29.09.2022
THE EC ASKED US TO CHANGE THE MINIMUM INCOME SCHEME
The European Commission is calling on Member States to modernize their minimum income schemes as part of the ongoing commitment to reduce poverty and social exclusion in Europe. The proposed Council Recommendation on Adequate Minimum Income Guaranteeing Active Inclusion sets out how Member States can modernize their minimum income schemes to make them more effective, which will eradicate poverty while promoting the labor market integration of these , which can work.
Minimum income is payments of money that help needy households reach a certain level of income that allows them to pay their bills and lead a decent life. They are particularly important in times of economic downturn, as they help mitigate the effects of declining household incomes for the most deprived, thus contributing to sustainable and inclusive growth. These cash payments are usually supplemented by benefits in kind, providing access to services and targeted incentives to enter the labor market. Thus, minimum income schemes are not a passive tool, but act as a factor in improving the prospects for inclusion and employment. Well-designed minimum income schemes strike a balance between reducing poverty, promoting employment and maintaining sustainable budget spending.
Minimum income and social safety nets should contain sufficient incentives and support for people who can work to reintegrate into the labor market. Furthermore, they should be designed to help realize the full potential of the environmental and digital transition by supporting labor market transformations and the active participation of disadvantaged people.
The social and economic benefits of adequate and targeted social safety nets have become even more important during the containment measures imposed by the COVID-19 pandemic. Adequate minimum income is also particularly important in the current context of rising energy prices and inflation following the Russian invasion of Ukraine, as income measures can be targeted specifically at vulnerable populations.
The proposal will contribute to the EU's 2030 social goals of reducing the number of people at risk of poverty or exclusion by at least 15 million, as outlined in the European Pillar of Social Rights Action Plan. It will also help Member States to achieve the target of at least 78% of the population aged between 20 and 64 having a job.
Valdis Dombrovskis, Executive Vice-President of the Commission on Economic Affairs in the People's Interest, said: Social protection systems help to reduce social inequalities and disparities. They provide a decent living for those who cannot work and encourage those who can to return to work. At a time when many people are struggling to make ends meet, it will be important for Member States this autumn to modernize their social safety nets with an active inclusion approach to help those most in need. This way we will be able to fight poverty and social exclusion and help more people get into work during this difficult period.
Commissioner for Jobs and Social Rights Nicola Schmidt added: One in five in the EU today is at risk of poverty and social exclusion. All Member States have minimum income schemes, but the analysis shows that they are not always adequate and do not reach all those in need or motivate people to return to the labor market. In a context of rising living costs and increasing uncertainty, we need to ensure that our social safety nets are up to the task. We need to pay special attention to getting young people back into work, including through income support, so they don't fall into the vicious cycle of exclusion.
Member States are recommended to:
To improve the adequacy of income support:
to determine the level of income support through a transparent and reliable methodology.
while maintaining work incentives, ensure that income support gradually reflects a range of adequacy criteria. Member States should achieve an adequate level of income support by the end of 2030 at the latest, while maintaining the sustainability of public finances.
To review annually and, if necessary, adapt the level of income support.
To improve the coverage and use of the minimum income:
the criteria for benefiting from assistance should be transparent and non-discriminatory. For example, to promote gender equality and economic independence, especially for women and young people, Member States should make it easier to receive income support per person instead of per household, without necessarily increasing the overall level of benefits per household. In addition, further measures are needed to ensure that minimum income schemes are used by single-parent households, which in most cases are women.
Application procedures should be accessible, simplified and accompanied by user-friendly information.
The decision in relation to an application for minimum income should be issued within 30 days from the submission of the application, with the possibility of revising this decision.
Minimum income schemes should be adapted to situations of socio-economic crisis, for example by introducing additional flexibility regarding eligibility criteria.
To improve access to inclusive labor markets:
Measures to increase labor market activity should provide sufficient incentives for (re)entering the labor market, paying special attention to supporting young people.
Minimum income schemes should help people find and keep jobs, for example through inclusive education and training and support during and after employment and for mentoring.
It should be possible to combine income support with work benefits for a shorter period, for example during a probationary period or a traineeship.
To improve access to support and essential services:
Minimum income recipients should have effective access to quality support services in the areas of health care, training and education. Social inclusion services such as counseling and mentoring should also be offered to those in need.
In addition, minimum income recipients should have constant efficient access to basic services such as energy.
To promote the provision of personalized support:
Member States should carry out an individual multi-faceted needs assessment to identify the barriers beneficiaries face to social inclusion and/or employment and the support they need to overcome them.
Based on the assessment, no later than three months after receiving access to a minimum income, the recipients should be given an inclusion plan containing joint goals, a timetable and a special package of measures to support their achievement.
Make the management of social safety nets more effective both at EU level and at national, regional and local level, and introduce monitoring and reporting mechanisms.
The EU provides funding to help member states improve their minimum income schemes and social infrastructure through reforms and investment.
Next steps
The Commission's proposal for a Council Recommendation on an adequate minimum income guaranteeing active inclusion will be discussed by Member States with a view to its adoption by the Council. After its adoption, Member States should report to the Commission every three years on their implementation progress. Furthermore, the Commission will closely monitor the implementation of the Recommendation in the context of the European Semester. The proposed instrument, a Council Recommendation, gives Member States sufficient latitude to assess how best to achieve the objectives of this initiative, taking into account their specific circumstances.
Context
One in five — or a total of 94.5 million people — were at risk of poverty or social exclusion in the EU in 2021. Social safety nets play a key role in supporting these people and facilitating their (re)entry into the labor market if they can. However, more effective social protection systems are needed as around 20% of the unemployed at risk of poverty do not qualify for income support and between 30 and 50% of the eligible population do not receive assistance for a minimum income.
