Momentum for Minimum Income in the EU and the need for a Framework Directive

May 4, 2023

Adequate minimum income schemes are a crucial tool to shield people from poverty and social exclusion, as well as a right enshrined in the European Pillar of Social Rights (principle 14). The Eurofound defines minimum income as “a non-contributory and means-tested safety net operating within social protection systems. It provides a last-resort safety net for people who have insufficient means to ensure a decent standard of living.” This is possible thanks to both the financial support it provides as well as by the participation in society beyond economic contributions that it ensures, enabling people who have no income to take part in training, education, volunteering or informal care work. Needless to say, this safety net is even more important during periods of multiple crises, like those Europe has been experiencing in recent years.

Despite the need for reinforced protection of decent standards of living of people on the fringes of our societies, adequate minimum income is not an accessible and adequate instrument for too many people in our Union. According to the 2022 Minimum Income Report by DG EMPL and SPC, in the European Union 30% to 50% of the eligible population do not take up the benefits they have the right to. The High-Level Group on the Future of Social Protection and the Welfare State in its report released in February highlights that levels of minimum income benefits are insufficient in many member states, failing to lift people, especially children, out of poverty. In the light of this mismatch and in order to fulfill the objective of reducing the number of people at risk of poverty or social exclusion by at least 15 million by 2030 as set in the European Pillar of Social Rights Action Plan, adopted in 2021, the European Commission put forward a proposal for a Council recommendation on adequate minimum income schemes ensuring active inclusion in September 2022. The proposed Council recommendation was developed following a Call for evidence opened by the Commission – the usual process through which it gathers information form the relevant stakeholders to define the scope of an initiative – and combined it with targeted consultations. SOLIDAR and its members participated in the Call, submitting a written contribution.

As a result of this preparatory work, the Commission’s proposal tackles following elements:

Adequacy.
Coverage and take-up.
Access to enabling and essential services.
Indivisualised support.
Effective governance and safety nets.

For each of these aspects the Commission has recommended changes to the member states’ national minimum income schemes to be implemented by 2030.

Adequacy is a particularly key aspect of minimum income schemes as it defines if these instruments are effective in lifting beneficiaries out of poverty. The recommendation foresees that member states base the definition of minimum income on a transparent and robust methodology. The adequate level of these schemes is recommended to be equivalent to one of these thresholds: (a) the national-at-risk-of poverty threshold; or (b) the monetary value of necessary goods and services, including adequate nutrition, housing, healthcare and essential services, according to the national definitions; or (c) other levels comparable to the levels referred to in point (a) or (b), established by national law or practice. The use of “OR” here implies that member states can decide themselves what benchmark to use, even if in some situations this may lead to a minimum income that is not sufficient to lift people out of poverty, as below the national poverty line. This is why SOLIDAR, and its allies, including the Social Platform, have been calling for minimum income schemes that are above 60% of the national median income before social benefits, the relative poverty level, to be contextualised to ensure that it effectively tackles poverty in consideration of actual costs of goods and services, for instance. A positive note on the adequacy indicated in the Recommendation is that the text recommends an annual review and adjustment of the minimum income levels, an indispensable mechanism to ensure that the measure remains fit for their purpose over time.

Another crucial aspect of the recommendation is the coverage and non-take-up of the measure. Among other things, this element of the recommendation calls for clear and transparent criteria to access minimum income that do not discriminate against certain categories of potential beneficiaries and thresholds that are means-tested and that reflect the standard of living in the given member state for different types and sizes of households. This last point raised concerns as the use of household means testing, which falsely assumes that members of the household pool and distribute their resources equally, is creating a cycle of dependency that reinforces the male-breadwinning model and has a negative effect on women’s economic independence. Moreover, while the recommendation goes in the direction of making minimum income more accessible for people with no permanent address (like homeless people) the text requires that length of legal residence is proportionate, making it harder for undocumented migrants or refugees to be reached by the measure, severing their marginalisation.

The Recommendation presented by the Commission was adopted by the Council in November 2022. More recently – in March 2023 – the European Parliament has adopted in plenary a Resolution on adequate minimum income ensuring active inclusion that highlighted the need for a more binding instrument to ensure that minimum income schemes are adequate and accessible across the EU, namely a European directive. In fact, a Council recommendation is a soft law instrument that, unlike a directive, is not legally binding and does not require member states to transpose it into the national law. Instead, the Council recommendation provides a reference framework for member states that should guide them in the implementation of the minimum income schemes and related national-level initiatives. However, no obligation exists and can be imposed by the European Union should any member states disregard the provisions of the Recommendation.

Albeit not perfect, the Council Recommendation on adequate minimum income schemes is a welcome first step in the direction of tackling poverty in Europe. However, SOLIDAR and other progressive civil society, under the umbrella of the Social Platform, have been calling for a EU framework Directive on adequate minimum income for a long time now. This directive must be elaborated in collaboration with civil society and people experiencing poverty and be built according to a rights-based approach and following the criteria of accessibility, adequacy and enabling aspects. Moreover, it is crucial that the EU fosters the integrated monitoring and mutual reinforcement between minimum income schemes and social protection in general on the one hand and adequate minimum wages on the other, to make sure that a positive hierarchy is built and that poverty traps are avoided; this is key especially in view of the future implementation of the recently adopted Directive on adequate minimum wages.

To conclude, SOLIDAR welcomes the European Parliament resolution that supports some of our key asks, and will keep advocating for a EU Directive ensuring minimum income schemes that help build a more socially just and sustainable Europe, free from poverty and social exclusion.

Picture credits: Pasuwan via Shutterstock