Adequate minimum income ensuring active inclusion 2023/C 41/01 - Main contents

EN

Official Journal of the European Union

C 41/1

With a view to ensure a life in dignity at all stages of life, this Recommendation aims at combatting poverty and social exclusion and at pursuing high levels of employment by promoting adequate income support, in particular by means of minimum income, and effective access to enabling and essential services for persons lacking sufficient resources and by fostering labour market integration of those who can work in line with the active inclusion approach.

Pursuant to Article 151 TFEU, the Union and the Member States have as their objectives, amongst others, the promotion of employment, improved living and working conditions, proper social protection and the combating of exclusion.

Article 34 of the Charter of Fundamental Rights of the European Union (1) provides that the Union recognises and respects the entitlements to social security benefits and social services. It also provides that everyone residing and moving legally within the Union is entitled to social security benefits and social advantages and that, in order to combat social exclusion and poverty, the Union recognises and respects the right to social and housing assistance in order to ensure a decent existence for those that lack sufficient resources.

Council Recommendation 92/441/EEC (2) on common criteria concerning sufficient resources and social assistance in social protection systems recommends that Member States recognise the basic right of a person to sufficient resources and social assistance to live in a manner compatible with human dignity as part of a comprehensive and consistent drive to combat social exclusion, and recommends adapting their social protection systems, as necessary. In view of the content of this Recommendation, it is appropriate to replace Recommendation 92/441/EEC.

Commission Recommendation 2008/867/EC (3) on the active inclusion of people excluded from the labour market sets out a comprehensive strategy to facilitate the integration into sustainable, quality employment of those who can work and to provide resources which are sufficient to live in dignity, together with support for social participation, for those who cannot. This integrated approach, based on a combination of three policy strands: adequate income support, inclusive labour markets and access to quality services, is particularly important for persons furthest from the labour market or excluded from society.

In November 2017, the European Parliament, the Council and the Commission proclaimed the European Pillar of Social Rights (4), setting out 20 principles to support well-functioning and fair labour markets and welfare systems. Principle 14 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 and that, for those who can work, minimum income benefits should be combined with incentives to (re)integrate into the labour market.

In its communication of 4 March 2021 entitled ‘The European Pillar of Social Rights Action Plan’ (5) the Commission set out the ambition for a strong social Europe. In June 2021, the European Council welcomed the Union social target on poverty reduction in line with the Porto Declaration, signed by the Heads of State and Government on 8 May 2021, whereby the number of people at risk of poverty or social exclusion should be reduced by at least 15 million by 2030, compared to 2019, at least five million of which should be children. The European Council also welcomed the headline targets on employment, namely to have at least 78 % of population aged 20 to 64 in employment, and at least 60 % of all adults taking part in training every year. A revised social scoreboard and a benchmarking framework on minimum income, agreed by the Social Protection Committee, strengthen the analytical underpinning of the European Semester, the Joint Employment Report and the country-specific recommendations.

The 2030 Agenda for Sustainable Development and its goals underline that sustainable economic growth needs to go hand in hand with an eradication of poverty and other deprivations, a reduction in inequality and the improved access to healthcare, education and employment.

In its Resolution of 24 October 2017 (6) on minimum income policies as a tool for fighting poverty, the European Parliament called on Member States to introduce adequate minimum income, highlighting the role of minimum income protection as a tool in combatting poverty. In its conclusions of 12 October 2020 on ‘Strengthening Minimum Income Protection to Combat Poverty and Social Exclusion in the COVID-19 Pandemic and Beyond’ (7), 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. During the Conference on the Future of Europe, citizens called for a common Union framework on minimum income.

This Recommendation builds on the findings of the Commission assessments in reviewing the progress achieved in the implementation of Recommendation 2008/867/EC. The assessments confirmed the validity of the active inclusion approach, but highlighted specific challenges regarding low adequacy, limited take-up and the narrow coverage of minimum income, potential disincentives arising from tax and benefit systems and a problematic access to quality services fostering social inclusion and labour market integration, amongst others. The assesments also called for a sharper focus on adequate support for the social inclusion of persons who cannot work.

Despite progress achieved in the reduction of poverty and social exclusion in the Union in the last decade, in 2021 over 95,4 million people still remained at risk of poverty or social exclusion and that risk was higher for women. Increase in the poverty risk for people living in (quasi) jobless households and a worsening in poverty in many Member States, accompanied by a decline in the impact of social transfers on poverty reduction, raise concerns. The Union and its Member States should do more to effectively assist the most vulnerable and disadvantaged persons.

Sustainable and quality employment is the best way out of poverty and social exclusion. At the same time, ensuring the presence of more people in the labour market contributes to the financing of social protection systems and enhances their financial sustainability, which contributes to intergenerational fairness and promotes social cohesion. In order to achieve higher employment levels, it is of paramount importance to support people in successful labour market transitions.

The social and economic advantages of adequate and targeted social safety nets became even more important during the COVID-19 pandemic lockdowns. COVID-19 containment measures had a disproportionate impact on women and disadvantaged groups, notably in terms of access to healthcare, both for physical and mental health reasons, education and relevant services, which also aggravated pre-existing limitations in access to employment (8). The lessons learnt from the COVID-19 crisis also highlighted the importance of adequate, comprehensive and resilient social protection systems that are shock-responsive preventive instruments that support recovery.

Macroeconomic trends associated with globalisation, green and digital transitions, changes in demographics and patterns of work continue to shape the Union. Comprehensive and robust social safety nets, which ensure adequate income support and facilitate labour market transitions, including support for reskilling and upskilling, can help that those processes are just and inclusive. Changes in career patterns, paired with an increase of non-standard forms of employment, can make it more difficult for low-income people to qualify for access to insurance-based social protection systems and can lead to an increased demand for alternative support measures, such as minimum income. Moreover, following Russia’s unjustified and illegal war of aggression against Ukraine, the sharp increase in energy prices and subsequent inflation areaffecting low- and lower middle-income households. Income measures can be aimed at vulnerable groups and are compatible with preserving incentives to reduce energy demand and improve energy efficiency.

The focus of this Recommendation is on ‘persons lacking sufficient resources’ meaning persons living in households with insufficient, irregular or uncertain monetary and material resources, which are indispensable for their health and well-being and for participating in economic and social life. For those who can work, robust social safety nets must facilitate the (re)integration in the labour market through specific support measures that combine active labour market measures, support in job seeking, education and training. For those in need, including those who cannot work, they ensure adequate income support and enabling services. Thus, social safety nets are not a passive tool but act, as far as possible, as a springboard for socioeconomic integration and upward social mobility, improving inclusion and employment prospects.

Social safety nets include an array of monetary and in-kind benefits that provide income support and access to enabling and essential services.Important components of income support are minimum income benefits, defined as non-contributory and means-tested monetary benefits of last resort that aim at bridging the gap in order to reach a certain overall level of income in households where other sources of income or benefits have been exhausted or are not adequate to ensure a life in dignity. In some Member States, minimum income benefits may be combined with other monetary benefits provided to the household and its members such as child and family allowances, housing benefits, unemployment benefits, disability benefits, old-age benefits or in-work benefits. They can also top up minimum pensions and income from work. This Recommentation principally addresses minimum income and is without prejudice to the Council Recommendation on access to social protection for workers and the self-employed (9).

Minimum income is a key element in strategies to exit poverty and exclusion and can act as an automatic stabiliser. In times of economic crisis, it can contribute to supporting a sustainable and inclusive recovery, help mitigate the drop in household incomes and contain the level of people at risk of poverty or social exclusion. For those who can work, minimum income should comprise adequate incentives and tailored and proportionate conditionality to (re)integrate in the labour market. At the same time, minimum income should be designed alongside with work incentives to avoid hysteresis effects in the labour market and to support high employment levels, high work intensity, sustainable transition to the labour market and upward income mobility.

In-kind benefits can complement monetary benefits by facilitating access to specific services such as early childhood education and care in accordance with Council Recommendation (EU) 2021/1004 (10) establishing a European Child Guarantee, healthcare and long-term care, social housing, employment and training as well as to essential services. The provision of such in-kind benefits can help contextualise the assessment of the adequacy of income support. Certain in-kind benefits provided through targeted schemes and supporting general consumption (for example food vouchers or the compensation of costs directly related to housing, including reduced energy tariffs) to persons lacking sufficient resources can be taken into account when assessing the adequacy of income support in so far as these benefits directly contribute to improving the income situation of the minimum income beneficiaries.

Doing more to implement integrated, robust social safety nets has the potential not only to improve the social and health outcomes for those furthest from the labour market, but also to deliver lasting social and economic benefits for the Union, boost economic, social and territorial cohesion and result in more equitable and cohesive and resilient societies. Continued efforts are necessary in order to improve access to the insurance-based social protection system for low-income people, to help them acquire social protection rights, particularly through facilitating quality employment, and to coordinate the provision of income support under the respective schemes. Those social safety nets should also help increase access to healthcare and healthy food for those in poverty. Member States should seek to raise the effectiveness and efficiency of their social protection systems, including by supporting access to the labour market, as a whole to avoid people from falling into poverty or needing to rely on minimum income longterm.

Although all Member States have social safety nets in place, the progress in making them accessible and adequate has been uneven. The design varies across Member States, reflecting different national traditions and the overall architecture of social protection systems and interplay between monetary and in-kind benefits. Despite the aforementioned points, Member States face similar challenges. While some convergence has taken place, the reforms adopted so far have not always been sufficient or their implementation has been slow, as reflected by relevant long-standing country-specific recommendations issued in the European Semester process. The national plans under the Recovery and Resilience Facility envisage support to reforms and investments in the concerned Member States to strengthen the effectiveness, design and resilience of their social protection systems, including through improving the design of minimum income and ensuring upward convergence in its adequacy and coverage. Several investments also focus on fighting energy poverty and on improving access to essential services for vulnerable households.

Income support is considered adequate when it ensures a life in dignity at all stages of life. A sound and transparent methodology for setting, reviewing at regular intervals and, whenever relevant, annualy adjusting minimum income, informed by relevant indicators and accounting for household’s specific needs, is necessary to ensure adequacy of the overall income support. Reference values, such as the national-at-risk-of poverty threshold or methodologies based on a nationally defined basket of goods and services reflecting the cost of living and needs of persons lacking sufficient resources in a given Member State or a region, can help guide the adequacy assessment. Adequacy can also be benchmarked against income from work, such as the income of a low-wage earner or a minimum wage earner, while respecting the at-risk-of-poverty threshold or ensuring the cost of living and the needs of persons lacking sufficient resources. While it is evident that income from work (at minimum wage level) should be higher than income from benefits, there is no evidence of significant negative impact on average on the likelihood of finding a job for people that receive minimum income support. Given the disparities in adequacy across countries, Member States should achieve adequate levels of overall income support in a progressive manner. When determining and adjusting the level of minimum income, Member States should consider the level of inflation (especially that of food and energy), rises in the costs of living, and wage developments.

The eligibility criteria for minimum income may be a barrier to access for certain groups. In principle, children are covered as a part of the household. However the age threshold set for claimants above the age of 18 may limit access for young adults. Restrictions related to the minimum length of legal residence can limit access for non-nationals, while the lack of having a permanent address makes it difficult for homeless people or people living in deprived areas (e.g. in Roma settlements) to benefit from minimum income. Whereas means-testing is an essential element in order to ensure the appropriate targeting of minimum income, insufficient coverage may also arise when a threshold for the maximum total value of income and assets during means-testing is set at a low level, thereby excluding some households even if they are poor. The introduction of non-discriminatory criteria for access to a minimum income shall not affect exceptions from equal treatment stipulated or permitted by Union law, such as Directive 2004/38/EC of the European Parliament and of the Council (11).

Gaps in the coverage by minimum income should be addressed and the continuity of coverage over different phases of life should be ensured by putting in place transparent and non-discriminatory access criteria. Age, the existence of a permanent address or the requirement of disproportionally long legal residence should not form a barrier to access minimum income. Means-testing usually includes various types of incomes (such as from work or benefits already granted) and certain assets (such as property). The thresholds for means-testing and the types of income and assets excluded from means-testing should reflect a life in dignity for different types and sizes of households in a given Member State. Low earnings from work (such as one-off or irregular incomes) should be treated proportionally in means-testing in such a way that safeguards incentives to work for those who can work and does not exclude claimants from drawing (possibly lower) benefits. Access to minimum income needs to be granted swiftly without unnecessary delay and the entitlement should be unlimited provided the claimants continue to meet the eligibility and specific conditionality criteria subject to periodical reviews. The envisaged time limit of 30 days to process the application from its submission can be interrupted in case of the necessity to establish all facts provided that, where possible, persons lacking sufficient resources receive appropriate provisional assistance.

In times of economic downturns and various types of crisis situations, flexibility in the design of minimum income, including through temporarily simplified access, relaxing the eligibility criteria or extending the duration of benefits, can play an important role in mitigating the adverse social consequences and play a stabilising role in the economy. Fiscal consolidation measures that result in the reduction of protection levels rather than improving the effectiveness of the schemes should only be used as a last resort option and be accompanied by a distributional impact assessment to mitigate adverse effects on the most disadvantaged; the level of protection should in any case remain adequate.

A disproportionate administrative burden, the lack of awareness or fear of stigmatisation or discrimination may lead to the fact that those eligible for minimum income do not request access to it. Avoiding fragmented schemes, ensuring overall accessibility and simplicity of the application procedures and offering administrative support to the potential claimants can increase the take-up of minimum income. Further measures are needed to facilitate the take-up of minimum income by single-parent households, predominantly headed by women. In addition, while respecting data protection rules, proactive outreach efforts should target in particular socially deprived areas and the most marginalised households, including Roma. The low accessibility of digital tools or lack of skills for their use can also constitute a barrier to effective access, including for persons with disabilities. Regular monitoring and analysis of relevant data can help understand the causes of non-take-up and improve policy responses.

While means-testing is done at household level, it often does not take into account the position of individuals within the household, potential unequal sharing of family incomes and the desire for autonomy. This particularly affects women as they are more likely to have lower incomes, lower pay and greater caring responsibilities. Without necessarily changing the means-testing practice and increasing the overall level of benefits received by the household, solutions taken in accordance with national law and practice facilitating the receipt by individual members of the household of their share in income support can contribute to gender equality and to economic independence and income security of women, young adults and persons with disabilities.

Strengthening inclusive labour markets accessible for all is important in mitigating long-term dependence on income support. Activation requirements and active labour market policies can encourage higher job-search efforts and acceptance of job offers, when including supporting services such as counselling, coaching and job-search assistance and measures to ensure work-life balance. In line with Council Recommendation of 30 October 2020 on a Bridge to Jobs – Reinforcing the Youth Guarantee (12), particular attention should be devoted to young people not in employment, education or training (NEET) at the risk of poverty or social exclusion by getting them back into education, training or the labour market within the shortest time possible, while the receipt of income support should be linked to particularly strong activation measures. In line with the Commission’s Strategy for the Rights of Persons with Disabilities 2021-2030 (13), particular attention should also be given to the needs of persons with disabilities. Upskilling and reskilling opportunities, personalised support and guidance that meet specific needs, ensuring quality jobs, promoting job retention and enabling advancement can support the transition to employment across all ages. Regular reviews of incentives and disincentives resulting from tax and benefit systems, gradual phasing out of income support upon taking up employment or the possibility to combine it with earnings can increase the disposable income of the household, thereby contributing to making work pay, reducing in-work poverty and incentivising formal employment. At the same time, in-work benefits need to be carefully designed to avoid low-wage traps.

Employment in the social economy could be a stepping stone towards other sectors of the labour market. Facilitating transition to employment should be supported through the provision of dedicated measures to employers, accompanied by targeted financial incentives where necessary.

Social inclusion services, for example social work, counselling, coaching, mentoring, psychological support and various rehabilitation schemes, and measures facilitating access to other enabling or essential services are also necessary to build robust social safety nets. Efforts should also continue to improve the quality of services, in line with the Voluntary European Quality Framework for Social Services, developed by the Social Protection Committee (14), and to ensure the continuity of access to essential services. Measures to address financial and non-financial barriers that hamper equal and universal access to services should also be strengthened.

More individualised support that aims at identifying and addressing complex needs of persons lacking sufficient resources and their households can significantly contribute to their successful social and economic integration. A needs assessment is a prerequisite to conclude a tailor-made inclusion plan covering persons lacking sufficient resources of a given household (individually or jointly), determining the type of support needed and agreed objectives. The support should include suitably sequenced social inclusion measures or active labour market policy measures, depending on individual situation and the availability to work, while ensuring a balance between positive incentives and activation requirements. The job integration agreements concluded in accordance with Council Recommendation of 15 February 2016 on the integration of the long-term unemployed into the labour market (15) can also serve this purpose and, if needed, be adapted accordingly.

Effective governance mechanisms are key in delivering robust social safety nets. Administration of the benefits and services provision should take the advantage of the tools offered by digital transition, while avoiding exclusion by digital divide. Efforts should be made to ensure close coordination and alignment of existing schemes and benefits, as well as their coordination with other policies. Particular attention needs to be paid to strengthening the operational capacity of all involved institutions. Data exchange and closer cooperation across different levels of governance and services, including through formal agreements or one-stop-shops, facilitate better-integrated support. Reliable monitoring and regular evaluating of policy impact, with the involvement of all stakeholders, can contribute to increased efficiency, informed policymaking and improved transparency of the national systems.

Civil society organisations often play an important complementary role in the fight against poverty and social exclusion. Their dedicated activities can support public authorities in the design and implementation of inclusion and activation policies. By providing both material and psychosocial support to the most vulnerable, civil society organisations contribute to restoring human dignity and supporting social inclusion, while guiding those who can work on the way to employment.

Mutual learning and exchange of best practices at Union level together with analytical work to further elaborate the existing Union benchmarking framework on minimum income, including through enhancing the availability and comparability of relevant indicators and data regularity should support Member States in the design and implementation of national reforms.

Union funds are available to support the implementation of this Recommendation. Within the European Social Fund Plus, established by the Regulation (EU) 2021/1057 of the European Parliament and of the Council (16), each Member State should allocate at least 25 % of the European Social Fund Plus to combat social exclusion. The European Regional Development Fund and InvestEU can equally support investments in enabling social infrastructure, such as social housing and early childhood education and care, as well as equipment and access to quality services. The Technical Support Instrument and the Recovery and Resilience Facility already support Member States in designing and implementing structural reforms in the area of minimum income.

The overall sustainability of public finances and the adequate funding of minimum income are essential for their resilience, efficiency and effectiveness. The implementation of this Recommendation should not significantly affect the financial equilibrium of Member States’ social protection systems.

Distributional impact assessment (the ‘DIA’) is a useful tool incapturing the impact of budgetary measures and other reforms and investments for different income groups, including the most disadvantaged. Thus, the DIA can contribute to a more efficient and effective design of tax and benefit reforms, thereby ensuring that no one is left behind. The Commission Communication of 28 September 2022 entitled ‘Better assessing the distributional impact of Member States’ policies’ (17) provides guidance to Member States on how best to embed the DIA in their policy-making processes.

The implementation of this Recommendation cannot be used to lower the level of protection provided for in existing national legislation or as laid out in Recommendation 92/441/EEC. Member States are invited to introduce or maintain more favourable provisions than those recommended herein.

This Recommendation is without prejudice to Member States’ competences to define and organise their social protection systems,

(1)

With a view to ensure a life in dignity at all stages of life, this Recommendation aims at combatting poverty and social exclusion by promoting adequate income support, in particular by means of minimum income, effective access to enabling and essential services for persons lacking sufficient resources and fostering labour market integration of those who can work, in line with the active inclusion approach.

(2)

For the purpose of this Recommendation, the following definitions apply:

(3)

It is recommended that Member States provide and, where necessary, strengthen robust social safety nets that guarantee life in dignity at all stages of life, by combining adequate income support – through minimum income benefits and other accompanying monetary benefits – and in-kind benefits, and giving effective access to enabling and essential services. The provision of in-kind benefits can support robust income support.

(4)

In order to ensure adequate income support, it is recommended that Member States set the level of minimum income through a transparent and robust methodology defined in accordance with national law and by involving relevant stakeholders. It is recommended that such methodology takes into account overall income sources, the specific needs and disadvantaged situations of the households, the income of a low-wage earner or a minimum wage earner, standards of living and purchasing power, price levels and their related developments and other relevant elements.

(5)

While safeguarding incentives to (re)integrate and remain in the labour market for those who can work, it is recommended that income support of persons lacking sufficient resources reaches a level which is at least equivalent to one of the following:

(6)

Member States are recommended to achieve gradually the adequate level of income support provided for in paragraph (5) by 2030 at the latest, while safeguarding the sustainability of public finances.

(7)

It is recommended that Member States regularly review and, whenever relevant, adjust the level of minimum income in order to maintain the adequacy of income support, while taking into account in-kind benefits.

(8)

With a view to promoting gender equality, income security and economic independence of women, young adults and persons with disabilities, it is recommended that Member States ensure the possibility of requesting the minimum income to be provided to individual members of the household.

(9)

It is recommended that Member States ensure that all persons lacking sufficient resources, including young adults, are covered by minimum income set by law, defining:

(10)

It is recommended that Member States encourage or facilitate the full take-up of minimum income through:

(11)

With a view to promoting high employment rates and inclusive labour markets, it is recommended that Member States, where relevant in cooperation with social partners, ensure labour market activation, remove barriers to (re)enter and remain in employment, support those who can work in their pathways to quality employment, ensure incentives to work, tackle in-work poverty and labour market segmentation, incentivise formal employment, fight undeclared work and facilitate working opportunities, by:

(12)

It is recommended that Member States ensure:

(13)

With a view to addressing diverse barriers of persons lacking sufficient resources to social inclusion and, for those who can work, to employment, it is recommended that Member States develop an individualised approach and coordinate service provision, by:

(14)

With a view of effective design and implementation of robust social safety nets at national, regional and local level, it is recommended that Member States:

(15)

To better inform policy making it is recommended that Member States:

(16)

The Council welcomes the Commission’s intention to:

(17)

Recommendation 92/441/EEC is replaced by this Recommendation.