Opinion of the European Economic and Social Committee on the Proposal for a Council recommendation on adequate minimum income ensuring active inclusion

(COM(2022) 490 final — 2022/0299 (NLE))

(2023/C 184/12)

Rapporteurs:

Jason DEGUARA and Paul SOETE

Referral	European Commission, 25.11.2022
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	8.3.2023
Adopted at plenary	22.3.2023
Plenary session No	577
Outcome of vote (for/against/abstentions)	143/00/08

1.   Conclusions and recommendations

1.1.

The EESC welcomes the content of the recommendation, especially the implementation of realistic and sufficient criteria for the level of adequacy and accessibility of minimum income, the legal guarantee thereof and the reporting system, the European Commission’s further recognition of the need for an active social policy and further actions to combat poverty across the EU.

1.2.

There is a need for a rights-based approach for all to an adequate minimum income which leaves no one behind, does not have overly restrictive criteria and is accurately measured to ensure that it is effective.

1.3.

Addressing poverty and income inequalities is important not only for reasons of social fairness but also to support economic growth. The overall stabilising effect of minimum income systems for the economy should also be noted in this context.

1.4.

The right of the Member States to define the principles of their social systems, the complementary competences of the EU and Member States and the full use of the EU Treaty’s instruments should be the guiding principles of any EU action in the field of social protection.

1.5.

Quality and sustainable employment is the best way out of poverty and social exclusion. At the same time, ensuring that more people are in an inclusive and good quality labour market helps finance social protection systems and makes them more financially sustainable.

1.6.

Currently, in a large number of Member States the setting and level of minimum income benefits are not based on a robust methodology or linked to statistically underpinned indicators reflecting decent and dignified life. The first step is to set up this kind of methodology and to take into account the different income sources and the specific situations of households.

1.7.

The EESC insists that it is necessary for minimum incomes to be kept in line with inflation, especially with the rise in cost of living in terms of food and energy, and this should be done on a regular basis, with the support of civil society organisations, social partners and welfare organisations.

1.8.

Continuous monitoring of implementation of income support policies and other social protection policies ensuring active inclusion is necessary to achieve the objectives of this recommendation. The progress reports by Member States should be drafted with the participation of relevant civil society and welfare organisations and social partners, or their reports should be regularly addressed by the Commission's monitoring mechanism, as stated in the Council recommendation.

2.   Introduction

2.1.

Despite some progress achieved in reducing poverty and social exclusion in the EU since the beginning of the century, in 2021 over 95,4 million people still remained at risk of poverty.

2.2.

There is an increase in the poverty risk for people living in (quasi) jobless households and a worsening in the depth and persistence of poverty in many Member States, and the risk is higher for women than for men. The EU’s target is fixed at reducing the number of people at risk of poverty by at least 15 million by 2030.

2.3.

In the long term, demographic evolution will have major economic consequences as the labour force will shrink and a rapidly ageing population will put additional pressure on public finances and the financing of minimum income schemes.

2.4.

The current context for the Council’s political agreement — with the war in Ukraine, the increase in energy prices and the rise of inflation — is even more challenging. The IMF estimates that inflation worldwide will rise by 8,8 % this year and 6,5 % in 2023.

2.5.

Single parents constitute less than 15 % of the families in the EU but have a much higher risk of poverty and non-employment. Even a full-time job will not safeguard single parents from the risk of poverty. Dual-income households in full-time employment that are normally not at risk of poverty however are at risk if they have more than two children (1).

2.6.

Minimum income benefits are means-linked benefits of last resort, granted on the basis of needs and for unemployed people who are able to work, linked to sufficient incentives to (re)enter the labour market. Usually national policies require assessment of the disposable income combined with personal means testing. The minimum income schemes are embedded in national contexts and traditions and linked to the wider social protection systems of each Member State.

2.7.

There are very large differences across welfare states in general concerning minimum income level and composition and this is also the case in the EU. As indicated by the Commission studies, the labour market situation of minimum income beneficiaries varies significantly across Member States.

2.8.

None of the countries currently ensure adequate income support for jobless families to avoid poverty risks, and 20 % of jobless people are not eligible to receive any support. There is also a problem of non-take-up of minimum income estimated at between 30 and 50 %.

2.9.

The income components to be considered to analyse the minimum income level are wages, social assistance benefits, child benefits (the most common additional income), housing, energy and health allowances, other benefits like benefits in kind, all of which are measured after taxes and social contributions.

2.10.

At European level, minimum income has been the subject of the following actions and instruments: — Council recommendation 92/441/EC and Recommendation 2008/867/EC on the active inclusion of people excluded from the labour market, — The European Pillar of Social Rights (EPSR), Article 14 (2) and other principles such as those on ‘active support to employment’, ‘social protection’, ‘access to essential services’, ‘education, training and lifelong learning’ and ‘equal opportunities’, — The European Semester which offers a framework for the relevant monitoring of policy coordination activities based on the benchmarking framework of the Council’s social protection committee, — The Council’s conclusions from 2020 on strengthening minimum income protection during the COVID-19 pandemic and beyond inviting Member States to review their national minimum income schemes (3), — Employment guidelines 2022.

3.   General comments

3.1.

Poverty is multidimensional and it manifests in all areas of life. Poverty reflects failures in the systems for redistributing resources and opportunities in a fair and equitable manner. Thus a minimum income scheme is a necessary, although not sufficient, condition to enable a dignified life and a viable road out of poverty. Poverty intersects with other forms of social injustice. Gender and racial inequalities exacerbate the risk of poverty while poverty increases the risk of exclusion and discrimination, manifesting especially in terms of health, education and training and exposure to financial dependency and violence.

3.2.

The EESC welcomes the content of the recommendation, especially the implementation of realistic and sufficient criteria for the level and accessibility of minimum income, its legal guarantee and the reporting system, further recognition by the European Commission of the need for an active social policy at EU level and further actions to combat poverty across the EU. The recommendation is a step towards implementing Principle 14 of the EPSR, which states that ‘everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring a life in dignity at all stages of life’.

3.3.

Following Russia’s illegal and barbarous aggression against Ukraine, the current context for the Council’s political agreement is even more challenging given the sharp increase in energy prices and high rate of inflation affecting households, especially low-income families. Against the backdrop of megatrends such as globalisation, digital and green transition and demographic change, the European labour markets are in the process of major transitions. Minimum income systems play a key role in providing support and incentives to (re)integrate people into the labour market.

3.4.

There is a need for a rights-based approach for all to an adequate minimum income which leaves no one behind, does not have overly restrictive criteria, is based on transparent and non-discriminatory requirements and is accurately measured to ensure its effectiveness. An inclusive society should cater for all sectors of society and Member States should introduce robust monitoring mechanisms to follow up on the minimum income and its take-up without further delays.

3.5.

Effective minimum income schemes can help to guarantee that human rights are respected, ensure that people live in dignity, help them remain active and included in society, and help integrate people into sustainable and good quality employment. The EESC also highlights the importance of minimum income schemes for self-employed people in Europe, who should be fully entitled to the same support and benefits as other groups.

3.6.

Addressing poverty and income inequalities is important not only for fairness reasons but also to support economic growth. As stated in the OECD report from 2021 (4), well-designed tax policies can support inclusive and sustainable growth and address the distribution of income and wealth. Inclusive growth should in this context aim at fairness of sharing the benefits of growth as well as promoting the inclusiveness of labour markets. The overall stabilising effect of minimum income systems for the economy should also be noted in this context.

3.7.

Minimum income schemes should be part of national strategies to combat poverty which effectively integrate measures to achieve fair wages and decent work, access to affordable and good quality essential services, access to basic social security and adequate income support, person-centred social services and active inclusion policies.

3.8.

The EESC stresses the aim of a Europe-wide methodology supported by a European analysis to help Member States define adequacy of minimum income through an appropriate method such as the agreed EU at risk of poverty (AROP) indicator of 60 % of equalised disposable income or/and underpinned by a reference budget (including food, housing, water, electricity, heating, telecommunications, health, transport, leisure and culture).

3.9.

As stated in the recitals of the Council’s political agreement, quality and sustainable employment is the best way out of poverty and social exclusion. The more people are in the labour market, the more sustainable financing will be available for social protection systems, as they are largely financed through employment taxes.

3.10.

While Member States have developed and reformed their social safety nets over the years, taking into consideration the guidance provided by Council Recommendation 92/441/EEC, developments in the economy, labour markets and societies at large in Europe have brought new challenges and a pressing need to update the European framework for tackling income inequalities and poverty.

3.11.

The right of the Member States to define the principles of their social systems, the complementary EU and Member State competences and the full use of the EU Treaty instruments should be the guiding principles of any EU action in the field of social protection. It is also important to analyse existing minimum income schemes in relation to the comprehensive social protection arrangements of Member States. However, there is scope for EU-level action to support the Member States in their endeavours.

3.12.

Tackling income inequalities requires determined reforms, coordinated policies and well-targeted actions by Member States in a wide range of policy areas, such as tax and benefit systems, wage setting mechanisms, labour market incentives, education and training, equal opportunities and good quality services with access and affordability for all. Furthermore, a key prerequisite for all redistribution systems is sustainable growth based on well-functioning markets and competitive companies.

3.13.

The EESC concurs with the Commission services’ conclusion that job counselling, individual action plans and integration of activation measures into minimum income have a positive effect on the likelihood of entering employment successfully.

3.14.

The EESC stresses the Commission services’ finding that a large proportion of minimum income beneficiaries are not subject to Active Labour Market Policy (ALMP) measures, even though they might be capable of working. While there should be a fair balance overall between incentives and a stronger link with conditions to receive income support and activation measures, attention should be paid to special groups such as young adults outside of the labour market or who are at risk of poverty or social exclusion.

3.15.

The European Anti-Poverty Network (EAPN) has identified adequacy, accessibility and an enabling character as three key policy design criteria for minimum income schemes: — Adequacy means sufficient for a dignified life; — Accessibility focuses on ensuring access and comprehensive coverage for all people who need minimum income schemes; — Enabling character relates to the use of design parameters that are in line with an integrated, person-centred ‘active inclusion paradigm’.

3.16.

As rightly pointed out in the Council’s political agreement, disproportionate administrative burden, lack of awareness or fear of stigmatisation or discrimination may cause those eligible for minimum income not to request access to it.

3.17.

Social economy enterprises, together with small and medium sized enterprises in general, are important, especially as entry-level employment. The EESC welcomes the Commission’s Social Economy Action Plan and urges the Commission to assess the best projects at the appropriate level.

3.18.

Special attention should be given to specific groups such as single-parent families, migrant families, young people, people with disabilities and Roma.

3.19.

Many pensioners today depend on a minimum income as their pension is too low. If they are not able to work it is not possible for these elderly people to go back to the labour market to get a better income. They require pension systems that provide them an adequate pension so that they do not have to rely on minimum income support. Since the demographic trend in the Member States signals that we will have more pensioners in the future, it is important that they have pension systems that provide adequate pensions.

3.20.

The EESC proposes that Member States should assess minimum income levels at least on a yearly basis and it should be indexed to take account of inflation, at least on a yearly basis depending on the level of inflation.

4.   Specific comments

4.1.    Concerning the adequacy of the minimum income

4.1.1.

Currently, in a large number of Member States the setting and level of minimum income benefits is not based on a robust methodology or linked to statistically underpinned indicators. The first step is to set up this kind of methodology and to take into account the different income sources and the specific situations of households.

4.1.2.

As for the level of the minimum income, the EESC notes that in the recommendation there are different methods proposed to define this minimum: by referring to the national at-risk poverty threshold, by calculating the monetary value of necessary goods and services according to national definitions, or by reference to other established national laws or practices. This also implies that systems with reference budgets can be considered. Those systems are based on a nationally defined basket of goods and services reflecting the cost of living in a given Member State or even a region and can help to guide the adequacy assessment.

4.1.3.

The EESC insists that it is necessary for minimum incomes to be kept in line with inflation, especially with the rises in cost of living in terms of food and energy, and this should be done on a regular basis. In this sense, the annual review at Member State level is a clear recommendation.

4.1.4.

Reference budgets of baskets of goods and services need to be developed at Member State level with coordination at European level. This would help Member States to ensure the adequacy of minimum income schemes. The basket of goods and services must include housing, water, energy, telecommunications, food, health, transport, culture and leisure, among other needs. Mechanisms which allow accurate and quick indexation to real prices are crucial to ensure adequacy, especially in times of crises which impact the cost of living.

4.1.5.

Minimum income allowances should not be used as means to subsidise low wages. Where top-up solutions are envisaged for those experiencing in-work poverty, these should be temporary and complementary measures. Acknowledging the multiple forms of work, an active labour market policy and adequate wage policy together with supportive social security and tax systems should be encouraged and supported to ensure good quality employment and a decent standard of living. People who are permanently or completely unable to be employed in decent conditions for a life in dignity should be guaranteed robust safety nets for as long as they need them.

4.1.6.

The EESC welcomes the decision that allowances such as disability allowance will not be considered part of the means testing to decide whether a person is entitled to the minimum income allowance, as those allowances cover additional costs due to specific needs. This shows that we are being very sensitive to those who really need help in our society.

4.1.7.

Special attention has to be given to vulnerable families and single parents, mostly women as for them the complementary role of child benefits, and of accessible childcare and other care provisions, is essential.

4.1.8.

Adequate minimum wages, set by law or collective bargaining, constitute a valuable instrument for addressing poverty. The implementation of the directive on adequate minimum wages will have a positive impact on the risk of poverty for a significant part of the workforce, certainly for single workers in full-time jobs and for dual-income households. Social partners should be encouraged to implement this through collective agreements. Once the directive is implemented the minimum wage could, where applicable, also be used as a reference for the minimum income as long as the minimum income is situated at the poverty level.

4.1.9.

The EESC believes that minimum income schemes should include both cash and in-kind services to those who cannot work or for whom it is almost impossible to work.

4.1.10.

In-work benefits can also play an important role in attracting inactive people to the labour market (5).

4.1.11.

The European Council’s target of reducing the number of people at risk of poverty or social exclusion by 15 million is set for 2030 and could seem to be limited in ambition. But this target has to be considered as a minimum taking into consideration that some countries are currently even below 20 % in terms of adequacy and will need quite a long time to achieve the targets. The Commission stated that the recommendation establishes a period for a progressive implementation of the provisions relevant to the adequacy of income support. For the other challenges, like coverage and take-up, the delays should be shorter.

4.2.    Concerning coverage, eligibility and take-up

4.2.1.

Currently on average 20 % of jobless people are not eligible for the minimum income schemes. This is due to eligibility conditions concerning the minimum age, the period of residence in the country, lack of addresses for homeless people, family composition issues, etc. Those gaps in coverage should be addressed by the Member States. There is also an issue with the continuity of coverage during the different phases of life and activity. In any case, transparent and non-discriminatory access criteria should be put in place in the Member States.

4.2.2.

The responsibility for non-take-up seems to lie to a large extent with the administration; this is unfair and should be tackled. Apparently, the non-take-up of minimum income ranges from 30 to 50 % in the Member States. This seems very high and quite a broad estimate. Member States should be encouraged to gather information about non-take-up and the reasons why this number is so high. The EESC wholeheartedly supports the Council’s political agreement’s focus on encouraging the full take-up of minimum income through a set of measures such as reducing administrative burden, ensuring user-friendly information and taking steps to combat stigmatisation and proactive action towards people who do not have sufficient resources.

4.2.3.

The minimum income should explicitly guarantee access to young adults from the age of 18 and to migrants. As minimum income is a non-contributory benefit, care should be taken to avoid ambiguous language with respect to what should be understood an ‘appropriate’ length of residency.

4.2.4.

EU-level disaggregated quantitative and qualitative indicators are required to capture the current coverage of minimum income schemes. Particular attention should be given to take-up rates and the efficacy of schemes, especially as regards marginalised groups, including Roma, refugees and homeless people.

4.3.    Concerning access to the labour market

4.3.1.

Minimum income systems should be designed with strong activation measures for people able to work with respect of policies for temporary care priorities. In any case, income from work should not disproportionately reduce social benefits so as to avoid an incentive trap.

4.3.2.

The participation in public work programmes and the opportunities in the social economy sector should be fully developed especially for the more vulnerable groups.

4.3.3.

For the long-term unemployed and inactive people able to enter the labour market, targeted support is especially important. In-work benefits together with structural measures to facilitate the inclusion of vulnerable groups can facilitate their entry into the labour market, but should be temporary.

4.3.4.

Participation in activation programmes requires availability of adequate measures such as education and training and life-long learning programmes, accompanied by supporting services such as counselling, coaching or job-search assistance. Development of effective measures requires strong engagement by Member States in active labour market policies in cooperation with relevant stakeholders such as the social partners. The administration and their staff should be qualified for their difficult task and draw on expert and scientific knowledge. The individual qualifications, potential, skills and career plans of unemployed persons should be taken into account systematically.

4.4.    Concerning access to essential services

4.4.1.

The recommendation confirms the need to guarantee effective access to good quality and affordable essential services (water, sanitation, energy, transport, financial services and digital communications) as listed in Principle 20 of the EPSR. Digitalisation should be considered a new social determinant for access to essential services and actions should be taken to overcome the digital divide.

4.5.    Concerning governance

4.5.1.

The EESC stresses the need to make the governance of social safety nets at all levels more effective. Special attention should be paid to strong coordination of different stakeholders, both horizontally and vertically. Roles and responsibilities of stakeholders should be clearly defined while avoiding silo effects.

4.5.2.

The implementation of minimum income schemes should involve all relevant stakeholders, including civil society organisations (notably those working with people experiencing poverty), social service providers and the social partners in all Member States. Stakeholders should be consulted as part of the development of ongoing monitoring and evaluation systems.

4.6.    Concerning monitoring

4.6.1.

As indicated in the Council’s political agreement, continuous monitoring of implementation of income support policies and related labour market activation measures as well as of access to services, supported by regular evaluations, is necessary to achieve the objectives of this recommendation in the most efficient way. The progress reports by Member States should be drafted with meaningful participation of relevant civil society and welfare organisations and social partners or their reports should be regularly addressed by the Commission’s monitoring mechanism. The EESC is not, as mentioned in the draft of the recommendation, one of many stakeholders at EU level but a central Treaty-based institution in the monitoring process.

4.6.2.

Minimum income schemes should include safeguards which ensure non-discrimination against actual or potential beneficiaries, as well as mechanisms to secure accessibility for vulnerable groups. All Member States should set up internal bodies to monitor that data protection and the fundamental rights of all those involved are respected.

4.6.3.

To progress it is important to build on the existing information at EU level and engage in the necessary action so that each Member State is in a better position to improve the way national income schemes operate. This includes the need to organise exchanges on national practices, thematic seminars and events. In this regard, and to review the progress, the EESC welcomes the proposed institutional activities such as reinforcing the existing cooperation between the Commission and Member States within the Social Protection Committee, Employment Committee and Network of Public Employment Services. However, ways need to be found to overcome the obstacles and difficulties caused by data protection legislation which may unnecessarily hamper smooth cooperation between authorities.

4.6.4.

The stages of monitoring Member States are imperative, especially for those that are still way behind the targets. The EESC stresses the importance of a clear way forward using the European Semester and other tools to keep following all Member States in their progress.

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(1)  From Minimum income support for families with children in Europe and the US. Where do we stand? by Ive Marx, Elize Aerts, Zachary Parolin, May 2022 SocArXiv; Children at risk of poverty or social exclusion.

(2)  Everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring 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.

(3)  The EESC has discussed the minimum income in its opinions: For a European Framework Directive on a Minimum Income (own-initiative opinion) (OJ C 190, 5.6.2019, p. 1); Decent minimum wages across Europe (exploratory opinion requested by the European Parliament/Council) (europa.eu) — para. 1.6, 3.3.7 (OJ C 429, 11.12.2020, p. 159); European minimum income and poverty indicators (own-initiative opinion) (europa.eu) (OJ C 170, 5.6.2014, p. 23).

(4)  OECD (2021): Tax and fiscal policies after the COVID-19 crisis.

(5)  The role of in-work benefits in the labour market is highlighted in point 3.4.3 of opinion SOC/737 on Guidelines for the employment policies of the Member States (OJ C 486, 21.12.2022, p. 161).