European Council approved the Europe2020 strategy, an economic growth and wellbeing improvementplan for the European Union (EU) in the ensuing decade. Thestrategy includes five interrelated headline targets to beachieved by the year 2020, encompassing employment,innovation, education, poverty and social inclusion, andclimate/energy. An overarching goal of the Europe 2020strategy is to reduce the number of poor and social excludedpeople by 20 million, with national level targets set byeach of the EU Member States. The European council usedthree measures of poverty and social exclusion: at risk ofpoverty rate, a measure of relative poverty defined as thepercent of the population with incomes less than 60 percentof the national median income after social transfers; theindex of severe material deprivation, a measure of thepercent of people who cannot afford a number of necessitiesthat are considered essential in order to live decent livesin Europe; and low work intensity, which is the percentageof people living in households in which adults worked lessthan 20 percent of their potential. This paper sheds lighton the impact of improving employment and educationconditions on poverty and social exclusion indicators. Thispaper is divided into eight sections. Section oneintroduction, section two provides background information onpoverty and social exclusion indicators in the ten countriesin the New Member States (NMS) group, including theirevolution since 2005. Section three describes the datasources used and defines the key variables of interest.Section four outlines the methodology used to simulateindicators of poverty and social exclusion. Section fivefirst presents the results from a validation exercise inwhich data from 2005 are used to simulate the likelyoutcomes in 2008, and then compares the simulated 2008values to the actual 2008 values. Section six presents theresults of the simulation exercise for the ten countries inthe study. Section seven provides an illustration of how thesimulation model has been adapted to address policies onpre-schools in Poland. And finally, section eight offers aset of overall conclusions.