Is a living wage sufficient for a dignified existence in our country? And are there sufficient financial incentives to switch from unemployment benefits to a job? “If a job entails additional expenses, it often becomes financially difficult again,” say researchers from Thomas More’s Budget and Financial Welfare Expertise Center.
‘Yes, it pays to go to work,’ says Marieke Frederickx. Those who switch from minimum unemployment benefits to a full-time job with a low gross monthly wage of 2,854 euros have much more money to live on. But not everyone has the same amount. The disposable income of a couple with two children aged 10 and 15 in Flanders will then increase by 864 euros per month. For a single person without children the difference is 800 euros and for a single person with a two-year-old child it is 583 euros.
A similar story applies to those who switch from a living wage. Then the financial gain from working full-time for a low wage is 878, 927 and 559 euros per month respectively. ‘But be careful,’ says Frederickx, ‘if, for example, you have to buy your own car to go to work, it will cost you 273 euros per month for a modest car. Then the financial incentive to work becomes much smaller.’
Marieke Frederickx, together with colleagues from the Expertise Center for Budget and Financial Welfare Thomas More (CEBUD), investigated whether you can live in a dignified manner on a minimum income in our country and whether the transition to a job is financially interesting. They calculated minimum incomes, such as living wages and unemployment benefits, and took into account child benefits, job bonuses and other financial compensation from the federal, Flemish or local governments. They compared these with the minimum expenses that a family must incur in order to live in dignity. They compared available incomes and necessary expenses for all kinds of families, because of course it plays a role, for example, whether you have a partner and children.
What seems? Small families in our country who live on a living wage or minimal unemployment benefit can barely make ends meet if they can rent social housing. Large families with older children cannot make ends meet, even if they can rent social housing.
Frederickx: ‘People with such a minimum benefit are entitled to social housing, but there are 176,000 people on the waiting list. They therefore have to find a home on the private rental market. Then a minimum benefit almost always proves to be insufficient to make ends meet. If you have been on the waiting list for more than four years without success, you can receive a rental premium, on average around 175 euros. However important that sum is, most families still do not reach it. Moreover, you only get that rental premium if the rent is below a maximum amount, which is unrealistically low for many cities.’
A full-time job always means a financial leap forward, even if you have to work for the minimum wage. ‘For most families, the income is just sufficient to live in dignity,’ says Frederickx, ‘although this is not the case for families with older children and most cannot save and therefore cannot build up reserves to cover an unexpected major expense, for example. to catch.’
If a job entails additional expenses, such as purchasing a car, things become financially difficult again, says Frederickx. ‘Childcare is also an issue. If families can use subsidized childcare, the cost is limited: people with a low income who leave their children in childcare three days a week pay 60 euros per month. However, there is a shortage of childcare places.’
In most cases, a part-time job does not provide any financial benefit compared to a minimum benefit. “Sometimes you even make a loss because of the taxes you have to pay when you work,” says Frederickx. ‘And if you need a car or childcare for a part-time job, it becomes completely impossible to make a decent living on your income.’
What you often hear nowadays is that it is not worth working because you will lose a number of social corrections that you are entitled to with a minimum benefit. Is that right? Frederickx: ‘In Flanders we have about ten social corrections that often occur, such as social housing, increased healthcare reimbursement, social rates for electricity and water, discounts on public transport. These are important, every euro counts for people with a low income. But compared to being able to rent social housing, all those other social corrections have only a limited impact.’
‘The good news is that someone who works for a low wage is still entitled to social housing or a rental premium,’ continues Frederickx, ‘and also to an increase in child benefit. And these are important sums. It is true that those who take on a job are sometimes no longer entitled to other social corrections, but ultimately they do not have much influence on the household budget.’
Frederickx notes that social corrections in Flanders are awarded in a very fragmented manner: ‘They are spread across different agencies, all of which also apply different conditions. The administration that you sometimes have to plow through to get the corrections you are entitled to is enormous. In short, it is a tangle, which deters many people. We have to ask ourselves whether all this is organized efficiently.’
In addition to that fundamental comment, Frederickx has a number of suggestions: ‘Social assistance and the minimum unemployment benefit should be increased so that these people can live in a dignified way. In order not to reduce the gap between working and not working and to make income from work humane for everyone, minimum wages should also rise. That is a task for the federal government.’
‘The Flemish government must urgently increase the supply of social rental housing, because this will have the greatest effect. If families are put on a waiting list because there are not enough social housing units, they should immediately receive a rental premium. And if child allowances are an instrument to combat child poverty, then they should be increased for low-income families. Because these amounts are now insufficient to cover the minimum costs of children. I realize that this requires a serious financial effort from governments, but it is a matter of policy choices so that everyone can live with dignity in a prosperous country.’