There is a long-standing debate about the most effective means of reducing poverty. An OECD study on the effectiveness of child poverty strategies in OECD countries determined that the answer lies in striking the appropriate balance between a “benefits strategy” and a “work strategy. The debate hinges on the apparent trade-off between ensuring adequate income assistance for families and providing incentives for people to work and provide for themselves.
On the surface, a benefits strategy appears to be most effective in reducing child poverty. Certainly, the relationship between social spending and poverty rates is striking. Denmark, Finland, Norway, and Sweden—four of the top performers on this indicator—all allot about 3 per cent or more of gross domestic product (GDP) for direct public spending on families, a full percentage point higher than the OECD average. And among the working-age population, relative poverty rates are lowest among OECD countries where social spending is the highest.
A clear link has been made, however, between joblessness and poverty. In Canada, relative poverty rates are highest among single parents and even more pronounced among non-working single parents. Across the OECD, non-employed families are the most economically disadvantaged, which means job creations strategies are an integral part of tackling poverty.
Countries that have reduced poverty rates have turned away from passive, benefits-only poverty reduction approaches in favour of national anti-poverty strategies that incorporate a number of “active” policies. Active policies are social policies that integrate strategies across governments, departments, and service providers to reduce poverty and increase self-sufficiency. For example, active job policies may be set up to help people overcome obstacles to get jobs through a combination of:
- funding jobs training
- providing child care
- introducing tax incentives for lower-paid workers
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