Gainfully Employed Receiving Welfare Top-Up-Payments: The Core Group of In-Work Poverty

Abstract

"In-work poverty characterizes a situation in which an individual must accept various restrictions in their everyday life despite earning an income. The measurement of in-work poverty is usually based on specific threshold levels that establish a relationship between comparatively low and average household incomes. The working poor can include individuals who are gainfully employed, yet are entitled to receive welfare top-up-payments (in-work benefits). Of importance in the German case is that the means-tested unemployment benefit II guarantees a socio-economic subsistence level for people out of work, as well as those employed with a low income. This paper deals with the quantitative significance of this group and asks which factors are responsible for their status and which policy implications can be derived. The empirical analyses show that the share of gainfully employed top-up welfare recipients amounts to around two percent of the total working population, which is much lower than the corresponding share of people below the in-work poverty threshold (nine percent). Welfare top-up payments are granted because the recipients can neither maintain a livelihood, nor can be adequately supported by other members of their household. It can thus be considered the core of working poverty in this country. The paper further illustrates that single persons and single parents are overrepresented within the group of gainfully employed top-up welfare recipients. Moreover, the group is characterized by a high level of part-time employment and employment with low hourly wages. Possible reforms should aim at strengthening work incentives in the low-wage segment of the labour market, as well as at an improved social infrastructure for all low-income households." (Author's abstract, IAB-Doku) ((en))

Cite article

Walwei, U. (2023): Aufstocker: Die Kerngruppe der Erwerbsarmut. In: Sozialer Fortschritt, Vol. 72, No. 2, p. 131-151. DOI:10.3790/sfo.72.2.131