Global Issues: Austria & Czech Republic/Poverty

A useful methodology to employ in assessing the conditions of poverty in Austria and the Czech Republic is not simply discussing the conditions of poverty in the country themselves, but to put the conditions in the context of global and European poverty. Although the conditions of poverty in Austria and the Czech Republic will be discussed a context for how these countries are performing in relation to European and global poverty will be provided. In short, this approach will allow for a broader understanding of the issue in regard to the conditions of global, European and finally a specific analysis of poverty in Austria and Czech Republic.

A Glimpse at Global Poverty
A Glimpse at Global Poverty

Poverty throughout the world is an enormous issue the international community seeks to alleviate. Most recently the international community, in its Millennium Development Goals, adopted by 189 world leaders at a 2000 UN summit, has called attention to this problem by charting a course to reduce by 50% the number of people living on less than $1 a day by the year 2015. This goal will certainly be challenging as the population continues to grow and resources become scarce. In addition to this challenge the recent global economic crisis has also curtailed efforts and gains in reducing poverty. According to Global Issues.org, access to water is becoming a major issue, as “1.1 billion people in developing countries have inadequate access to water and 2.6 billion people lack basic sanitation.” Secondly, as wars between nations and internal conflicts within nations continue to rage the plight of refugees, internally displaced people and the process of migration become more problematice. As these people move about in an effort to escape the violence they often leave with nothing and thus struggle to survive while living in poverty. Using Afghanistan as example – a country who has been inflicted with 30 years of civil upheaval and radical devolution of political, economic, and military authority - Refugees International has the following to say about Afghanistan’s situation: Millions of Afghans need help rebuilding their lives and country. While all Afghans suffer the government’s poor capacity and lack of services, Afghan returnees and internally displaced have been neglected and are particularly vulnerable. Today more that three million registered refugees remain in exile- 2.1 million in Pakistan and 0.9 million in Iran- and hundreds of thousands more are living abroad to escape economic hardship or targeted violence. In addition to these realities, the World Bank has reported that:

“the global economic crisis left an additional 50 million people in extreme poverty in 2009 and will leave some 64 million impoverished by the end of 2010, primarily in sub-Saharan Africa and eastern and southeastern Asia. Hunger may also have spiked in 2009 – with over 1 billion people undernourished – as a consequence of the global food and financial crises. Moreover, the effects of the crises are likely to persist with poverty rates slightly higher than they would have been had the world economy grown steadily at its pre-crisis pace, it said.”

Interestingly it is China alone that overwhelmingly drives the numbers in regard to how the world is progressing in the field of reducing poverty. For example, the World Bank has noted that “between 1981 and 2005, the poverty rate has fallen by about 25%, however while this sounds encouraging, it masks regional variations, and perhaps most glaringly the impact of China.” The World Bank continues, “China’s poverty rate fell from 85% to 15.9%, or by over 600 million people, China accounts for nearly all the world’s reduction in poverty and excluding China from the data would yield a reduction in poverty by only 10%.”

European Poverty
European Poverty

In an effort to tackle poverty in Europe the European Union has launched a campaign called ‘2010 European Year for Combating Poverty and Social Exclusion’ to help the estimated 84 million Europeans currently considered at risk of poverty. “The key objectives are to raise public awareness about these issues and renew the political commitment of the EU and its Member States to combat poverty and social exclusion.” A 2008 report on poverty levels in Europe was concluded that the 16% of Europeans considered at risk of poverty fell within a range of 10% to 23% in terms of how much each countries population was at risk throughout the 27 member states of the EU. The EU rate, in comparison to the Czech Republic found that only 10% of the Czech population was considered at risk of poverty- the lowest in the EU. The EU rate, in comparison to Austria found that only 12% of Austrians are considered at risk of poverty. In regard to social exclusion the EU is encourage member states to coordinate their approaches in fighting poverty and social exclusion by placing it at the top of their political agenda. The EU estimates that social transfers- the public policy measures which makes it possible for people to achieve up-ward mobility and thus decrease overall social exclusion- reduced the risk of poverty by 38% on average in the EU, but this impact varies from less than 10% to nearly 60% across Europe. For example, one aspect helping to drive down poverty in CZ is through the public policy agenda centered on social transfers. According to a study conducted by the EU, social transfers in the Czech Republic have helped reduce poverty by 50%. In general view of Europe, “low levels of poverty characterize the Scandinavian countries, the so-called Corporatist countries (Austria, Germany) and the Czech Republic, Slovakia and Slovenia among the ex-Socialist countries.” In contrast the risk of poverty tends to be relatively high in the Mediterranean and the Baltic States. Countries with the highest poor population include France, Germany, Italy, Poland, Spain and the UK. Looking at the conditions of poverty in the countries of Austria and Czech Republic one can clearly see that these nations are doing exceptionally well when compared to others, especially the countries in Sub-Saharan Africa and Southern Asia. So what has set Austria and the Czech Republic apart from other nations in increasing individual wealthy and thus less of their respective populations residing in poverty? In answering this question I have found that the common link existing between Austria and the Czech Republic are the social programs and support available to their respective citizens, which have made those nations successful in reversing the tide of poverty while increasing the purchasing power of their citizens.

Austrian Poverty
Austrian Poverty

Taking a closer look at indicators of Austria’s level of poverty a study was conducted by the United Nations. Below are the UN’s findings as compared to the United States:

Source: Human Development Report 2000; Trends in human development and per capita income

Although this data was taken in 2000 it not only gives a solid indication of Austria’s economic success when compared to the United States but more importantly it speaks to the prowess of Austria’s ability to sustain and improve its human development. From 1975-1998 Austria’s human development and per capita income steadily increased this is significant because human development encompasses life expectancy, literacy, average number of years of schooling, and income to assess a country’s performance in providing for its people’s welfare and security. In addition to this study the UN also provides reasoning to explain how Austria is able to achieve such favorable human development and per capita income rates thus reducing poverty. Specifically the report states that, “living standards are very high, and due to socialist policies of the federal government, the incidence of poverty is minimal.” Another interesting aspect highlighting why Austria’s method of dealing with the issue of poverty and homelessness lies in their infrastructure to provide for their citizens who are in need of help. In another study conducted in 2005 by Helix, a clinical research and consulting firm located in Salzburg, Austria concluded the following: In some counties like Vienna, Salzburg, Tyrol and Vorarlberg there are chain like structures of services in force. Centers for counseling and prevention of eviction –emergency shelters and day care institutions – supported housing and provisions for re-housing. In the counties Styria, Upper Austria and Nether Austria emergency services still have an overweight and provisions headed on resettlement are less elaborated. In the counties Carinthia and Burgenland there are only very few services for homeless persons provided – especially emergency services like shelters and asylums. In some counties (like Vienna, Tyrol, Styria) some old fashioned asylums are still working and can be characterized by low standards and very low provisions of individual support. Beside the professional emergency services in most counties of Austria cheap boarding houses and private hostels are accessible also for homeless persons and used for temporary shelter.

Austria uniquely offers an extensive support system throughout its country to help those in poverty and at risk of going into poverty. One characteristic about the country’s apparuts to deal with poverty is the mix of institutions it offers in order to meet the needs of its citizenary. From the chain-like structures, emergency shelters, day care, asylums, boarding houses and private hostels Austria has a plethora of institutions to support its citizenary.

Czech Republic Poverty
Czech Republic Poverty

One unique aspect about the Czech Republic society is that the citizenry enjoy vast benefits from their government in the role of state aid for social support. The Ministry of Labour and Social Affairs (MoLSA) is charged with administering the aid. MoLSA was established in 1990 and is responsible for all social and labour aspects in the Czech Republic such as social services, social benefits, and social security, equal opportunity for all citizens as well as migration and integration of foreigners. Under a national law passed on 1 January 2008, titled State Social Support, the “citizens have a right to benefits if they and the household members assessed with them are permanent residents in the Czech Republic or if they are EU citizens- subject of directly applicable legislation of the European Communities.” The benefits, as administered by the MoLSA, are outlined below:

Child Allowance-

Child allowance is a basic long-term benefit provided to families with dependent children. A dependent child up to the age of 26 years, living in a family with an income of less than 2.4 times the family’s living minimum is entitled to this allowance.

Social Allowance-

The aim of this benefit is to be help families with low incomes to cover the costs of their children’s needs. Parents who care for at least one dependent child are entitled to this allowance provided the family income is the previous calendar quarter does not exceed 2.0 times the family’s living minimum. The higher the family income, the lower the monthly allowance. Te social allowance may be raised in cases where the child has a long-term severe disability, a long term disability or a long-term illness. A higher level of social allowance is also paid to families in cases of multiple births- up to the age of three years and to family whose child is studying secondary school on a daily basis or attending university.

Housing Allowance-

Property owners or tenants registered as permanently resident in that property are entitled to a housing allowance of 30% (in Prague 35%) of family income is sufficient to cover housing costs and at the same time this 30% (in Prague 35%) of family income is lower than the relevant prescriptive costs set by law. The level of housing allowance is set as the difference between prescriptive housing costs and the relevant family income multiplied by a coefficient of 0.03 (in Prague 0.35).

Parental Allowance- A parent who personally and duly cares for a child who is the youngest in the family is entitled to parental allowance. Parental allowance is provided at four rates that are set at fixed monthly amounts according to duration of drawing- increased rate (11, 400CZK), basic rate (7,600CZK) and lower rate (3,000 CZK). A parent may elect to draw parental allowance for a period of up to two, three or four years of the child.

Foster Child Allowance-

Dependent children placed in foster care are entitled to an allowance. The child continues to be entitled to this allowance even after reaching adulthood, up to a maximum of 26 years of age, provided that they remain a dependent child and live under the same roof as the former foster parent(s).

Foster Parent Allowance-

A foster parent who takes a child into foster care is entitled to this allowance. The monthly amount of the foster parent allowance equals the individual living minimum for each child placed in foster care. The foster allowance for one child is 3,126CZK a month. Birth Grant-

This a one-time benefit for women who have given birth to a child. If a woman who gives birth to a child and dies and the birth grant has not been disbursed, the child’s father is entitled to this grant. Persons who have taken a child up to the age of one year old into permanent care replacing parental care are also entitled to the birth grant. The birth grant amounts to 13,000 CZK for each child born.

Funeral Grant-

The funeral grant is a one-time payment to a person who has arranged for the funeral of a dependent child, or to a person who was the parent of a dependent child, on condition that the deceased was a permanent resident of the Czech Republic on the date of death. The amount of the funeral grant is a fixed sum totaling 5,000 CZK. The amount of state support the Czech government provides to its citizens is significant and has a tremendously favorable impact on the conditions of poverty in their country as evidence by their lowest ranking of at-risk-poverty among all the EU member states.

Other Consulted Resources
Kearny, A.T. 2006. "The Globalization Index." Current History 108, no. 722: 395-401. Academic Search Premier, EBSCOhost (accessed May 20, 2010).

Tomas Sirovatka and Petr Mares. 2006. "Poverty, Social Exclusion and Social Policy in the Czech Republic." Social Policy & Administration ISSN 0144-5596 Vol. 40, No. 3, pp. 288-303. Academic Search Premier, EBSCOhost (accessed May 20, 2010).

Horacio Levy, Christine Lietz and Holly Sutherland. 2007. “Swapping Policies: Alternative Tax-Benefit Strategies to Support Children in Austria, Spain and the UK.” Journal of Social Policy, 36, 4, pg. 625- 647. Academic Search Premier, EBSCOhost (accessed May 20, 2010).

Christian Karner. 2005. “The Habsburg Dilemma Today: Competing Discourses of National Identity in Contemporary Austria.” National Identities, Vol. 7, No. 4, pp. 409-432. Academic Search Premier, EBSCOhost (accessed May 20, 2010).

Philippe Legrain. 2004. “Open World: The Truth about Globalization.” Academic Search Premier, EBSCOhost (accessed May 20, 2010).

Rob Cameron. Cesky Rozhlas. " Chomutov benefit seizures provokes new row over Romany integration." http://www.radio.cz/en/article/113665 (accessed May 20, 2010).

Isabelle Le Rouzic. Central Europe Review. “From Precarious to Disaffection: The Homeless in Prague.” http://www.ce-review.org/99/21/lerouzic21.html (accessed May 20, 2010).

BBC News. “Prague Homeless Face Rising Abuse.” http://news.bbc.co.uk/2/hi/europe/4634061.stm (accessed May 20, 2010).

Malan, Mia and Shreedhar, Jayalakshmi. 2007. “Time Bomb for Roma.” Academic Search Premier, EBSCOhost (accessed May 20, 2010).