illustration for Domain 4 Financial security and dignified work

Financial security and dignified work: Inequality in the capability to achieve financial independence and security, enjoy dignified and fair work, and recognition of unpaid work and care


Description

The capability to be financially secure and enjoy financial independence is an important element of well-being. In addition, economic inequalities play a key role in shaping inequalities in other life domains. Measures include income and wealth inequality, rates of poverty and material deprivation, income insecurity and financial resilience, including measures designed to capture advantage as well as disadvantage. This domain also covers aspects of work; an important element of well-being not just because it provides an income but because workers can enjoy a range of non-pecuniary benefits. Inequalities include differences in working conditions and unequal access to the top jobs.

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Many have argued for examining economic inequalities alongside a range of other forms of inequality in capabilities (e.g. Therborn, 2013). The fact that economic resources (income and wealth) provide the means to other ends both now and in the future, highlights their importance. In addition, personal wealth holdings (examining inequalities in financial stocks in addition to financial flows) can provide important information on people’s future capability sets and financial security over the lifecycle.

The idea that it is possible to have ‘too much’ as well as ‘too little’ income or other economic resource has been explored by a number of scholars (see, for example, Robeyns, 2017). Where individuals have more resources than are needed, Robeyns outlines the moral position that these individuals have “too much” and suggests that development of a ‘richess line’ to complement the ‘poverty line’. Robeyns (and others) describe how concentration of income and wealth can have a negative bearing on other people’s capabilities; where money ‘buys’ power, or limits the opportunities of others.

Burchardt and Hick (2017) highlight how high income and wealth can be associated with freedoms enjoyed in other domains (political influence, geographical mobility, security and room for legal manoeuvre) and that the very well-off (elites) do not need to actualise these freedoms in order to secure advantage – the capability is often sufficient. In the context of advantage, Burchardt and Hick argue, the non-observable nature of people’s capabilities becomes more significant at high levels of income. Analysing ‘functionings’ in relation to ‘basic’ capabilities is more straightforward as absence is more likely to reflect a lack of capability. In the context of advantage, “as we move away from ‘basic’ achievements, the relationship between capabilities and functionings is likely to be governed to a greater extent by the preferences of the individual” (Burchardt and Hick, 2017, p.10). There is a strong case for using measures of income and wealth where they represent better proxies of the underlying capabilities than the available measures of ‘functionings’ (Burchardt and Hick, 2017).

Economically rewarding activities in the form of paid work and entrepreneurial activities are important because the income generated can assist individuals to pursue the life that they wish to lead, to support those dependent on them, such as children, and to avoid poverty and destitution. In addition to the income that work generates, work can be rewarding in its own right, particularly for those able to pursue an interest. We observe inequalities not just in the rewards from work but also in the quality of jobs. These inequalities include safety at work, autonomy, treatment at work and discrimination. Research shows that differences in these relations and conditions of work also impact on capabilities in other spheres of life (physical security, health, etc) (see, for example, Bartley, 2005). Some forms of work are precarious and temporary in nature and there can be large differences between conditions for those working in the formal and informal labour markets. Conditions can be particularly bad for individuals working under exploitative conditions and in forced labour (complete lack of autonomy). Measures for these aspects of dignified work are included in this domain.

Unequal access to the best opportunities and how this relates to family background and forms of discrimination are key aspects of labour market inequality captured in this domain. These are forms of social mobility and a number of different measures are included in this domain. These include standard measures of social mobility measuring the correlation between outcomes for parents and children (in income, earnings and social class) and perceptions of equal opportunity and social mobility.

The importance of paid work as an activity clearly varies between different age groups, with less importance for those old enough to retire from work and those able to retire on an adequate income. Not all individuals have access to pension income (and therefore need to work to secure an income) and some individuals choose to continue working past ‘retirement age’ for the non-pecuniary benefits that work has to offer.

This domain also covers forced labour, exploitative labour and child labour. Although children may ‘choose’ to work and income from their employment may make a crucial contribution to the family budget, child labour is considered a negative outcome. Child labour does not refer to ‘pocket-money’ jobs, it refers to work that deprives children of their childhood, their potential and their dignity which is harmful to physical and mental development (more information can be found in the ILO publication – What is child labour?). Similarly, children shouldering the burden of caring for other family members limits their capacity to engage in activities which would expand their adult capabilities or simply the freedom for children to ‘play’ and socialise with peers.

References and selected readings

Bartley, M. (2005). ‘Job insecurity and its effect on health’, Journal of Epidemiology and Community Health, 59:718-719

Burchardt, T. and Hick, R. (2017) ‘Inequality and the Capability Approach’, CASEpaper 201, Centre for Analysis of Social Exclusion, London School of Economics

Dillon, A. (2010). ‘Measuring child labor: Comparisons between hours data and subjective measures’, Research in Labor Economics, 31, 135-159

Ritualo, A. R., and Castro, C. L. and Gormly, S. (2003). ‘Measuring Child Labor: Implications for Policy and Program Design’, Comparative Labor Law & Policy Journal, Vol. 24, No. 2, pp. 401-434, Winter 2003

Robeyns, I. (2017) ‘Having Too Much’, in J. Knight and M. Schwartzberg (eds.) NOMOS LVI: Wealth. Yearbook of the American Society for Political and Legal Philosophy, New York University Press

Ruwanpura, K. N. and Rai, P. (2004). Forced Labour: Definitions, Indicators and Measurement, ILO working paper DECLARATION/WP/18/2004


Measurement considerations

Key measures of economic inequality in earnings, income and wealth, which include measures of advantage (concentration of income and wealth among a few) and disadvantage (income poverty, incidence of low pay, over-indebtedness) are included in this domain. Measures include overall dispersion of income, earnings and wealth, financial resilience, income security and volatility, and social mobility.

Obtaining accurate measure of child labour is challenging as there is no internationally agreed measure. One of the issues that requires consideration is time children spend on non-economic family productive activities, including household chores and care roles, which tend to be shouldered disproportionately by girls in many cultures, and therefore excluding them may understate girls’ involvement in child labour. UNICEF, ILO and the World Bank (Understanding Children’s Work collaboration) have made some progress in establishing a standard quantitative measure (Ritualo et al., 2003) and other work has suggested the use of children’s subjective responses rather than adult’s which can be biased (Dillon, 2010).

Measuring forced labour is also challenging but some progress has been made (Ruwanpura and Rai, 2004). The ILO define forced labour as "all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily."

 

Click on the button beside each sub-domain to see related indicators, inequality measures and references to any relevant UN Sustainable Development Goal (SDG) indicators. You may click on the Expand All button to view all inequality indicators, their measures and SDG indicators within each of the sub-domains.

 

Sub-domains:
Achieve financial security and resilience against shocks
Indicator:
Income inequality, income security and financial resilience
     Measures:

Relative income inequality - Gini (or a measure of dispersion such as 90/10 or Palma ratio) - household equivalised disposable income

Concentration of income at the top - top income shares (top 10%/5%/1%)

Relative income poverty - income <60% median equivalised disposable income

Reference: UN SDG:
1.1.1

Proportion of population below the international poverty line, by sex, age, employment status and geographical location (urban/rural)

1.2.1

Proportion of population living below the national poverty line, by sex and age

1.2.2

Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

10.2.1

Proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities

Rate of absolute income poverty: (a) against a fixed poverty line; (b) material deprivation

Reference: UN SDG:
1.1.1

Proportion of population below the international poverty line, by sex, age, employment status and geographical location (urban/rural)

1.2.1

Proportion of population living below the national poverty line, by sex and age

1.2.2

Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

Precariousness of household income: (a) income volatility; (b) perceptions of income insecurity

Reference: UN SDG:
1.3.1

Proportion of population covered by social protection floors/systems, by sex, distinguishing children, unemployed persons, older persons, persons with disabilities, pregnant women, newborns, work-injury victims and the poor and the vulnerable

Rate of over-indebted households (debt/income ratio)

Percentage of households with high-cost, short-term loans (eg pay-day loans)


Enjoy financial independence and control over personal spending
Indicator:
Financial independence, control over resources and financial inclusion
     Measures:

Intra-household division of income

Percentage of women with equal control over household budget

Percentage with bank account

Reference: UN SDG:
8.10.2

Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider


Evidence of excess financial accumulation and financial advantage in the control and ownership of resources
Indicator:
Inequality in private ownership of financial assets and resources
     Measures:

Wealth inequality: (a) concentration - top wealth shares (top 10%/5%/1%); (b) overall inequality (such as Gini or decile ratios); (c) homeownership and housing wealth

Concentration of land ownership

Reference: UN SDG:
1.4.2

Proportion of total adult population with secure tenure rights to land, with legally recognized documentation and who perceive their rights to land as secure, by sex and by type of tenure

5.A.1

(a) Proportion of total agricultural population with ownership or secure rights over agricultural land, by sex; and (b) share of women among owners or rights-bearers of agricultural land, by type of tenure

5.A.2

Proportion of countries where the legal framework (including customary law) guarantees women's equal rights to land ownership and/or control


Have equal access to paid work, job opportunities, productive assets and markets
Indicator:
Access to work
     Measures:

Percentage of working age in paid work (employment or self-employment)

Unemployment rate: (a) ILO rate; (b) unemployment benefit claimant rate

Reference: UN SDG:
8.5.2

Unemployment rate, by sex, age and persons with disabilities

Percentage of young people (15-24 years) not in education, training or employment

Reference: UN SDG:
8.6.1

Proportion of youth (aged 15-24 years) not in education, employment or training


Indicator:
Earnings inequality (income from work)
     Measures:

Earnings inequality - Gini or percentile ratio - Annual/ monthly/ weekly/ hourly (depending on availability)

Earnings volatility

Low pay rate - Less than 2/3rd median hourly wage

High pay rate - greater than 2/3rd median hourly wage


Evidence of unequal pay and access to the highest paid work opportunities
Indicator:
Social mobility, unequal pay and unequal access to the top jobs
     Measures:

Social mobility (social class, earnings, income)

Perceptions of equal opportunity and social mobility

Percentage of women working in top professions

Reference: UN SDG:
16.7.1

Proportions of positions (by sex, age, persons with disabilities and population groups) in public institutions (national and local legislatures, public service, and judiciary) compared to national distributions

5.5.2

Proportion of women in managerial positions

Gender, disability and racial pay gaps

Reference: UN SDG:
8.5.1

Average hourly earnings of female and male employees, by occupation, age and persons with disabilities

Percentage of privately educated in top professions (managerial and professional, politicians, top civil service jobs, CEOs on boards, non-executive directors, high-ranking officers in the military)

Gender and racial occupational segregation

Reference: UN SDG:
16.7.1

Proportions of positions (by sex, age, persons with disabilities and population groups) in public institutions (national and local legislatures, public service, and judiciary) compared to national distributions


Enjoy good working relations and dignified and fair work conditions
Indicator:
Employment relations and conditions
     Measures:

Percentage working in the informal sector

Reference: UN SDG:
8.3.1

Proportion of informal employment in non-agriculture employment, by sex

Percentage employed on: (a) part-time contracts; (b) temporary contracts; (c) Zero hours contract; (d) without a contract

Workplace injury rate

Reference: UN SDG:
8.8.1

Frequency rates of fatal and non-fatal occupational injuries, by sex and migrant status

Percentage of workers experiencing job strain

Percentage of workers who enjoy autonomy at work (tasks, start and leave time, breaks)

Percentage of workers with opportunities for promotion in current job

Inequality in job satisfaction


Protection from forced labour and exploitative conditions
Indicator:
Forced labour and child labour
     Measures:

Evidence of forced labour

Evidence of child labour

Reference: UN SDG:
8.7.1

Proportion and number of children aged 5-17 years engaged in child labour, by sex and age


Enjoy equal division of care and un-paid domestic work
Indicator:
Distribution of care, domestic duties and home production
     Measures:

Average time spent on: (a) domestic duties; (b) caring for others; (c) home production

Reference: UN SDG:
5.4.1

Proportion of time spent on unpaid domestic and care work, by sex, age and location

Time-related under-employment