GINI DP 79: A Critical Evaluation of the EU 2020 Poverty and Social Exclusion Target: An Analysis of EU-SILC 2009

As part of its 2020 Strategy adopted, the EU has set a number of headline targets including one for poverty and social exclusion reduction. Our analysis in this paper suggests that, in focusing on the union of the three chosen component indicators, cross-nationally we are not comparing like with like and the case for aggregating the indicators to produce a multidimensional indicator is seriously undermined. In relation to the measurement of deprivation, the development of this target was conducted on the basis of information available in the European Union Survey of Income and Living Conditions (EU-SILC) that was generally recognised to be less than satisfactory. More recently the introduction of a special module on material deprivation as part of EU-SILC 2009 provides an opportunity to explore the consequences of critical choices in relation to the deprivation index utilised and the threshold employed. In order to deal with problems relating to the fact that neither the union or intersection of the current dimensions proves to be satisfactory, we explored a consistent poverty approach using both the EU severe material deprivation 4+ threshold and a 3+ threshold and nationally relative threshold based on an alternative basic deprivation index. Employing the EU material deprivation index, extreme deprivation is largely abolished in more affluent member states. A purely relative measure produces much higher rates in these countries but leads to a compression of rates across countries. The basic deprivation 3+ index largely manages to avoid both of these problems.Understanding the scale of between country differences while continuing to be able identify those groups within countries who should remain the focus of attention is an indispensable part of any attempt to develop EU poverty and targets. The absence of coherent principles underlying the measurement process is likely to undermine the stated objectives of achieving an effective way of communicating in a political environment, and a necessary tool in order to monitor national situations.