 0,94 0,69 0,92 0,46 0,80 -0,38 -0,20 -0,20 -0,48
Utilities 0,34 -0,33 0,56 0,88 -0,23 0,52 0,48 0,72 0,34 -0,77 -0,65 0,16 -0,50 0,08 -0,46 0,35 0,58 0,76 -0,02 0,94 -0,38 0,81 -0,09 -0,04 0,27 -0,68
Current SILC and FD
Current SILC and prev year FD
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
Strong correlation Medium correlation
Same year CY, EE, IT, NL, PL, SE LU, MT, PT, SI, SK
better in following year ES, PT, EE, SK LU, LV, UK
Same year AT, CY, DK, PL, SK BE, LT, SI, ES
better in following year DK, ES, LU LT
Same year CY, EE, NL, PL, SI, SK MT, ES
better in following year DK, ES, LU, SK LV, PT, UK
Correlation with FD time series:
AROP
SMD
AROPE
Social Europe
Correlations of financial distress and key social indicators for Netherlands and Poland
Netherlands
AROP SMD AROPE
9.00
9.50
10.00
10.50
11.00
11.50
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
2004 2005 2006 2007 2008 2009 2010
Fin Distress - Total
AROP
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
2004 2005 2006 2007 2008 2009 2010
Fin Distress - Total
SMD
14
14.5
15
15.5
16
16.5
17
4.00
4.50
5.00
5.50
6.00
6.50
7.00
7.50
8.00
8.50
2004 2005 2006 2007 2008 2009 2010
Fin Distress - Total
AROPE
Poland
AROP SMD AROPE
15.00
16.00
17.00
18.00
19.00
20.00
21.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
22.00
24.00
2004 2005 2006 2007 2008 2009 2010
Fin Distress - Total
AROP
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
8.00
10.00
12.00
14.00
16.00
18.00
20.00
22.00
24.00
2004 2005 2006 2007 2008 2009 2010
Fin Distress - Total
SMD
15
20
25
30
35
40
45
50
8.00
10.00
12.00
14.00
16.00
18.00
20.00
22.00
24.00
2004 2005 2006 2007 2008 2009 2010
Fin Distress - Total
AROPE
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