Explanatory Memorandum to COM(2022)490 - Adequate minimum income ensuring active inclusion - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)490 - Adequate minimum income ensuring active inclusion. |
|---|---|
| source | COM(2022)490  |
| date | 28-09-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Ensuring that every person in the Union can enjoy a life in dignity is essential to build fair and resilient economies and societies. In her political guidelines 1 , Commission President Ursula von der Leyen expressed an aspiration for a Europe that strives for more social fairness and prosperity. This initiative delivers on the ambition and commitment of the Union to promote more inclusive economies and ensure that no one is left behind.
Despite policies to combat poverty and improvements over the last decade, the risk of poverty or social exclusion affected over 95.4 million Europeans in 2021. In many Member States there has been an increase over the last decade in the poverty risk for people living in (quasi)jobless households 2 , worsening in the depth and persistence of poverty and a decline in the impact of social transfers on poverty reduction. Until 2020 the Union economy continued to expand, employment reached the highest level ever recorded and unemployment returned to the pre-2008 levels. The COVID-19 pandemic led however to an economic shock. The Union and the Member States stepped up social protection significantly, providing a comprehensive response to the unprecedented social challenges that arose. Nevertheless, confinement measures have had a disproportionate impact on women and people in vulnerable situations, notably in terms of the higher burden of informal care work and more limited access to healthcare, education and relevant social services, also aggravating pre-existing limitations in access to employment.
More recently, following Russia’s illegal and unjustified aggression against Ukraine, the sharp increase in energy prices and hiking inflation affect in particular low- and lower middle-income households, as the share of energy and food consumption in their overall incomes is generally higher.
The fight against poverty and social exclusion and the right to adequate minimum income occupies a central role in the European Pillar of Social Rights. Principle 14 of the Pillar states that ‘Everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring a life in dignity at all stages of life, and effective access to enabling goods and services. For those who can work, minimum income benefits should be combined with incentives to (re)integrate into the labour market’. On 4 March 2021, the Commission adopted the European Pillar of Social Rights Action Plan, which was welcomed by the Union leaders at the Porto Summit on 8 May 2021. The European Council 3 set 2030 headline targets in the areas of poverty, employment, as well as in the area of skills. By 2030, the number of people at risk of poverty or social exclusion should be reduced by at least 15 million, including at least 5 million children; at least 78% of people aged 20 to 64 should be in employment; and 60% of adults should participate in training every year. In June 2022, Member States presented their national targets to support this ambition.
Contents
Social safety nets help reduce social inequalities and disparities within Member States, enhancing upward social convergence, while promoting labour market integration for those who can work. Well-designed social safety nets aim to guarantee that everybody has a sufficient level of resources to ensure a life in dignity and be able to participate in the economic and social life, including the labour market. They are particularly important for persons living in households lacking sufficient resources, meaning those having insufficient, irregular or uncertain monetary and material resources, which are indispensable for their health and well-being and for social inclusion and labour market integration. For this purpose, social safety nets include income support and various in-kind benefits and services provided to those in need.
Income support consists of a spectrum of monetary benefits addressing different needs. Such monetary benefits may include for instance child and family allowances, housing benefits, unemployment benefits, disability benefits, old-age benefits or in-work benefits and also the minimum income benefits.
Minimum income benefits 4 play a special role within overall monetary income support as they aim at filling the gap to reach a certain overall level of income in the a given household. They are non-contributory and means-tested benefits of last resort to households without sufficient resources, when other sources of income or benefits have been exhausted or are not adequate to ensure a life in dignity. They are generally complemented with tailored assistance and incentives to access to labour market, measures fostering social inclusion and provision of quality services. In this way, minimum income schemes - integrating all three reinforcing strands - are not a passive tool but act, as far as possible, as a springboard to improve inclusion and employment prospects.
Properly designed minimum income schemes, can act as automatic stabilisers. In times of economic downturns, they can contribute to supporting a sustainable and inclusive recovery, help mitigate the drop in household incomes and contain the levels of people at risk of poverty or social exclusion. They can also have a stabilising effect on the overall demand for goods and services. 5 Well-designed minimum income schemes strike the right balance between poverty alleviation, work incentives and sustainable budgetary costs.
The overall level of income support should ensure a dignified life while it should always pay to work, and social protection systems should be fiscally sustainable. Minimum income needs to be accompanied with sufficient incentives to (re) enter the labour market for people who can work to play their stabilising role and avoid detrimental hysteresis effects leading to lower employment levels. Appropriately designed minimum income, together with effective labour activation measures, can be an important tool to meet the Union’s 2030 employment target and also support activation of young adults and their integration to the labour market.
As part of their social safety nets and in addition to monetary benefits, Member States also provide benefits in-kind. These include, for example, such as social housing, reduced fees for certain services (e.g. public transport, gas, energy and other utility costs) or targeted support to cover the out-of-pocket costs of childcare or healthcare, including in maternal and infant healthcare. While minimum income beneficiaries are likely to profit from those, they are not always integrated with minimum income and are not taken up by all minimum income beneficiaries. Evidence shows that the take up of some of these services (e.g. childcare) is lower for low-income households in spite of the additional support provided.
Although all Member States have social safety nets in place, the progress in making them accessible and adequate has been uneven. While the design varies across Member States, reflecting different national traditions and the overall architecture of social protection systems, Member States face similar challenges, as shown by the recurring European Semester country-specific analysis and recommendations. In addition, thematic discussions under the Open Method of Coordination highlighted mutual challenges, in particular on non-take up of benefits and on supporting beneficiaries to participate in the labour market and integrate in the society.
Securing the adequacy of income support is a challenge in nearly all Member States, including on account of wage developments. The adequacy can be measured by comparing the overall income of beneficiaries with the national poverty threshold 6 (as an indication of the poverty alleviation effect) and with the income of a low-wage earner 7 (as an indication of the financial incentives associated to labour market participation). While it varies across households, both indicators provide similar results, pointing out that low wages are close to poverty threshold and benefits stands at even lower level. In 2019, the income of a beneficiary of income support (a single person) was below 80% of the poverty threshold in 22 Member States, while the income of a low-wage earner reached or stood above the poverty threshold in all Member States. For households with children, the adequacy of income support is generally significantly higher (on average by around 10 to 20 percentage points).
Low frequency of revisions of the income support may result in benefits not keeping pace with wage developments, rises in costs of living, prices or inflation (especially of food and energy) and thus further eroding their adequacy. In a large number of Member States, setting and uprating the level of minimum income benefits is not based on a robust methodology, neither linked with statistically underpinned reference values or indicators. Automatic indexation systems that adjust the amount of income support on a regular basis to take into account changes in the costs of living is applied in around one-third of Member States.
The adequacy of income support, and in particular of minimum income benefits has remained almost unchanged on average in the Union in the last decade, in spite of a slight improvement in the recent years. Some convergence has been observed, in particular due to new minimum income schemes introduced in several Member States. On the reverse, some significant deterioration in terms of adequacy took place since 2009 in a number of Member States where rates were already below the Union average. 8
A second common challenge relates to coverage of minimum income, with around 20% of jobless people at risk of poverty not being eligible to receive any income support. Certain groups face particular difficulties in having access to them. Age requirements (for example age limit is set higher than 18 years in five Member States) may limit access of young adults. While restrictions on nationality have limited impact on eligibility 9 , criteria related to the minimum length of legal residence (regulated in a few Member States, ranging from one to ten years) can limit access for non-national claimants. Furthermore, the obligations such as having permanent address or a bank account are obstacles for homeless people or marginalised people living in deprived areas (e.g. Roma settlements).
Whereas means testing is an essential element to ensure the appropriate targeting of minimum incomes, insufficient coverage may also arise from means testing if it is excessively severe. Means testing examines the resources - be it income, assets, real estate or movable property - of all household members. In most Member States, the threshold used in the means testing represents the maximum level of the benefit provided (and the minimum income benefits are used to top up the household's income to this level). In some Member States, if the threshold is set at a low level, means test can exclude from eligibility to minimum income an important number of low-income households and working poor. Furthermore, incomplete coverage may stem from a too stringent design of the asset test, generating situations when a household would be excluded from minimum income due to disproportionate accounting of low value assets 10 .
Finally, benefits might not be adequately distributed among household members, as the right to claim benefits is limited to the head of the household. In most countries, women are not usually considered as heads of households unless no adult male is living permanently in the household 11 . Only in few Member States, the right to receive the benefits by individuals of the households is allowed in specific cases, while eligibility remains to be determined at the household level. Without necessarily increasing the overall level of benefits received at the level of the household, solutions facilitating the receipt of income support by individual members of the household can contribute to promoting gender equality and economic independence and income security of women and young adults.
The national Recovery and Resilience Plans (RRPs) under the Recovery and Resilience Facility envisage reforms in Member States, where challenges for the adequacy and coverage of minimum were identified by the country specific recommendations issued in the European Semester process 12 . By way of example, a number of investments focuses on expanding or improving the quality of social services, fighting energy poverty and on the inclusion of vulnerable groups. Some RRPs also aim at increasing the effectiveness and adequacy of social benefits, including minimum income.
Thirdly, the non take-up of minimum income appears to be rather high in all Member States. Available estimates of the non-take-up typically range from 30% to 50% of the eligible population. This may be explained by various factors, such as lack of information, complexity of access, lack of trust in institutions and perception of stigma. It appears that only a few Member States gather information on the non-take up.
Fourthly, the coordination between income support policies and incentives to (re)integrate to the labour market of those who can work remains insufficient. Social safety nets should be designed in a way that incentives to work are ensured. In particular, the design of income support should not erode work incentives nor create poverty traps (or low-wage traps for people in work and in receipt of income support). In some cases, high withdrawal rates of minimum income benefits (also with regard to supplementary benefits) or high marginal effective tax rate might result in low incentives to take up work. While it is evident that income from work (already at minimum wage level) should be higher than income from benefits, other factors also affect the rate of transition of minimum income recipients into work (e.g. participation and quality of job counselling or other tailor-made activation measures, skills gaps, health-related issues, childcare availability, etc).
Active labour market policies encouraging the transition to employment include lifelong learning, personalised support and guidance that meet specific needs, promoting quality jobs and job retention and enabling advancement, in line with the concept of the inclusive labour markets 13 . Yet, in many Member States these measures are not sufficiently tailored to individual needs of beneficiaries of minimum income who are often furthest away from the labour market.
While participation in activation programmes is a requirement in most of the Member States, adequate measures may not even be available. Activation requirements (and related sanctions) need to be accompanied with supporting services such as counselling, coaching or job-search assistance to be more effective and to encourage the acceptance of job offers. Special attention needs to be paid to young adults outside of the labour market or being at-risk-of poverty or social exclusion. To get them back into education, training or the labour market within the shortest time possible, the receipt of income support should be linked to particularly strong activation measures supporting them in gaining work experience and developing the right skills for a changing world of work, in particular those relevant to the green and digital transitions.
Positive incentives to take up employment, supporting a progressive transition to the labour market while retaining eligibility to minimum income for certain period during employment, generally yield positive results. The quality and sustainability of offered jobs (i.e. long-lasting quality jobs) is also a challenge. Participation in public works programmes is either obligatory or the first resort option for the beneficiaries in around one-fourth of Member States, despite the fact that public works are generally considered to have little or no impact in terms of supporting longer term transitions to employment. The role of the social economy is instrumental to facilitate employment opportunities for minimum income beneficiaries. Employment in the social economy could be a stepping stone towards attachment to the open labour market.
Fifthly, ensuring effective access to quality enabling and essential services is also a necessity. While an exhaustive list of enabling services cannot be drawn, they typically include general enabling services provided to everyone, such as early childhood education and care, training and education, healthcare, and long-term care. A specific category of enabling services, - social inclusion services - encompasses services addressing specific problems of those furthest away from the labour market to help them integrate into society and employment. Social inclusion services may include social work, counselling, coaching, mentoring, psychological support and rehabilitation. In addition, accessibility and affordability of essential services, such as water, sanitation, energy, transport, financial services and digital communications, are a fundamental prerequisite of any further social integration. Although most of those services are in principle available for the whole population, access and affordability may be problematic for people lacking sufficient resources, particularly now with current energy price hikes.
The dramatic increase in energy prices is putting pressure on vulnerable households and risks causing wider social and economic harm. In these turbulent times, having solid social safety nets contributes to mitigate the risk of energy poverty. In particular, minimum income and access to essential services can contribute to mitigate the impacts of the price hikes on the most vulnerable, while complementing other structural measures. Compared to price measures, income support measures generally allow for better targeting the support to those in need, and are more compatible with preserving incentives to reduce energy consumption.
Sixthly, persons lacking sufficient resources face multiple and complex barriers to inclusion and thus require individualised support. Some people are actively available to (re)enter the labour market. Some others might not be (immediately) able to work, such as people with severe disabilities or health problems, those lacking basic social skills, the homeless, or those looking after young children or dependent adults. For those people, social inclusion policies are of primary importance and may make finding a job easier at a later stage. In order to provide an individualised support, most Member States carry out multi-dimensional needs assessment. In around half of countries, it is conducted for all persons living in households lacking sufficient resources, while in a smaller group of Member States it is limited to specific groups (e.g. unemployed for a specific period) or is provided on a discretionary basis. However, only around half of Member States who carry out a multi-dimensional needs assessment offer a tailor-made inclusion plan to address the barriers to social integration, and, eventually, employment. As significant proportion of beneficiaries of minimum income is likely to be long-term unemployed, they are offered a job integration agreement, in line with the Council Recommendation on the integration of the long-term unemployed into the labour market 14 .
Finally, the effective implementation of robust social safety nets is challenged by governance issues. Key barriers include insufficient coordination between different entities due to missing standards of cooperation, lack of information exchange, shortage of skilled human capacity and low resources, including infrastructure in public employment and enabling services. These limitations also pose challenges to regular monitoring and evaluation of the effectiveness - about half of the Member States have regular monitoring mechanisms in place, while in others such practice has not been established yet.
There are more structural challenges ahead, making a case for strong social safety nets. The accelerating green and digital transition offers a window of opportunity to stimulate economic growth and create jobs. Well-designed, robust social safety nets can help fully realise this potential by supporting labour market transitions and more active participation of people facing disadvantage. On the other hand, the insufficient coverage by contributory-based benefits (including unemployment benefits and future pensions), caused by growing use of non-standard employment, may create additional burdens for non-contributory schemes.
In this context, social safety nets and minimum income in particular need to be modernised and adapted to foster social inclusion and to support people able to work in their pathways to quality employment.
Safeguarding adequate social safety nets to protect a life in dignity has been a long-standing concern of the Union. In 1992, the Council adopted a Recommendation 92/441/EEC on common criteria concerning sufficient resources and social assistance in social protection systems 15 , proposing as a common objective the establishment of a minimum level of guaranteed income and principles and guidelines to attain that objective. The general principles of the framework included active availability for work or vocational training for people whose age, health and family situation so allows, and economic and social integration measures for others. The objectives of that Recommendation were reiterated and further reinforced by the Commission Recommendation 2008/867/EC on the active inclusion of people excluded from the labour market 16 .
Recognising the relevance of a Union-level policy response to address the current challenges, in October 2020 the Council invited the Commission to initiate an update of the Union framework to effectively support and complement the policies of Member States on national minimum income protection 17 . In its Resolution 18 , the European Parliament, called on Member States to introduce adequate minimum income, highlighting the role of minimum income protection as a tool for fighting poverty.
Against this background and with a view to ensure a life in dignity at all stages of life, this Recommendation aims at combating poverty and social exclusion by promoting adequate income support, effective access to enabling and essential services for persons lacking sufficient resources and fostering labour market integration of those who can work, as laid down by principle 14 of the European Pillar of Social Rights. In doing so, it aims at achieving a high level of employment by contributing actively to the integration to the labour market of those who can work. These objectives are to be achieved without prejudice to the powers of the Member States to organise their social protection systems.
In order to reach this general objective, the specific objectives of the initiative are:
(a)to improve the adequacy of income support;
(b)to improve the coverage and take-up of minimum income;
(c)to improve access to inclusive labour markets for those who can work;
(d)to improve access to enabling and essential services;
(e)to promote individualised support;
(f)to increase the effectiveness of the governance of social safety nets at Union, national, regional and local level, as well as monitoring and reporting mechanisms.
• Consistency with existing policy provisions in the policy area
The proposal contributes to the implementation of principle 14 of the European Pillar of Social Rights and will also further other Pillar principles such as those on “active support to employment”, “social protection”, “access to essential services”, “education, training and life long learning” and “equal opportunities”. The proposal will help achieve the headline target on poverty reduction, and its sub-target on child poverty, set in the European Pillar of Social Rights Action Plan and will support the attainment of the headline targets on employment, as well as the headline target on skills.
The proposal builds upon on the Council Recommendation 92/441/EEC on common criteria concerning sufficient resources and social assistance in social protection systems. The proposal is coherent with the existing provisions and introduces new elements where it has been considered that the Council Recommendation 92/441/EEC was insufficient and needed to evolve according to societal changes. For reasons of simplification, this proposal aims to replace the Council Recommendation 92/441/EEC, while ensuring that the acquired level of protection is not diminished.
The proposal also complements the Commission Recommendation 2008/867/EC on the active inclusion of people excluded from the labour market. Active inclusion strategies aim to help integrate those who can work into sustainable, quality employment, and to provide enough resources and support for living in dignity to those who cannot. This proposal builds on the experience and lessons learnt from the implementation of that Recommendation and offers the possibility to further develop its various elements and addressing the remaining gaps.
The proposed initiative builds on and complements the ILO Social Protection Floors Recommendation 19 , which provides guidance to countries in extending social protection coverage by prioritising the establishment of national floors of social protection accessible to all in need.
The European Semester process of economic and employment policy coordination has highlighted structural challenges related to minimum income schemes and related elements such as social inclusion and labour market activation, with a number of Member States receiving related country specific recommendations. The revised social scoreboard 20 tracks performance and trends in the Member States, enabling the Commission to monitor progress in addressing the country-specific recommendations. The 2022 guidelines for the employment policies of the Member States state that social protection systems should ensure adequate minimum income benefits for everyone lacking sufficient resources and promote social inclusion by encouraging people to actively participate in the labour market and society, including through targeted provision of social services. For strengthening analytical work, a benchmarking framework was agreed in the Social Protection Committee and its results have been reflected in the Joint Employment Report, country reports and country-specific recommendations.
In order to continuously gather such contextual information and facilitate mutual learning and exchange of practices within the Open Method of Coordination, the establishment of a network of national authorities responsible for minimum incomes (MINET) has allowed a regular structured dialogue among Member States.
• Consistency with other Union policies
The initiative is also complementary to and consistent with a number of other Union initiatives.
The Council Recommendation on the integration of the long-term unemployed into the labour market 21 recommends that Member States provide individual support to long-term unemployed and encourage a better coordination of relevant services.
The Council Recommendation on access to social protection for workers and the self-employed 22 aims at ensuring that all of them contribute and have formal access to effective, adequate and transparent social protection systems. It aims in particular at supporting people in non-standard forms of employment and self-employment who, due to their employment status, are not sufficiently covered by contributory-based social security schemes and thus are exposed to higher economic uncertainty.
The Directive on adequate minimum wages 23 seeks to establish a framework to improve the adequacy of minimum wages and to increase the access for workers to minimum wage protection, thereby contributing to addressing in-work poverty and low-wage traps.
The Council Recommendation on a Bridge to Jobs – Reinforcing the Youth Guarantee 24 aims to ensure that all young people under the age of 30 receive a good quality offer of employment, continued education, an apprenticeship or a traineeship within 4 months of becoming unemployed or leaving formal education, thereby preventing their poverty and social exclusion.
The Council Recommendation establishing a European Child Guarantee 25 invites Member States to guarantee for children at risk of poverty or social exclusion free and effective access to key services crucial for their development and well-being, including through labour market integration measures for parents and income support to families and households.
The Commission Recommendation for Effective Active Support to Employment (EASE) 26 highlights the importance of developing and implementing coherent policy packages, including hiring and transition incentives, upskilling and reskilling, and enhanced support by public employment services.
The Gender Equality Strategy 2019-2025 27 recognizes the higher proportion of women, particularly older women, in poverty, due to the gender employment and pay gaps and which, accumulated throughout life result in a wide pension gap.
The EU Roma Strategic Framework and the Council Recommendation on Roma equality, inclusion and participation 28 calls on Member States to fight multiple and structural discrimination against Roma, to ensure that by 2030 the majority of Roma escape poverty and to take stronger measures in the interrelated fields of income support, employment, healthcare and social services, housing and essential services.
The Strategy for the rights of persons with disabilities 2021-2030 29 aims to ensure, amongst others, that persons with disabilities can enjoy human rights, have equal opportunities and have equal access to participate in society and economy, as well as have adequate social protection, to ensure an adequate income for a decent standard of living of persons with disabilities and their families.
The New Skills Agenda for Europe 30 lays out a comprehensive plan to ensure social fairness and to facilitate access to inclusive education and training for everybody, including for the most vulnerable. The Council Recommendation on individual learning accounts 31 , adopted as one of the deliverables of the Skills Agenda, enables and empowers individuals to participate in labour-market relevant training and facilitates their access to or retention in employment. The proposed 2023 European Year of Skills will put further focus on skills, at all stages of life.
A Commission Communication entitled ‘A Renovation Wave for Europe - greening our buildings, creating jobs, improving lives’ 32 is based on the principle of affordability of the renovated housing and its accessibility, thus contributing to the goal of guaranteeing adequate housing to vulnerable population, especially through the Commission Recommendation on Energy Poverty 33 .
The Council Recommendation on ensuring a fair transition towards climate neutrality 34 sets out specific guidance to help Member States implement policy packages that ensure a fair transition towards climate neutrality in a comprehensive manner, with particular attention to vulnerable households.
The REPowerEU Plan 35 calls for targeted measures to minimize volatility, keep prices in check and protect the individuals in or at risk of (energy) poverty in order to ensure long-term benefits of a fair energy transition and a swift phase-out of Russian fossil fuels.
A Commission proposal for a Regulation on an emergency intervention to address high energy prices 36 seeks to address the massive energy price increases by reducing electricity consumption in Member States and by sharing the exceptional profits of energy producers with those who need help the most, including vulnerable households.
The social economy action plan 37 helps social economy thrive, tapping into its economic and job-creation potential, as well as its contribution to a fair and inclusive recovery, and the green and digital transitions.
This proposal contributes to the objectives of the 2030 Agenda for Sustainable Development.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposed recommendation is based on Article 292 of the Treaty on the Functioning of the European Union (TFEU) as the procedural legal basis in combination with Article 153 i point (j) TFEU as the substantial legal basis.
Article 153(1)(j) allows the Union to support and complement the activities of Member States in the field of combating social exclusion. The proposal will contribute to this objective through promoting income support at a level allowing to have a life in dignity, combined with effective access to enabling and essential services and measures supporting labour market integration of those who can work.
Using the substantial basis of Article 153(1)(j), is limited, firstly, by Article 153(2)(a) as it allows only measures designed to encourage cooperation between Member States, excluding any harmonisation of the laws and regulations.
Further under Article 153 i all provisions adopted pursuant to Article 153 require that the Recommendation (i) does not affect the right of Member States to define fundamental principles of their social protection systems; (ii) does not significantly affect the financial equilibrium of these systems.
• Subsidiarity (for non-exclusive competence)
Employment and social protection policy remain primarily a responsibility of the Member States, in line with principle of subsidiarity.
Starting with the Council Recommendation 92/441/EEC and the Council Recommendation 92/442/EEC on the convergence of social protection objectives and policies 38 , the Union has taken action in the area of social protection, building on a consensus that the deepening single market should be complemented by social solidarity and convergence in social protection policies between the Member States.
While all Member States have adopted reforms in the area of minimum income, evidence shows that there is scope for improvement in most of the Member States to address the identified challenges in an integrated way. Gaps in the effective delivery of minimum income and labour market activation measures increase risks to the welfare of the affected individuals and their families who endure greater economic uncertainty and reduces overall employment levels in the economy. The problem of inadequate income support and insufficient access to supporting services for a considerable share of population has negative consequences on social fairness and sustainable growth. Persistent inactivity and remaining remote from the labour market leads to skills erosion and lead to a lower-quality and less-productive workforce. This is a strong driver of social exclusion and poverty and an obstacle to the achievement of the 2030 headline targets. As shown in the Staff Working Document accompanying the proposal, the target on poverty reduction is unlikely to be reached in the coming years unless Member States strengthen their social protection and social inclusion systems, while the employment target requires more effective labour market activation policies.
Given the risk of non-action (or insufficient action), in view of the past trends and the social challenges ahead and the potential mutual learning among Member States, the Union is well placed to step up efforts and take the lead, while respecting Member States’ competences in the area of social protection. The Union action can help ensure that all Member States move in the same direction at the same time, promoting upward convergence within and between Member States, resulting in more equitable and cohesive societies.
• Proportionality
Measures proposed in this Recommendation are proportional to the pursued objectives. The proposal supports social safety nets and minimum income already existing in Member States and complements Member States’ efforts in the area of combating social exclusion and labour market integration of disadvantaged individuals. The proposed action respects Member States’ practices and the diversity of their social protection systems. It recognises that different national, regional or local situations could lead to differences in how the Recommendation is implemented and allows Member States to make use of the Recommendation according to their specific context. Proportionality also played a key role in guiding the choice of the instrument.
• Choice of the instrument
The instrument is a proposal for a Council Recommendation, which respects the principles of subsidiarity and proportionality. It builds on the existing body of the Union law and is in line with the type of instruments available for Union action in the areas of employment and social policy. A Council Recommendation will provide Member States with specific guidance on the reform pathway, whilst leaving to discretion of Member States the adaptation of measures to national institutions and delivery models. It lays down measures to be considered by Member States and provides a strong basis for cooperation at Union level in this area, while fully respecting Member States competence in the relevant policy fields. Once adopted, the Council Recommendation 92/441/EEC will be replaced by this Recommendation.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
In 1999 the Commission submitted a report on the implementation of the Council Recommendation 92/441/EEC 39 . The report confirmed the essential role of minimum income as a final safety net mechanism. It concluded that the Recommendation had helped to organise and stimulate the debate between the Member States on the role and development of minimum income and that it had fostered convergence across the Member States. The report stated that notable differences remain in the way minimum incomes function; to what extent and for how long they cover essential needs and how they are linked with other measures of social and employment support.
In 2013, the Commission reviewed the implementation of the Commission Recommendation 2008/867/EC 40 . The assessment confirmed the validity of the active inclusion approach, but acknowledged that progress in implementing it at national level had been relatively limited. It highlighted specific challenges related to the three active inclusion strands, such as: (i) low adequacy, lack of take-up and limited coverage of income support, (ii) in-work poverty and potential disincentives arising from tax and benefits systems and (iii) a problematic access to quality services in a number of Member States, notably for Roma, migrants and people with disabilities. Furthermore, coordination challenges at local level and scattered competencies across policy levels hampered the implementation.
Another review of progress in implementing the Commission Recommendation 2008/867/EC was carried out in 2017 41 . The findings of that assessment underlined the importance of integrated and comprehensive policy measures for disadvantaged people. They called for a sharper focus on adequate support for the social inclusion of people who cannot work and highlighted the need for close cooperation among stakeholders and the active involvement of all relevant partners.
The results of those assessments have been taken into consideration during the preparation of this proposal.
• Stakeholder consultations
The Commission carried out stakeholder consultations over two periods. Between 14 January and 30 November 2020, the Commission carried out public consultation on the European Pillar of Social Rights Action Plan (including on principle 14) 42 that contributed to shaping the content if this proposal. Furthermore, between 5 January and 5 May in 2022, the Commission carried out targeted consultations on the initiative itself. Those consultations, mainly thematic debates, took place with social partners, civil society organisations, the Social Protection Committee and the Employment Committee, the European Economic and Social Committee, the European Network of Public Employment Services, the Committee of the Regions, young people, researchers and academia. All stakeholders could participate in the call for evidence, on which 75 individual contributions and 33 position papers were submitted, mainly from civil society, citizens, as well as from business associations, academia, trade unions and public authorities.
The majority of the stakeholders was supportive of a Union initiative aimed at strengthening the current framework. Many of them reiterated that minimum incomes are interconnected with other support measures and as such should be seen as a part of broader social protection systems, which are designed and implemented at national level. A Council Recommendation providing Union-level guidance, while leaving the implementation to the Member States, was generally mentioned as the best-suited instrument. Most of the stakeholders reiterated the importance of an empowering active inclusion approach, comprising income support, inclusive labour markets, social inclusion and access to quality services. For the approach to be effective, adequate governance system should support cooperation of different actors on vertical and horizontal levels. To this end, many stakeholders reiterated the importance of local actors, including service providers and civil society organisations and recommended that these actors become part of the governance systems. On adequacy, most of the stakeholders agreed that the level of income support should be set at or above national poverty threshold to ensure a life in dignity. Most of the stakeholders pointed to the need of a robust monitoring systems to support an effective implementation of the Recommendation.
• Collection and use of expertise
The evidence base to underpin the initiative includes:
·An exploratory study to support the Staff Working Document entitled “Filling in the knowledge gaps and identifying strengths and challenges in the effectiveness of the EU Member States’ minimum income schemes”. The aim of the study was to: (i) collect data on national minimum income across the Union; (ii) identify strengths and challenges of the effectiveness of minimum income; and (iii) assess the impacts of different measures aimed at enhancing their effectiveness, including activation and access to services.
·Modelling of impacts of selected policy options in the provision of adequate income support carried out by the Joint Research Centre.
·A benchmarking framework on minimum income agreed in the Social Protection Committee that identified three policy levers most likely to affect performance of minimum income: (i) adequacy of benefits, (ii) eligibility rules and take-up of benefits, and (iii) activation measures and access to services. The framework identified a selection of outcome, performance and policy lever indicators, including a twofold indicator for adequacy of monetary income support: (i) as a share of the national at-risk-of poverty threshold in the Member State concerned; and (ii) as a share of the income of a low wage earner, defined as a person earning 50 % of the average wage.
·Based on the benchmarking framework, the joint report of the Social Protection Committee and the Commission provides an overview of the state of play on minimum income.
·The Social Protection Performance Monitor (SPPM), which identifies annual key social trends to watch across the Union and key social challenges and good social outcomes within individual Member States.
• Impact assessment
The proposed instrument – a Council Recommendation –gives Member States enough leeway to determine how to best achieve the objectives of this initiative, taking into account national, regional or local circumstances. Since potential impact depend on concrete actions taken by Member States, a fully-fledged impact assessment cannot fully assess expected impact before implementation choices by Member States are made.
The accompanying Staff Working Document includes an overview of the most important challenges with regard to the performance of minimum income. It also includes an analysis of impact of possible policy reforms on poverty reduction.
• Regulatory fitness and simplification
Not applicable.
• Fundamental rights
The proposal will contribute to safeguarding the right to life to dignity (Article 1 of the Charter of Fundamental Rights of the European Union, the ‘Charter’), to social security benefits and social services, to social and housing assistance and to decent existence of those who lack sufficient resources (Article 34 of the Charter).
4. BUDGETARY IMPLICATIONS
Not applicable.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
Member States will regularly report to the Commission on the progress in implementation of this Recommendation. The Recommendation also establishes a period for a progressive implementation, by end-2030, of the provision relevant to the adequacy of income support. The progress reports should be discussed within the Social Protection Committee, in close cooperation with the Employment Committee and the network of Public Employment Services with regard to the access to inclusive labour markets.
Based on the national progress reports, regular joint reports of the Social Protection Committee and the Commission will be delivered at the Union level. The Commission will also regularly monitor the Recommendation’s implementation in the context of the European Semester and issues country-specific recommendations, as appropriate.
The Commission also aims to work jointly with the Social Protection Committee to further develop the benchmarking framework on minimum income schemes to underpin the monitoring of this Recommendation and to enhance the availability and comparability of relevant indicators.
The Commission aims to review actions taken in response to the proposed Recommendation, in particular with regard to their impact on the reduction of poverty and social exclusion, increasing employment and improving skills, and report to the Council by 2032. On the basis of the results of the review, the Commission may consider making further proposals.
• Explanatory documents (for directives)
Not applicable.
• Detailed explanation of the specific provisions of the proposal
Paragraph 1 indicates the objective of this Recommendation.
Paragraph 2 contains definitions, which are to be applied for the purpose of the Recommendation.
Paragraph 3 recommends Member States to develop robust social safety nets through an integrated approach which combines income support, incentives and support to (re)integrate in the labour market and access to services.
Paragraph 4 to 7 recommend Member States ensure the adequacy of income support by defining a transparent methodology for setting and reviewing the level of income support, proposing reference values to guide the assessment of adequacy and recommending annual adjustments of income support. Specifically, Paragraph 6 invites Member States to progressively achieve the adequacy of income support by 31 December 2030 at the latest.
Paragraph 8 recommends to Member States to provide for a possibility to request the income support to be provided to individual members of the household, without necessarily increasing the overall level of benefits received by the household.
Paragraph 9 recommends to Member States to ensure a comprehensive coverage of persons lacking sufficient resources by minimum income, through inter alia non-discriminatory eligibility criteria and proportionate means testing;
Paragraph 10 recommends to Member States to encourage full take-up of minimum income, including through simplifying the application procedure, reducing administrative barriers and providing accessible information to the potential recipients;
Paragraph 11 recommends to Member States to ensure appropriate incentives for minimum income recipients to (re)integrate in the labour market, and ensure inclusive labour markets and high employment rates, including through investments in human capital and skills, safeguarding incentives to work, supporting employers and facilitating working opportunities in the social economy sector;
Paragraph 12 recommends Member States to ensure effective access to enabling and essential services by safeguarding continuity of access to essential services (including energy) and addressing barriers to access to the services;
Paragraph 13 recommends Member States to develop individualized approaches to address various barriers to social inclusion and employment faced persons lacking sufficient resources.
Paragraph 14 to 15 recommend Member States to put in place effective governance and monitoring systems and to report regularly to the Commission on the implementation of the Recommendation;
Paragraph 16 invites the Commission to work further with the Social Protection Committee on the benchmarking framework on minimum income schemes and to enhance the availability and comparability of relevant data. It also recommends the Commission and the Social Protection Committee to regularly review the progress in implementing the Recommendation and to report to the Council by 2032.