Targeted family policies and social protection measures can play a crucial role in protecting the millions of Europeans who remain financially vulnerable despite holding jobs, the EU-funded Project WeLaR found.
On average, from 2004 to 2021, 6% of employed individuals in the EU experienced poverty, but rates varied significantly across countries. The highest levels were found in Luxembourg, where 10% of workers were at risk of poverty, and in several Central European and Mediterranean countries. By contrast, countries such as Belgium and Czechia reported significantly lower rates, just above 2%.
The study, “Reforms, Labour Market Outcomes, and the Quality of Work”, explored factors that contribute to in-work poverty in 25 EU countries. Using the latest longitudinal EU-SILC data, researchers examined transitions into and out of in work-poverty and the effects of a large set of reforms introduced in the period 2006 to 2018.
“Household composition is one of the biggest factors linked to in-work poverty, and households with children and households with only one working adult are among the most exposed,” said Maria Cristina D’Aguanno, a co-author of the study. “By contrast, workers living in households where there are older family members (65+) are at lower risk, likely due to the stabilising effect of pensions.”
One of the study’s more striking findings is that getting a job after a period of unemployment does not necessarily lift people out of poverty. Nearly half of those who return to work remain in financial hardship, exposing the limits of employment as a route to economic security.
Education can be a powerful shield against in-work poverty. Researchers found that those with higher qualifications are far less likely to struggle financially, as they have better access to stable, well-paid jobs.
The power of family and labour market policies
Just as the right policies can lift workers out of poverty, the wrong ones can trap them in it. The study found that loosening restrictions on temporary contracts has often driven up in-work poverty, as companies increasingly rely on insecure, low-paid jobs with few protections. Likewise, weakening collective wage bargaining by shifting negotiations from the national to the company level has been linked to rising poverty among workers.
In contrast, strong family policies have proven to be one of the most effective tools in tackling in-work poverty. Countries that introduced generous family benefits, non-gender-specific parental leave, and flexible working arrangements to cope with family workloads saw a decline in poverty rates among workers.
“These policies allow parents, particularly women, to stay in the workforce while managing childcare,” said Cristiano Perugini, Full Professor at the University of Perugia and co-author. “Measures such as generous child tax benefits and maternity leave also play a key role in reducing in-work poverty by increasing household income and employment stability.”
But the researchers warn that job security alone is not enough to protect workers from financial hardship. “Being employed is no longer a guarantee of financial security for many Europeans,” concludes Fabrizio Pompei, Associate Professor at the University of Perugia and co-author of the study. “Without strong social welfare policies alongside labour protections, in-work poverty will persist.”
Maria Cristina D’Aguanno, Anne-Catherine Guio, Cristiano Perugini, Fabrizio Pompei, Philippe Van Kerm (2024) Reforms, labour market outcomes and the quality of work. An analysis of the drivers of in-work poverty and of the moderating effects of reforms of family policies, labour market institutions and social protection. (Deliverable D5.4). Leuven: WeLaR project 101061388–HORIZON.
The full paper is available here.
