Why poverty and inequality fell in 2019

Macron “antisocial president”. Macron “president of the rich”. These criticisms carried by the left-wing opposition, foremost among which La France insoumise, had redoubled when INSEE published last September the 2018 figures on the evolution of inequalities and poverty.

The Gini index, an indicator that measures the deviation from a situation of perfect equality in which each French person would have the same standard of living (noted 0) and the opposite situation in which only one of them would pocket the total income to the detriment of others (rated 1), had risen sharply in 2018. Published Wednesday, November 18, the first assessments by INSEE for 2019, which will have to be confirmed, show that this trend has been reversed. Over the past year, inequalities have declined. The Gini coefficient fell to 0.295 against 0.298 in 2018. However, this level is still higher than that of 2017 (0.289).

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Another indicator of inequalities should also have regressed in 2019, calculated Insee. Last year, the top 20% enjoyed a standard of living 4.3 times higher than the standard of living of the poorest. A figure down 0.1 point. The ratio between the standard of living of the richest 10% and that of the poorest has remained stable.

Poverty rate down to 14.5%

With regard to the monetary poverty rate *, it fell in 2019 by 0.3 point, from 14.8% in 2018 to 14.5% of the population. In 2019, 9.1 million people would experience a situation of poverty, or about 210,000 people less than in 2018, underlines INSEE. And this, while the poverty line has increased, which raises the bar of the standard of living to be reached in order to get out.

As the poverty rate had risen sharply by 0.7 points in 2018 compared to 2017, the increase in the poverty rate would still reach 0.4 points over two years.

We could conclude that poverty remains on the rise after two years of powerful exercise of Emmanuel Macron even before the coronavirus crisis. The reality is more complex. In fact, in 2018, the increase in poverty was mainly explained, to the tune of 0.4 point, by the drop in housing allowances for French people benefiting from social housing. However, this decrease was offset by a drop in rents in due proportion not taken into account in the indicator. By correcting the change in poverty for this effect, it therefore remained stable from 2017 to 2019.

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The positive effect of the activity bonus

The reduction in the poverty rate in 2019 compared to the previous year is explained first of all by the revaluation of the activity bonus of 90 euros per month for a single person, underlines INSEE. A measure decided at the end of 2018 to calm the sling of the yellow vests. Provided for in the candidate’s program, the increase in this benefit paid to French workers, to ensure that they are better paid than by remaining inactive, was then accelerated and amplified. This announcement also made it possible to significantly increase the recourse rate of French people who are entitled to it, by popularizing the activity bonus. A significant effect on reducing poverty and reducing inequalities in living standards.

Other decisions by the head of state also contribute to this trend. This is the case of the exceptional revaluations of the allowance for disabled adults (AAH) and the minimum old age (Aspa). “Conversely, certain measures of 2019 would contribute to increasing inequalities, such as social and tax exemption from overtime which would benefit the wealthiest 50%, and to a lesser extent the under-indexation of benefits”, notes the ‘Insee.

Primary inequalities that increase slightly

The drop in inequalities is all the more significant as they have tended to increase before the redistributive effect of the French social and fiscal system, mainly because the salaries of executives have grown faster than those of others.

INSEE also explains that Emmanuel Macron’s social reforms are not taken into account when measuring poverty and inequalities. They exclude “the transformation of complementary universal health coverage and payment assistance from complementary health to complementary solidarity health at the end of 2019, which could have redistributive effects”. Conversely, the effect of increasing taxes on tobacco, and therefore its price, which affects the most modest, does not enter into these indicators either.

With the Covid-19 crisis, poverty should nevertheless explode this year, despite the measures taken by the government to try to protect household income. The number of RSA applicants is increasing sharply, which could affect many self-employed people deprived of income. The government, which has already made the payment of several exceptional aid for the poorest, says it is ready to do more, but is waiting to learn more about the people most affected.

* The monetary poverty line is characterized by a standard of living lower than or equal to 60% of the median standard of living of the French, a level which allows the population to be divided into two equal parts. In 2018, the median standard of living was 21,250 euros per year and the poverty line was 1,063 euros per month, or 12,756 euros per year.

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