Becoming unemployed surest way to fall into poverty

Parishes anticipate breadlines will lengthen this winter as financial crisis bites and food prices increase

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Finland has fallen off the wagon of Nordic well-being and the increased income disparity produces more poverty.
      “The welfare state has been brought down. A permanent low-income class has been formed in the country and it is clearly larger than in the 1980s”, explains director Jaakko Kiander of the Labour Institute for Economic Research.
     
Churches are making provision for the increased need for food aid this winter, brought about by rising rents and soaring food prices.
      “Next winter we will face a completely new situation. Already last spring the rising cost of food caused new individuals to become our customers. They were nearly in a state of shock”, explains executive director Jari Ilmonen from a church-funded food aid organisation operating in Vantaa.
     
According to special researcher Pasi Moisio of the National Research and Development Centre for Welfare and Health (STAKES), poverty is on the increase because the income development for those with small salaries is clearly slower than for those in the middle-income bracket.
      “In ten years the income level of the middle-income group has grown 1.8-fold in relation to the low-income people."
      The greatest risk to be impoverished is with those who live alone, the single parent households, and families with more than three children.
      The poverty line for someone living alone is a net income of just under a thousand euros per month. In other households EUR 500 is added for every additional grown-up and EUR 300 for every child.
     
Remaining outside the labour market is the surest way to slide into poverty.
      With the exception of the financial aid to students, increases have not been introduced to the social security payments system in 15 years.
      The basic amount of the subsistence support has in ten years fallen 25 per cent behind the general income level.
      “Simultaneously the rich have become even richer. The top one per cent of the income distribution, in other words around 40,000 extremely well-off and of them the 4,000 richest, have really increased their lead compared to the rest of the population”, Kiander states.
      Also the wage earners' real earnings have grown by 50 per cent since the 1990s recession. The growth in real terms for those with low income, on the other hand, is nearly zero.
     
Tax reductions have only accelerated the growth of income disparity.
      But comparisons should not even be drawn between tax cuts and income redistribution, Kiander points out.
      “Even if another half a billion euros had been spent on social benefits, no indicator would have picked that up”, Kiander snaps.


Previously in HS International Edition:
  Pensioners´ average income level grows while income disparity widens rapidly (29.4.2008)
  ETLA: Income disparity likely to increase as economy slows down (5.12.2007)

Links:
  GINI coefficients - List of countries by income equality (Wikipedia)

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