Poverty, income and working poor

The concept of working poor in the developing world adds a new dimension to the study of labour markets: it integrates employment into poverty. In fact, the majority of the poor of working age are not idle, but work. However, their income from work is below the poverty line and they usually do not benefit from the other items that define decent work: social protection or representation rights (voice). Current estimates show that in developing countries in 1997 around 534 million persons can be considered working poor. This was about the same number as in 1986 (536 million). Thus, in 1997 around 25% of the employed labour force in developing countries were working poor, the great majority of whom were living in low-income countries.

The dynamics of the working poor population show that their numbers have increased in low-income countries, but decreased in middle-income countries. There seems to be also a polarization between those low-income countries where the number of working poor are declining and those where they are increasing thus exacerbating world inequalities.

For policy, the emergence of the concept of working poor has some important consequences. In particular it must be questioned if the jobs that the working poor actually hold –many of them in the area of self-employment-, might be a good starting point for the development of decent jobs. In addition to the creation of new, more productive jobs these jobs might be upgraded.

Further research on the issue will include a re-estimation on the basis of new data of the working poor population and their labour force participation rates, multi factor analysis trying to explain the size of the working poor population by macroeconomic and labour market policy factors and some more work on the consequences for labour market policies of the existence of the working poor. These studies will also contribute to the formulation of policies, which intend to reduce the population of working poor by facilitating the access to better jobs. The working poor concept can be developed into an important ILO employment sector input to the overall millennium goal of halving poverty by 2015.