Contents

1..... Active inclusion: a European strategy to fight social exclusion 3

1.1. Background. 3

1.2. A brief synthesis. 5

2..... Guidance on active inclusion.. 9

2.1. Adequate income support 9

2.1.1. What money can buy. 9

2.1.2. Gradual phasing out of income support 10

2.1.3. Improving efficiency and effectiveness: reaching out to the most disadvantaged 11

2.2. Inclusive labour markets. 12

2.2.1. Proper sequencing and targeting of activation. 12

2.2.2. Providing optimal tax and benefit support to encourage employment and reduce in-work poverty. 13

2.3. Access to enabling services. 14

2.3.1. Investment in relevant services. 15

2.3.2. Personalised approach: high quality case handlers. 15

2.4. Cross-cutting policy areas. 15

3..... Poverty and social exclusion among people of working age: main developments and country characteristics. 16

3.1. Main trends since the Recommendation’s adoption. 16

3.2. Grouping countries according to their main challenges. 22

4..... Review of active inclusion strategies at national level. 24

4.1. Adequate income support 24

4.1.1. Institutional features of minimum income schemes in EU countries. 26

4.1.2. The non-take up of benefits: estimated extent, causes and policy-relevant consequences 28

4.1.3. Minimum income schemes: the issue of adequacy. 29

4.2. Inclusive labour market measures. 31

4.2.1. The working poor in the EU.. 32

4.2.2. Active Labour Market Policies (ALMPs) for the people furthest from the labour market 34

4.2.3. Income support and work incentives. 37

4.3. Access to quality services. 37

4.3.1. Access to services in the Member States. 38

5..... Comprehensive policy design, integrated implementation, vertical coordination, and active participation of relevant actors. 43

5.1. Integrated Approaches. 43

5.2. Participation of relevant actors. 45

5.3. Case studies –Recent developments at national level 46

5.4. Budgetary effects of active inclusion strategies. 49

6..... Coordinating European social policies: the role of the European Union in promoting the active inclusion strategy.. 50

6.1. On-going monitoring and evaluation through the Europe 2020 Strategy. 52

6.2. Other relevant initiatives. 54

7..... Follow-up. 56

8..... ANNEX.. 58

1. Active inclusion: a European strategy to fight social exclusion

Active inclusion entails reaching out to the most disadvantaged and enabling them to fully participate in society, including the labour market. It is one of the priority social policy areas at EU level. The 2008 European Commission recommendation on active inclusion introduced an ambitious plan for Member States based on the integrated implementation of three pillars: adequate income support, inclusive labour markets, and access to quality services. Four years later, it is time to assess how Member States have responded. This Staff Working Document (SWD) prepared by the Commission with the support of various stakeholders has identified the main challenges to active inclusion implementation. These challenges include inadequacy, low coverage, and non-take-up of minimum income support, possible disincentives to work, in-work poverty, insufficient access to services, and lack of an integrated approach (including inadequate vertical and horizontal coordination, and lack of single access points). Intensified budgetary constraints in the context of the economic crisis and increasing demographic dependency ratios[1] have exacerbated the challenges to the proper implementation of active inclusion strategies. The above challenges signal the importance for Member States and the Union to move towards a social investment approach highlighting — among others — the long-term benefits of active inclusion. Social investment seeks to develop people’s human capital, improving their ability to participate in the labour market, while also preventing the greater social and economic costs that can arise from an unskilled workforce and people experiencing social exclusion. The successful implementation of active inclusion strategies will require well-coordinated and intensified efforts at local, national, and European levels, and this document contains concrete policy guidance to assist governments, civil society organisations, and practitioners.

1.1. Background

On 3 October 2008, the European Commission adopted a Recommendation on the active inclusion of people excluded from the labour market. This promoted a comprehensive strategy based on integrating three pillars of social policy: adequate income support, inclusive labour markets, and access to quality services.[2] The Council and European Parliament endorsed the strategy.[3] [4]

Active inclusion strategies aim to help integrate those who can work into sustainable, quality employment, and to provide enough resources with which to live in dignity for those who cannot. The three pillars cited above can achieve this by:

- Providing adequate, well-designed income support for those who need it, while helping them back into jobs, for example by linking out-of-work and in-work benefits.

- Ensuring inclusive labour markets and employment policies that address the needs of those least likely to get a job.

- Providing quality social services to support active social participation.

The recommendation also calls for:

(1) comprehensive policy design (by considering joint impacts, possible synergies and trade-offs),

(2) integrated implementation,

(3) policy coordination among various levels of governments, and

(4) active participation of civil society organisations in the development, implementation and evaluation strategies.

The Commission has stressed the importance of integrating active inclusion policies. Piecemeal implementation will not achieve the results that a concerted effort on all three fronts can bring about to get people back into jobs, even if they have been among the long-term unemployed.

Active inclusion fits well into the life-cycle approach taken by the Social Investment Package, where exposure to the risk of poverty and exclusion is not static. A well-designed active inclusion strategy should enable individuals to quickly return to society, preferably through participation in the labour market. The recommendation emphasises the importance of investing in human capital, in line with the Social Investment Package. Strengthening inclusive labour markets should be done through ‘inclusive education and training policies’ that adapt to ‘new competence requirements’ and ‘the need for digital skills.’ Quality services also contribute to the development of human capital.

The pillars of active inclusion are linked to social investment. The one-stop-shop model promoted by the active inclusion strategy contributes to the efficiency and effectiveness of social protection systems. Activating and enabling policies and adequate livelihoods promote policies of inclusive labour markets and adequate income support. Investing in children and young people reinforces the importance of enabling services. Thus, the active inclusion strategy forms an integral part of the social investment approach.

At the outbreak of the economic crisis, the European Commission engaged in a concerted effort to realign European economies onto the path of smart, inclusive growth. This was reflected in the launch of the Europe 2020 Strategy. Member States endorsed this strategy, and most made explicit commitments towards achieving the targets — including those on poverty.[5]

Three of the five headline targets of the Europe 2020 Strategy are related to the active inclusion policy. Pillar 2 of the active inclusion strategy (inclusive labour markets) which focuses on activating those furthest from the labour market is key for the achievement of the employment target (75 % of those between the ages of 20 and 64 to be employed). The education goals can also be facilitated through active inclusion strategies by focusing on services (such as training, education) for those who are disadvantaged. Effective active inclusion is perhaps most relevant for reducing poverty (at least 20 million people fewer in poverty or at risk of it and social exclusion). Those furthest from the labour market are the core target of the active inclusion strategy.

The European Platform against Poverty and Social Exclusion,[6] one of Europe 2020’s seven flagship initiatives, argues that with the active inclusion strategy, the EU has a common set of principles to fight against poverty.

The adoption of the 2008 recommendation coincided with the start of the global financial crisis, which had a significant impact on the socio-economic environment. The financial crisis, followed by the sovereign debt crisis in Europe forced many governments to reduce public spending drastically, while the number of those unemployed and at risk of poverty rose sharply. Social protection systems have been put under pressure, and a number of Member States have been forced to reduce spending while faced with increased caseloads.

This document reviews the implementation of the recommendation at national level.[7]

Part 1 (chapters 1 and 2) of the document provides a synthesis of the analysis from Part 2, and gives concrete policy guidance based on the results of the analysis.

Part 2 (chapters 3 to 6) reviews policy developments at national level since the adoption of the 2008 Recommendation, focusing on the three pillars of the strategy. It looks at the challenges specific to each pillar as well as the issues related to the integrated delivery of the strategy. It also discusses the role of the social open method of coordination as well as the Europe 2020 Strategy in shaping European level social inclusion policies, and looks at relevant European level initiatives and strategies.

1.2. A brief synthesis

The summary table on the main policy characteristics (derived from Tables 1-4 of the Annex) suggests that the countries with the best outcomes are those with policy characteristics comparable to the active inclusion principles.

These countries (mainly from groups A and B) are characterised by high coverage and medium to high levels of generosity regarding income support (first pillar). They have low labour market segmentation, high activation (second pillar), high use of childcare, and high participation in education and training of those with a low standard of education (third pillar). However, their safety net benefit systems are more likely to create disincentives to work.

Ranked lower down are groups D and E with social protection systems not in line with active inclusion principles. Such systems are characterised by low coverage and low-generosity income support[8] for working age people (first pillar), high labour market segmentation, mainly low activation (second pillar), low use of childcare, and low participation in education and training for those with a low standard of education (third pillar). However, their safety net benefit systems tend not to create disincentives to work.

Not surprisingly, there is a high correlation between the situation of people facing poverty in a given Member State, and the robustness of that country’s social protection system.

Table 1. Summary of the main policy characteristics[9]

|| First pillar || Second pillar || Third pillar

|| Unemployment benefits first level of safety nets || Other benefits second level of safety nets || Inclusive labour markets || Access to services

Group A CZ FR NL AT SI SE (CY) || High coverage (SI) Medium to high generosity Long duration (CY) High disincentives || High coverage Medium to high generosity High disincentives (especially for second earners) || Low segmentation (FR) High activation (SI, CZ) No low wage trap || High childcare use (NL, AT, CZ) High participation in educ/training (FR, CY)

Group B BE DK DE FI UK || Very high coverage (UK) High generosity High disincentives (UK) Long duration (UK) || High coverage High generosity High disincentives (especially for second earners) UK || High activation (UK) Low wage trap || High childcare (UK) Medium participation in educ/training (BE, UK)

Group C Ireland || Very high generosity High disincentives || Very high generosity High disincentives || High activation || Low child care use Low participation in education and training

Group D BG HU IT MT PL RO || Medium coverage (BG, PL) Low generosity Low disincentives || Low coverage (MT, HU) Low generosity Low disincentives || High segmentation Low activation Low wage trap especially for 2nd earner(BG, RO) || Low childcare use Low participation in education and training (PL)

Group E EE EL ES LV LT PT SK || Low coverage Low generosity Low disincentives (LT LV) || Low coverage Low generosity (except LT for lone parents) Low disincentives (except for 2nd earners in LT, LV) || High segmentation Low activation (ES, PT) No low wage trap || Medium childcare use (SK) Medium/Low participation in educ/training (PT EL ES)

See detailed tables in Annex (Outlier countries are signalled in strikeout font CC indicating that the given characteristic does not apply to that country)

The various assessment and evaluation exercises have identified the major challenges active inclusion policies face with respect to the three pillars.

First pillar: regarding adequate income support, the main challenges identified in the assessment are adequacy and coverage (both strongly affected by the recession), non-take-up, and disincentives to work. Though most Member States extended social benefits at the start of the crisis, the dropping of temporary stimulus measures and budget constraints since then have had a negative impact on adequacy and coverage (restricting eligibility) for some.

Non-take-up is a matter of concern and needs to be carefully monitored. Member States have recognised the issue and most have introduced measures to increase take-up, including simpler application procedures and better information for potential claimants about entitlement and application procedures. ‘One-stop shops’ introduced in some Member States have also helped to boost take-up, by informing people applying for one benefit that they may be entitled to others.

Second pillar: inclusive labour markets. The main concerns identified in the assessment are in-work poverty and disincentives that may arise from tax and benefits systems. This continues to be a problem in a number of Member States. Ensuring that tax and benefits systems contribute to make work pay is essential to avoid poverty traps. Member States should make sure that proper incentives are in place, so that people can move smoothly from benefit support to employment.

Helping the most disadvantaged get back into work is crucial, given an ageing population and the on-going economic crisis. Stakeholders must protect, up-skill and activate dormant human capital. That is why it is important to understand how effective labour market activation programmes can boost their earnings potential,[10] clear evidence for investment that leads to smart and inclusive growth.

Third pillar: access to quality services. This has been a problem for a number of Member States. Children are disproportionately affected by poverty. Access to services is often difficult for specific disadvantaged groups, such as the Roma, some groups of migrants, and people with disabilities.

High-quality services should be made available to all citizens to achieve the considerable redistributive and poverty-reducing potential of these services. Member States undertaking reforms to improve these services should bear in mind their poverty alleviating effects.

Member States have reported little progress in providing an integrated comprehensive strategy for active inclusion. Almost all are planning partial implementation, but have difficulties or challenges with integrated provision of active inclusion. These difficulties are often due to lack of administrative capacity, or to the vertical and horizontal coordination of the three pillars.

There are, however, some promising examples (e.g. IE, SI)[11] that can serve as models for others. At local level, the EU Network experts note that the introduction of ‘one-stop-shops’ in some Member States has been a successful way of ensuring effective coordination in delivering assistance under different schemes.

Civil society organisations have reported limited involvement in the design and implementation of active inclusion strategies at national level.

More needs to be done to fully implement active inclusion reforms, especially:

reorganising frontline services to provide one-stop-shops for vulnerable people; modernising social protection systems towards greater effectiveness and efficiency; linking employment policies with social support.

As a result of the assessment concrete steps are proposed below for both Member States and EU institutions.

2. Guidance on active inclusion

This guidance identifies steps for sound social investment to implement active inclusion strategies. The Commission recommends improving the efficiency and effectiveness of Member States’ income support programmes, especially with regard to adequacy, coverage, take-up and incentives to work, so that they can reach those most disadvantaged and deliver at full capacity.

The guidance promotes a holistic approach to active labour market policies, explaining:

- the optimal sequencing of activation

- the merits of personalised approaches for the most excluded

- how Member States can provide optimal tax and benefit support to encourage employment and reduce in-work poverty.

It also provides guidance on how to ensure access to enabling services, recommending a ‘one-stop shop’ approach, including better administrative coordination and capacity.

This guidance is also a tool for the Commission to assess Member States’ performance in the European Semester and points to the way in which Structural funds can contribute to achieving poverty reduction and social inclusion targets.

The guidance can also be the basis for funding priorities on social innovation and social policy experimentation. It is backed by best practices and evidence presented in this document.

2.1. Adequate income support 2.1.1. What money can buy

Adequate livelihoods (income support) are an essential part of the active inclusion strategy.[12] The debate on the adequacy of minimum income measured in relation to the median income (whether it is 60 %, 50 %, or 40 %)[13] is not conclusive. In a recent paper,[14] researchers from the University of Antwerp argue that only a minimum income level no higher than 40 % would eliminate inactivity traps.[15] One way to refocus attention on the importance of adequacy is by looking at reference budgets,[16] which give a good indication of differences in consumption patterns and the cost of living across Member States. Reference budgets would be especially useful in those with low adequacy of minimum income (measured in relation to the median income).

· Developing reference budgets would enhance understanding of what expenses could be covered through minimum income support. The development and application of reference budgets should have two phases: 1. Design of reference budgets (timeline: max. one year); [17] 2. Monitoring and updating of reference budgets (continuous).

2.1.2. Gradual phasing out of income support

Moving from social assistance (or other forms of income support) to paid employment creates a degree of disincentive. The exact degree depends on the difference between the value of the social assistance and the value of earned income. The closer the two, the bigger the disincentive to return to work. The way social assistance is phased out is also relevant. Immediate withdrawal creates more disincentives, while gradual withdrawal is less likely to deter someone from taking a job.

· Structuring phase-outs[18] in a way that strengthens incentives to take a job[19] can help to end benefit dependency. Phasing out should take into consideration the cost of doing so.[20]

2.1.3. Improving efficiency and effectiveness: reaching out to the most disadvantaged

Low coverage and non-take up directly affect the effectiveness and efficiency of the social assistance schemes. It is not enough just to have programmes. It is also important to reach those most disadvantaged, and ensure that policies are delivering at full capacity. Boosting the coverage and take-up of minimum income schemes will certainly contribute to reducing poverty. [21]

· Simpler procedures and better information for potential beneficiaries would boost take-up rates.

· Minimum income schemes should be assessed in relation to their contribution to achieving the national poverty targets.[22]

· Besides horizontal comparisons (poverty target, minimum income coverage, and take-up rate), cross-country comparison of coverage and take-up rates should be carried out in the context of European Semesters.

· Use social policy experimentation to examine ways to better reach out to the people furthest from the labour market

2.2. Inclusive labour markets

Activation is only successful if there is a concerted effort on both sides:

· demand side: incentives to businesses, in line with the EU State aid rules (including support for investment in human capital, wage subsidies, tax allowances, etc.), can play an important role,

· supply side: Active labour market policies (ALMPs), support for life-long learning, tax credits, in-work support etc. are needed.

ALMPs cannot compensate for structural barriers to job creation, such as excessively strict employment protection legislation, and they cannot be expected to compensate for cyclical labour market downturns.

2.2.1. Proper sequencing and targeting of activation

Growing evidence on successful labour market programmes shows:

· short-run impacts: it appears that job search assistance programmes have relatively favourable short-run impacts,

· medium-term impacts: formal education and on-the-job training programmes tend to show better outcomes in the medium-run.[23]

It is therefore extremely important to choose the right activation measures, taking into consideration the specific circumstances.

The longer someone has been unemployed, the likelier they are to find it hard to get back into work. The duration of unemployment is thus an important indicator, so programmes can be tailored to that criterion. Young people who have dropped out of school could be another example of a group requiring a specific programme.

· Effective ALMPs should be sequenced based on the duration of unemployment and the intensity of activation and employment support: from active job search, through counselling to targeted programmes.[24]

· Activation and employment support programmes should be matched to specific client criteria. For instance, extensive educational programmes could be made available only to young people who are unemployed and do not have formal education. Investing in the development of more sophisticated targeting (such as profiling) could shorten the time a person needs to find a job, while cutting the cost of activation.[25]

· Proper sequencing of activation should be incorporated in the individual contract[26] between the recipient and the service provider.

2.2.2. Providing optimal tax and benefit support to encourage employment and reduce in-work poverty

Back-to-work benefits (such as gradual phasing out of income support, tax allowances and in-work benefits) and earnings disregards (income that is disregarded when it comes to assessing tax liability) complement ALMPs in making it more attractive to take a job. Taxing labour income is a prominent element of every Member State’s tax policy. So it is important to understand the underlying relationship between taxation and labour supply. Evidence suggests that secondary earners are much more responsive to wages (and thus taxes) than primary earners. If the tax burden is too high, secondary earners might decide they are better off not working, or (more rarely), working fewer hours.[27] Disincentives can also stem from joint taxation.

Policy responses can only be effective if they take account of the fact that low-paid work and in-work poverty do not necessarily overlap.[28] Low-paid work is only one of the factors contributing to in-work poverty.[29] Thus, if the goal is to reduce in-work poverty, there is limited scope in using tax and benefit support on low-wage earners. Instead, targeting should focus on particular household types, chiefly single-earner households, or households with dependent children.

In-work poverty is strongly associated with single-earners, or with secondary earners who are women that may want to work part time. So supporting the latter through childcare provisions for working parents would yield good results.

· Tax and benefit incentives should be primarily targeted towards low-income single-earner households, to encourage them to take full-time jobs.

· Offering tax and benefit allowances to families with children or dependents would raise the likelihood of parents taking jobs, reducing child poverty.

2.3. Access to enabling services

The term ‘enabling services’ refers to various services essential to active, social, and economic inclusion policies. Social assistance services, employment and training services, housing support and social housing, childcare, long-term care services and health services[30] are all examples of such provision.

There is evidence that publicly[31] provided services in education, health care, social housing, childcare, and elderly care, can do much to reduce poverty. They can also help to reduce inequality, thus reducing poverty across various groups.

The impact of publicly provided services can be relevant for:

(1) children and the elderly because of their higher use of education and health services respectively;

(2) single parents and couples with children, because of their higher use of education and childcare;

(3) the unemployed, as they will benefit from employment and training services and

(4) households with high work intensity.

When it comes to service delivery, there is evidence that universal service provision faces fewer problems related to stigmatism compared to traditional, targeted social assistance benefits.[32]

2.3.1. Investment in relevant services

· The specific poverty-alleviating effects of various services should always be borne in mind when planning reforms of service-providing systems. Investing in enabling services, including through Structural funds, and ensuring their accessibility and affordability and at the same time ensuring efficacy, can improve quality of life for different categories of disadvantaged people.

2.3.2. Personalised approach: high quality case handlers

· Structural funds, including the European Social Fund,[33] could be used to support quality training of case handlers to boost outreach to the most disadvantaged, for whom services can play a crucial support role. The type of support needed often depends on individual circumstances. High-quality case workers[34] can contribute significantly to job seekers successfully finding jobs. The Digital Agenda for Europe acknowledges the key role played by intermediaries and social actors and sets out different mechanisms to help them acquire digital knowledge and competences through the use of ICT. [35]

2.4. Cross-cutting policy areas

Integrating the most relevant services with activation and income support would help hard-to-reach clients get access to the services they need. It would also reduce administrative costs. Integration would be a step towards more effective, efficient social services, a prime example for social investment.

· Setting up ‘one-stop shops’ would simplify the organisation, delivery and take-up of services. This approach requires:

– integration of information systems to reduce duplication, provide the basis for a holistic, personalised approach to service delivery and help fight fraud;

– integration of employment services with social assistance services and enabling services;

– reducing the complexity of accessing services by simplifying eligibility requirements;

– improving coordination among different levels of government (central, regional or local) to improve overall service delivery. Cohesion funds could be used to improve administrative capacities at various levels of government;

– coordinating tax and benefits systems and looking at the impact of various programmes at the level of the individual.

· Participation of relevant stakeholders should be built into the design and evaluation of national active inclusion strategies in line with the 2008 recommendation on active inclusion.

3. Poverty and social exclusion among people of working age: main developments and country characteristics 3.1. Main trends since the Recommendation’s adoption

Recent data on poverty and social inclusion suggest there were 120 million people at risk of poverty or social exclusion in the European Union in 2011, about 24 % of the population. The at-risk-of-poverty rate was especially high for children, lone parents and older workers. Nearly two-thirds (77 million) of this group were of working age.

Between 2008 and 2011, those of working age[36] were most directly affected by the crisis and its impact on the job market and opportunities. Their risk of poverty and social exclusion rose in nearly two-thirds of EU countries and by 5 percentage points or more in the Baltic States, Spain, Ireland and Bulgaria. The apparent decrease or stability of the rate in countries that were seriously affected by the crisis (Portugal, Greece) is partly due to the counter-intuitive[37] stagnation or decrease in the relative poverty rate (see section below).

Chart 1: Share of working age (18-64) population at risk of poverty and social exclusion[38] (%); 2008-2011

Source: Eurostat; EU-SILC (2011 income year 2010); except for IE (SILC 2010 income year 2010).

Poverty is primarily about living on a low income. The risk of poverty[39] among those of working age remained stable on average at EU level, but rose in nearly two-thirds of EU countries. The rise exceeded 2 percentage points in Estonia, Ireland, Italy, Lithuania, Slovakia, and Spain. However, the data may underestimate the actual deterioration in living standards among the poorest in these countries, as well as in the countries that show smaller changes in the incidence of relative poverty, as explained below.

Chart 2a: Share of working age (18-64) population at risk of poverty (%); 2008-2011

Source: Eurostat; EU-SILC (2011 income year 2010); except for IE (SILC 2010 income year 2010)

Changes in relative poverty have to be interpreted together with trends in the poverty threshold. During the crisis, the general fall in incomes led to a significant drop, by 5 % or more, in the level of the poverty line (that is, the actual income of a person living on the poverty line) in Latvia, Ireland, Spain, Lithuania, Slovenia, Portugal and the UK. This indicates a sharp fall in the living standards of the poorest in these countries, including those in which the incidence of relative poverty remained stable.

Chart 2b: Evolution of the at-risk of poverty threshold (% change between 2008 and 2011)

Source: Eurostat; EU-SILC (2011 income year 2010); except for IE (SILC 2010); at risk of poverty threshold in national currency (in Euro for CY and SK), deflated.

8.8 % of the EU-27 working age population suffered from severe material deprivation[40] in 2011. As it is based on a single European threshold, this indicator reflects better the stark differences in living standards across the EU. In 2011, the severe material deprivation rate exceeded 30 % in Bulgaria and Latvia and exceeded 20 % in Hungary and Romania. The chart below shows the deterioration of the situation in the Member States among those most severely hit by the crisis. The deterioration was especially severe in Latvia, Lithuania, Hungary, and Greece (at least 5 percentage points).

Chart 3 Developments in severe material deprivation across EU Member States among the working age population (18-64), 2008-2011

Source: Eurostat; EU-SILC (2011); except for IE (SILC 2010). Unlike income, material deprivation refers to the survey year.

Exclusion from the labour market is another driver of poverty in the EU, especially in households where no-one holds a job. The crisis pushed many households out of the labour market, as shown in the chart below. Most Member States saw sharp rises in the rate of people living in jobless/very low work intensity households. The trends are particularly worrying in Ireland, Greece, Spain, and Bulgaria (over 4 percentage point deterioration between 2008 and 2011).

Chart 4 Developments in the share of people living in jobless households[41] across EU Member States, 18-59 (not students) 2008-2011

Source: LFS

Holding a job does not always protect a household from the risk of poverty. The working poor account for a third of adults of working age who are at risk of poverty. In 2011, almost 9 % of those with jobs were living under the poverty threshold. In-work poverty rose significantly in a third of EU countries (MT, DK, CY, IE, FR, IT, ES, and RO) between 2008 and 2011. In-work poverty applies to situations in which there are not enough adults working in a household, or where they are not working enough hours to earn a living. It is also linked to poor labour market conditions such as low pay, low skills, precarious employment and under-employment. Single-parent households and single households in which the breadwinner is not working full time, as well as single-income families face the highest risks of poverty (often these being women or young people).

Chart 5 Developments in the level of in-work poverty across EU Member States among the working age population (18-64), 2008-2011

Source: Eurostat; EU-SILC (2011); except for IE (SILC 2010).

Social transfers play an essential role in providing support to both those that are without jobs, and those that are transitioning into the labour market (and may face low-paying jobs). Their impact in reducing the risk of poverty of those of working age varies greatly across EU countries, from less than 25 % of the risk of poverty before social transfers in BG, EL, and IT, to more than 50 % in BE, IE, DK, FI, SE, HU, NL, LU, and AT. These variations reflect differences in levels of poverty before social transfers, in levels of spending, and in the design of taxes and benefits systems. During the crisis, the impact of social transfers has increased in nearly half of EU Member States, including some of those worst hit by the crisis.

Chart 6 Impact of social transfers (not pensions) in reducing the risk of poverty of the working age population, 2008-2011

Source: Eurostat; EU-SILC (2011); except for IE (SILC 2010), DG EMPL calculation. Impact of social transfers is calculated as the relative change in the at-risk-of-poverty rate before and after social transfers.

3.2. Grouping countries according to their main challenges

Poverty and social exclusion among those of working age are driven by multiple factors, including exclusion from the labour market, insufficient earnings from work for the employed and his/her family and inadequate income support for those who need it. Different factors prevail in different countries. A cluster analysis based on five indicators[42] of the main drivers can group countries according to the main challenges they face. It shows that countries that perform well on all drivers have good outcomes and relatively less poverty, while those that show bad performance on one or more drivers have the worst outcomes.

Table 1. Clustering of MS based on the following drivers: jobless households, long-term unemployment (LTU) rate, impact of social transfers on poverty reduction, activity rate, in-work poverty, and related poverty outcomes

|| Drivers || Outcome || Countries

Group A || Low share of jobless households Low level of long term unemployment Impact of social transfers is high Relatively high level of activity rate Low level of in-work poverty || Risk of Poverty Poverty gap Persistent poverty || CZ FR NL AT SI SE (CY)

Group B || Relatively high share of jobless households Low level of long term unemployment Impact of social transfers is high Relatively high level of activity rate (BE) Low level of in-work poverty || Risk of Poverty Poverty gap Persistent poverty || BE DK DE FI UK

Group C || Very high share of jobless households Very high level of long term unemployment Impact of social transfers is high Low level of activity rate Relatively low level of in work poverty || Risk of Poverty Poverty gap || IE

Group D || Relatively high share of jobless households Low level of long term unemployment Impact of social transfers is very low Very low level of activity rate Relatively high level of in-work poverty || Risk of Poverty Poverty gap Persistent poverty || BG RO HU PL IT MT

Group E || Relatively high share of jobless households Very high level of long term unemployment Impact of social transfers is low Relatively high level of activity rate High level of in-work poverty || Risk of Poverty Poverty gap Persistent poverty || ES EL PT LV LT EE SK

|| || ||

Source: EU-SILC 2010, and EU LFS 2011, European Commission (DG EMPL) calculation. Groups are obtained by cluster analysis based on five variables for the working age population: share of the population living in zero or very low work intensity households, long-term unemployment rate, impact of social transfers in reducing poverty, activity rate and in work poverty rate. Country scores are calculated with reference to the EU average.

Notes: LU is treated as a ‘shadow country’ not influencing the clustering, since it presents outlier values. Countries in brackets are to be considered as on the edge of the cluster.

Group A includes CZ, FR, NL, AT, SI, SE, and (CY) characterised by fewer people excluded from the labour market, low levels of in-work poverty and above-average impact of social transfers. They are among the countries with the least poverty among those of working age.

Group B includes BE, DK, DE, FI and the UK. These countries are quite similar to group A, but have more people living in jobless households. They are among countries with the least poverty for those of working age, though rates are slightly higher than for group A.

Group C singles out Ireland, characterised by a very high number of people living in jobless households and low activity rates, combined with social transfers that have a high impact on reducing poverty. Ireland combines a relatively high risk of poverty with a low poverty gap.

Group D includes BG, IT, HU, MT, PL and RO which combine low activity rates, low impact of social transfers and a medium to high number of people in jobless households and in-work poverty. They are among countries with a medium to high risk of poverty for those of working age.

Group E includes the Baltic States, ES, PT, EL and SK which combine high levels of long-term unemployment, average activity rates, social transfers with a low impact and a medium to high number of people in jobless households and in-work poverty. They are among countries with a high incidence and persistence of poverty for those of working age.

This clustering is used throughout this document to assess the performance of Member States, based on indicators relevant for the three pillars of active inclusion.

4. Review of active inclusion strategies at national level 4.1. Adequate income support[43]

The 1992 Council Recommendation on sufficient resources [44] called on Member States to recognise the individual’s right to sufficient resources and to provide adequate income support, based on an evaluation of the resources necessary for a life in dignity. Such support should be combined with an availability to work and the system should avoid creating inactivity traps. Minimum income schemes are central among the range of measures in place across the EU, given that they are non-contributory safety nets of last resort. This review shows persistent differences among Member States as regards the level of coverage. There are also challenges in reaching those experiencing the worst forms of poverty, for instance, the homeless. The evidence suggests that one of the issues is the number of people who do not take up schemes for which they are eligible. Minimum income schemes alone are in any case insufficient to lift beneficiaries out of poverty. They intervene as a last resort and generally interact with other benefits schemes.

Adequate income support aims to ensure that those who do not have enough of their own resources to live in a manner compatible with human dignity may do so, whether or not they are fit for work. That is consistent with the 1992 Council Recommendation which called on Member States to recognise such a basic right.

In assessing adequate income support, it is important to distinguish between two levels of safety net for the working age population.

The first level of safety net is mainly[45] represented by the unemployment benefit system. Most people who lose their jobs usually receive some form of unemployment benefit in the first instance. Well-designed insurance-based unemployment benefit systems with broad coverage should in principle limit the need for last-resort schemes. Spending on unemployment benefits is also quite significant in overall spending on social protection.

The first level of safety nets is reviewed regarding the coverage, adequacy and labour market friendliness (presence/absence of financial disincentives) of benefits (see Annex, Table 1).

Group A and Group B (as defined in section 2.2) include the countries that do well in terms of coverage, generosity, and duration in the first level of safety nets (with the exception of UK and CY). High generosity, however, comes with higher disincentives to return to the labour market (higher than average unemployment traps[46]).

At the other end of the spectrum, countries belonging to groups D and E (eastern and southern European countries) are characterised by low coverage, low generosity, low duration, and benefit systems with low disincentives. Without a strong first-line safety net system, the bulk of the burden falls on last-resort schemes, such as social assistance.

The second level of safety nets complements the first one. It is based on various benefit systems, mainly minimum income schemes. They are designed for those who are not eligible for unemployment benefit or other forms of replacement income, though they may have previously been so. These schemes can play an important role at times of prolonged economic downturn, as growing numbers of the unemployed become ineligible to collect unemployment benefits.

Both levels are reviewed in relation to the coverage, adequacy, and labour market friendliness (financial disincentives to work) of benefits (see Annex, Table 1). The patterns are similar to those seen for the first level of safety nets: Scandinavian and Benelux countries as well as AT, CZ, FR and DE have more comprehensive safety nets (high coverage, generosity), but also higher disincentives to return to work (higher than average inactivity traps[47]), while, in general, eastern and southern European countries have safety nets characterised by low coverage and generosity, but lower disincentives to work.

Thus, countries in groups D and E do not have adequate safety nets, whether at first or second level. These countries face significant difficulties in addressing the social consequences of a serious economic downturn.

In the remainder of this section, the focus is primarily on minimum income (MI) schemes for people of working age given that active inclusion aims at people furthest from the labour market (potentially the main group to benefit from such schemes of last resort).[48] The focus on working age is due to the strong labour market reintegration component of the strategy. Minimum income schemes provide cash benefits to ensure a minimum standard of living for individuals (and their dependants) that have either no other means of financial support, or whose resources fall short of a given level, despite including contributory cash benefits and support from other family members. MI schemes are considered as ‘schemes of last resort.’ They provide a safety net to protect people from destitution if they are not eligible for social insurance benefits, or are no longer entitled to such benefits. They play an even more important role in a crisis, when the rise in unemployment has already had an impact on social assistance schemes.[49]

Almost all EU countries have some form of MI scheme at national level. Member States that do not have one, such as Italy, have some sort of scheme at regional or local level. These are generally conceived as a short-term form of assistance, though in most Member States, they are not formally time-limited. They are means-tested and funded through the tax system (i.e. non-contributory). They are intended mainly for people out of work, but some Member States (CY, DE, LT, FR, PT, RO, SI, SE and IE) have extended their scope to provide in-work income support.

4.1.1. Institutional features of minimum income schemes in EU countries

In most Member States, MI schemes are designed at national level, while delivery is delegated to the local authorities.[50] An examination of various national definitions[51] shows that most Member States use a statutory minimum level of income, fixed by the (national, regional, local) legislator or government. Further classifications are possible along territorial arrangements, type of benefits (cash vs. in-kind), and existence of top-ups (or income tapers). Minimum income benefits in general are adjusted periodically.[52] In none of the Member States is the minimum income level linked to national minimum wage.

The design of MI schemes varies widely among Member States. In terms of comprehensiveness (i.e. the extent to which MI schemes are non-categorical, thus applying to those on low incomes in general, rather than to specific subgroups), four ‘broad’ groups of countries can be distinguished.[53]

- Group 1 (AT, BE, CY, CZ, DE, DK, FI, NL, PT, RO, SI, SE) is characterised by relatively simple and comprehensive MI schemes, generally open to those without sufficient means to live in dignity.

- Group 2 is smaller (EE, HU, LT, LV, PL, SK). It has simple and non-categorical[54] MI schemes accompanied by more restricted eligibility conditions.

- Group 3 (ES, FR,[55] IE, MT, UK) is characterised by a complex set of different and often categorical schemes that sometimes overlap but generally cover most of those with insufficient means.

- Finally, there is a small group of countries with limited, partial or piecemeal arrangements only covering narrow categories of people (BG, IT, EL).

Eligibility conditions (commonly related to age, nationality, residence, lack of financial resources and availability for work) vary significantly. In some Member States, where there are only piecemeal and categorical schemes, there are people on very low incomes that do not have access to any form of MI scheme.

Over the past years many Member States have tightened eligibility conditions.[56] Conditionality has generally been increased and availability for work has usually been more tightly enforced for those are fit to work. There are often sanctions if beneficiaries fail to comply with the requirement that they must be available for work. Sanctions may lead to reductions in benefits, and to the loss of the right to SA benefits in more extreme cases. There is also a trend towards a stronger link between income support through MI schemes and activation measures including vocational training, job search assistance, and counselling.

MI schemes are of unlimited duration in all Member States. They are granted for as long as a person is in need of support, and need is monitored by regular checks that beneficiaries do indeed fulfil eligibility conditions. National MI schemes differ as regards the duration for which benefits are available after each application, so the frequency with which a claimant has to reapply varies. For example, in FR the Revenu de solidarité active (RSA) has to be renewed after three months, in BG, SI and LV after six months, while in PT, the period is 12 months.[57]

Considering overall income support, it should be noted that in some Member States, MI claimants also receive additional assistance for specific needs, such as housing benefits, contributions to fuel costs and means-tested child benefits. Though not formally classified as ‘guaranteed MI benefits’ these do contribute to the level of income that is actually guaranteed to people supported by MI schemes.

4.1.2. The non-take up of benefits: estimated extent, causes and policy-relevant consequences

Coverage of MI schemes is defined on the basis of eligibility criteria. The take-up of benefits refers to the share of those entitled to benefits that actually receive them. Coverage and take-up rates do not necessarily match,[58] and the available evidence[59] shows that the gap between the two is significant, sometimes very large.

Hernanz et al. (2004) report estimates of take-up for social assistance and housing benefits ranging between 40 % and 80 %. A more recently completed EUROMOD project (AIM-AP)[60] has provided additional evidence for some EU countries and different types of benefit. It reports ranges between 33 % and 88 %.[61]

The UK is the only EU Member State which has published official estimates of take-up rates for various benefits, including Income Support, since 1997, but its last estimates refer to 2007-08. Evidence from an evaluation of the French RSA scheme highlights that many beneficiaries do not receive the support and activation to which they are entitled, with a non-take up rate of 35 % for basic benefits (RSA socle) and up to 68 % for the in-work RSA supplement (RSA activité).[62]

Overall, take-up seems to have declined, at least for some of the EU countries for which data are available. Some groups may be more likely not to take up benefits than others.[63]

The reasons for this vary widely. Information costs, administrative costs, disincentives (due to low benefit levels and short duration), social and psychological costs, errors in evaluation procedures and discretionary assessment may be among the explanations.[64]

In any case, the evidence clearly shows that a considerable number of people do not take up benefits. The reasons for this require research efforts and attention from policy-makers, because:

· low take-up distorts the intended effects of social benefits and reduces the chances of programmes achieving their objectives. Non-take-up lowers the capacity of SA to reduce the at-risk-of-poverty rate and widens the poverty gap.[65]

· if a benefit is not claimed because of reasons such as lack of information, this creates disparities in the way potential claimants are treated in a welfare programme supposed to treat them equally.[66]

4.1.3. Minimum income schemes: the issue of adequacy

In most Member States, for most types of household, minimum income benefits alone are not enough to lift people out of being at risk of poverty. Chart 6 shows the level of net social assistance as a percentage of the median household income in the EU countries. There are wide differences across Member States: on the one hand, DK, IE, and the NL have social assistance support (including housing) above 70 % of the median household income, while on the other, RO, PT, and BG all have social assistance support below 30 % of that level.

Chart 7. The level of net social assistance as a percentage of median household equivalised income in EU-27,[67] Single household, 2010

Source: Eurostat, OECD.

Mechanisms for raising MI benefits over time are important to ensure they are adequate. There has been a tendency towards benefits failing to keep pace with general living standards, and to lose ground relative to wage increases over time.[68] This is often linked to the lack of clear systems and procedures for regular reviewing of the level of MI.[69]

Measuring ‘adequacy’ is problematic. Setting the monetary poverty threshold at 60 % of median income does not reflect variations in consumption patterns and the cost of living across a given country. As an alternative, the reference budget (standard) method defines poverty thresholds with reference to a basket of goods and services that are considered necessary to reach an acceptable standard of living within a given country or region. Once agreed, the basket is valued using detailed price data.

Table 2 illustrates reference budget methods in the UK, NL, IE and BE (Flanders), reflecting the sums needed to cover basic necessities, defined as food, clothing, fuel and rent. The methods also estimate an amount for other goods and services considered necessary to lead a decent life (e.g. transport, communication, heath care, personal care, education, etc.). In three methods (UK, BE, IE), the total is an amount close to or above 60 % of median income threshold. In NL, the method produces a much more parsimonious basket. This shows that efforts to define the set of goods and services that are absolutely necessary to escape poverty, even following strict methodological guidelines, will always involve significant normative assumptions leading to substantial differences in the amounts estimated.

Table 2: Reference budget examples for a single person of working age

Source: ‘The measurement of extreme poverty’ — European Commission (2011) and EU-SILC (ilc_li01)

4.2. Inclusive labour market measures

By inviting Member States to put in place more inclusive labour markets, the Recommendation called on them to support access and return to employment through active labour market policies. These policies include lifelong learning, personalised support and guidance that meet the needs of those furthest from employment, while ensuring quality jobs, promoting job retention and enabling advancement. Providing such support has become increasingly challenging as jobs losses have disproportionately affected jobs offering middle income and lower middle income. Most Member States have moved towards active welfare policies in which income support is granted, on condition that the recipient is actively involved in looking for work. Yet active labour market measures (such as profiling, job counselling, educational training and re-qualification) still account for only a small proportion of expenditure on the labour market across the EU, especially in eastern Member States. And while many Member States have taken steps to tackle financial disincentives to work (for instance, through back-to-work benefits and disregarding a portion of earnings when setting tax liability), in-work poverty remains a major concern, standing at a rate of 9.4 %. Social enterprises and the social economy in general have already proven their capacity to provide innovative responses to the current economic and social challenges by developing sustainable, largely non-exportable jobs, social inclusion, and improvement of local social services.

Assessment of the second pillar of active inclusion (inclusive labour markets) is based on a series of indicators reflecting the labour market friendliness of tax and benefits systems, the level of labour market segmentation, the level of participation in activation measures, and the design and level of expenditures on ALMPs (see Annex, Table 2). These indicators also reflect various aspects of the phenomenon of in-work poverty.

Minimum wages often act as a ceiling for minimum income support. As such, a comparison of minimum wages to the poverty threshold (60 % of the national median household income) gives an idea on the adequacy of minimum wages. The data show wide variations. In the UK, NL and IE, the minimum wage is significantly above the poverty threshold. On the other hand, in EE, SI, HU, and SK, minimum wages are significantly below it. Very low minimum wages also effectively risk creating inactivity traps.

Support for activation is stronger in groups A (CZ, FR, NL, AT, SE, and CY), B (i.e. BE,[70] DK, DE, FI), and C (IE), than in D (BG, IT, HU, MT, PL, and RO), and E (i.e. the Baltic States, EL, and SK). It appears therefore that countries that, overall, have better performing social protection systems also have more comprehensive ALMPs. Transition out of poverty is also higher for northern and western European countries and lower in the east and south.

Back-to-work benefits and earnings disregards make taking a job more viable. Inadequate coordination of the tax and benefits system may lead to a low-wage trap[71] that can create disincentives when a worker is trying to increase productivity. This phenomenon is more severe in group B (BE DK DE FI and the UK) for single-wage households and in group D (IT, HU, MT, and PL) for second-income earners.

4.2.1. The working poor in the EU[72]

In-work poverty refers to a situation in which having a job does not enable a person and his/her family to escape poverty. Though employment is seen as the best way of doing so, there are those who are working and are still at risk of poverty. Access to employment is not enough to improve their situation.

The main factors behind in-work poverty can be grouped under four categories:

1) family/household composition, low work intensity and low wage;

2) individual/personal characteristics;

3) institutional factors (i.e. duration and type of contract, minimum wage, tax and social protection);

4) structure of economy/labour market.

Low work intensity[73] and low wages contribute most to in-work poverty.[74] In general, countries with high at-risk-of-poverty rates have high in-work poverty rates and vice-versa. In-work poverty rates tend to be highest for single parents with dependent children. Rates are much higher for those on temporary contracts or working part-time. The tax rate for low-wage workers has increased in recent years, though with wide variations across Member States. Lack of access to services, such as childcare, which forces women to opt for part-time work, can also cause in-work poverty.

The more members of a household there are in work, the lower the risk of poverty. Thus, the one-breadwinner family household, in which work intensity is low to medium, is not protected from the risk of poverty. In fact, across the EU, the risk for such households is between 15 % and 50 %. For almost half the adult population and most households in the EU, work intensity is high to very high (80 %-100 %). Next come households with medium work intensity (40 %-60 %) covering nearly 20 % of all adults. This is the type of household involving 25 % of adults in southern Member States (ES, IT, MT, ES), where female participation in the labour market is low. By contrast, in DK only 10 % of adults live in medium work intensity households.

Single parents and children are particularly exposed to in-work poverty. If there are children in a household, this directly affects the risk of poverty, as total income has to be shared among more people. However, in most Member States, very high work intensity can reduce the risk of poverty affecting children. This is not the case for BG, EE, LT, PL, PT and ES. This may be due to low levels of child benefit and wages. In DE, however, the risk of poverty for families with children is similar to that of the same type of household in DK, despite lower work intensity (usually medium). This highlights the need for good family support at different levels of work intensity. As in DE, most families in ES and IT are medium work intensity households. In ES and IT, however, only high work intensity seems to alleviate the risk of poverty, mainly because of higher wages and largely due to lack of family support.

Low wages have an impact on in-work poverty because they affect individual and household income. There is a danger that low-wage temporary employment, especially among young people, may become a persistent feature of working life. Among the self-employed, wages have gone down considerably because of the crisis.

Women, young people, older workers, migrants and the low-skilled are more at risk of in-work poverty than other groups. Across the EU, the in-work poverty risk for men is higher than for women. This may be because women tend to be second-income earners (thereby better protected) and have actually gained employment in a medium-to-higher paid wage structure during the recession. Yet, single mothers and single women are particularly at risk of in-work poverty compared to others. There is no strong correlation between age and in-work poverty. Young people tend to be more vulnerable if they live by themselves, or if they hold a student job or ‘mini job’ (e.g. in DK, SE).

In-work poverty is highest for people working less than a full year, followed by those in temporary contracts or in part-time employment. Apart from IE, MT and UK, all Member States have in-work poverty rates for those on temporary contracts that are almost double those seen in permanent employment. Only in IE, MT, UK and DK does in-work poverty prevail in permanent employment. Young people, migrants and those in low-skilled labour are most likely to be on temporary contracts. For instance, in Poland, those on temporary contracts account for up to 26.8 % of total employment, working in jobs with a wage penalty of 27.8 % relative to permanent contracts. These factors tend to trap people in poorly-paid jobs and hamper upward mobility. In Spain, the in-work poverty rate for temporary workers is four times higher than for permanent workers.[75] Those on temporary contracts would usually prefer to be on permanent contracts, so the temporary aspect is involuntary, except in DK and AT. Involuntary part-time work is a growing issue in many countries, such as DE, where wider use of non-standard contracts has increased flexibility on the labour market, but also led to further inequalities among workers.[76]

4.2.2. Active Labour Market Policies (ALMPs) for the people furthest from the labour market[77]

Shared characteristics of ALMPs in Member States are profiling, job counselling, educational training and (re-)qualification.[78] Subsidised employment, public work programmes, short-term paid employment, traineeships and voluntary work are among ways of reintegrating people into work. While all Member States have policies for the unemployed and job seekers generally, the degree to which these target those who are furthest from the labour market (e.g. social assistance recipients) varies substantially. However, some Member States (BE, DE, AT, FI, LU, PL, SI) specifically target these recipients by means of separate programmes.

ALMPs[79] account for only a small share of Member States’ GDP in the EU-27 (0.85 % of the GDP on average), and these policies are mostly financed through unemployment insurance funds. DK, BE, NL, and SE had the highest share of ALMP spending in 2010. Sometimes ALMPs go hand in hand with passive labour market policies,[80] as in DK, providing an effective tool for both protection and activation, though passive policies have much a more prominent role in ES and BE. Most eastern European countries spend little (see the chart below) on labour market policies, whether active or passive. There has been no significant rise in funding for ALMPs in recent years.

Chart 8: Active and passive labour market policies expenditure in percentage of GDP, 2009

Source: Eurostat LMP database, 2010

Among the unemployed and recipients of social assistance and activation policies, Member States identify different sub-targets for ALPMs, among which young and older workers, low-skilled and long-term unemployed, migrants and people with disabilities. For example, IE targets older workers, while the UK targets young people within the Jobseeker’s Allowance scheme. DK and SE have separate schemes for older workers and young unemployed people. Measures currently in place in DE, SK, SI and ES tend to focus on the long-term unemployed. Few efforts are made to provide special support to integrate migrants into the labour market, although Vienna is a notable exception.

An overwhelming majority of Member States[81] link the right to income support to the willingness to work and a minimum commitment to seeking a job, vocational or occupational training. In SK, proving one’s willingness to work and to accept a suitable job is only compulsory when applying for the highest level of income support benefit.[82]

The conditions under which job seekers have to accept a job offer varies across Member States. In CZ and DE, job seekers are required to accept any job, even if it is short-term, or a mismatch with their skills. In LV, EE, SK, MT and NL, job seekers are obliged to accept suitable work only (subject to the relevant authority’s assessment).

If a job seeker is unable to find work, most Member States offer vocational or occupational training. Some also provide various counselling services which can cover advice to manage debt or addiction or psychological support (DE) during drug or alcohol rehabilitation (MT). In SI, job seekers may have to sign a contract with the Social Work Centre to take part in social and/or health programmes (SI). In other countries such as LU, an ‘integration allowance’ is available only if job seekers take part in an ‘integration activity’.

If occupational or vocational training is not successful, some public administrations provide (mandatory) measures to ensure activation (NO, RO, BG, NL, LV, HU). This may mean compulsory involvement in public works (e.g. providing social services, cleaning). This dimension should in many cases be complemented by improving job seekers’ prospects of finding work, to avoid locking them into such schemes (LV, HU).[83] In NL, a young person who is not in employment or education (NEET) has the right to request a job or an offer of a place in education from the local municipality.[84]

‘Reluctant behaviours or attitudes’ such as refusing a job offer or refusing to take part in ALMPs are generally penalised by sanctions. These vary, and include withdrawal of benefits and grants (e.g. in EE, SI, LT, CZ, EE), withdrawal of benefits (e.g. BG, CY, HU), suspension of benefits (e.g. LT, DK) or lowering the level of benefits (LV, IE).

Box 1: Recent activation measures in Ireland The main types of measures introduced are: · active case management and profiling services for recipients of benefits of working age (Department of Social Protection); · reform and consolidation of job-placement services and related provisions for the unemployed in the Department of Social Protection and effective separation between job placement and training provision (the latter has been moved to the Department of Education and Skills); · scaling up, targeting and further diversifying the training and work experience available. Community Employment is a new scheme that offers places as part of the response to the crisis, and a new job creation programme, the Community Work Placement Initiative (Tús), has been rolled out, both noteworthy developments. ‘FAS’ employment services and the Community Welfare Service have been integrated into the Department of Social Protection in a restructuring of the way different departments operate, focused solely on labour market activation. (Source: Irish expert’s report)[85]

As a response to the economic crisis, most governments recognise the need to step up efforts to develop measures tailored to specific vulnerable groups, notably the young, older unemployed people, and women. The main priorities for ALMPs in NRPs are expanding educational measures (including on-the-job and vocational training) to reduce skills mismatches, expanding and improving job (search) counselling for the unemployed to improve the matching process, and tax reforms that benefit low-wage earners to support labour market participation even during high unemployment, as implemented recently by e.g. AT and LU.

4.2.3. Income support and work incentives

For Member States, designing social benefits without eroding incentives to take up work is a key concern.[86] Schemes are increasingly designed to avoid creating unemployment and inactivity traps, as well as low wage traps for people in work and in receipt of MI benefits. Member States have, for instance, adopted measures to reduce the tax wedge (direct labour taxation plus social security contributions) on lower wages, to raise minimum wages, to offer in-work benefits, and they have reviewed the design of out-of-work benefits, including social assistance.[87]

Back-to-work benefits and earnings disregards make participation in the labour market more viable. Several countries, CY, DE, LT, FR, PT, RO, SI, SE and IE make use of various forms of back-to-work or tax allowances, with gradual phasing out of SA payments. Similarly, earning disregards are a common practice in CY, DE, AT, BE, LU, MT, NL, SK, CZ, DK and LT. In many cases, around 30 % of earnings are disregarded when calculating social benefits. In addition, special allowances, e.g. for single parents and children (MT) and compensation payments for voluntary work (NL) can top up incomes.

Specific factors in the design of MI schemes might result in disincentives to take up work. These include:[88]

1. high benefit withdrawal rates[89] (also with regard to secondary benefits providing access to key services such as health care and childcare);

2. lack of systematic mechanisms to adjust the value of earnings disregards[90] over time so as to avoid their erosion;

3. regulations requiring former beneficiaries to refund benefits.

4.3. Access to quality services

The Recommendation invited Member States to enable access to quality services, essential to support people’s inclusion in the labour market and more generally their resilience and participation in society, making sure such services are available across territories, physically accessible and financially affordable. Such services should emphasise solidarity, equal opportunities for users and employees, quality investment in human capital and infrastructures, while being designed and delivered in a comprehensive and coordinated manner. This review shows that the potential to improve access to services seems to be very considerable, as few Member States report better access to housing or to childcare, and access to social assistance and health services has not improved much either.

Access to services is reviewed according to indicators reflecting access to childcare, housing costs, adult participation in education and training, and social gradient[91] in unmet need for health care (see Table 3 from the Annex). Differences among Member States are most significant on two indicators: access to childcare and participation in education and training for those with a low level of education. Group A and B countries, mostly in northern and western Europe) tend to have high childcare use and high participation in education and training. Group C, D, and E (eastern and southern European countries plus Ireland) tend to have low childcare use and low participation in education and training.

A recent OECD study on publicly provided services has confirmed that better access to specific services such as healthcare, childcare, housing and care for the elderly can contribute significantly to reducing inequality in society and thus reduce the level of poverty across various groups.[92] The impact of such services can be particularly relevant for

(1) children and the elderly because of their higher use of education and health services respectively;

(2) single parents, and couples with children, because of their higher use of education and childcare services; and

(3) households with high work intensity.

Reduced rent tenants and people with a lower level of skills may also benefit, albeit less so. Regarding service delivery, there is evidence that universal service provision generates fewer problems related to stigmatisation or discrimination compared to traditional, targeted social assistance benefits.[93]

4.3.1. Access to services in the Member States[94]

Most Member States report that the poor now have better access to employment and training, but the potential of other services to lift people out of poverty remains relatively underexploited. Several Member States report better access to housing, but few report improvements in access to childcare. Better access to social assistance and health services ranks below the others.

Self-reported improvements in access to employment and training opportunities may be linked to Member States’ increased use of labour market ‘activation’ approaches, tougher conditionality on taking up work, compulsory participation in public works programmes and growing sheltered employment.[95]

According to independent EU experts on social inclusion,[96] only a small number of Member States have taken steps to improve services essential to support active social and economic inclusion policies since 2008.

Six have focused on those who can work, AT, BE, EE, DE, LU, MT, and four on those who cannot, BE, EE, LU, MT. Such services include social assistance services, employment and training services, housing support and social housing, childcare, long-term care services and health services.

Reported improvements in access refer to such services being set up for these groups in the first place, rather than specifically addressing the obstacles disadvantaged groups face when trying to access services. There has yet to be more attention to designing services to reach out, through e.g. ‘peer’ inclusion, developing effective mixtures of targeted and universal services, reducing adverse effects of stigmatisation or removing administrative burdens.

Table 3. Areas in which Member States have improved access to services for the most disadvantaged

a. employment and training || AT; BE; BG; CY; CZ; DK; EE; FI; FR; DE; EL; IE; IT; LV; LU; MT; NL; PL; PT; RO; SK; SI; ES; SE; UK

b. social assistance || DK; FI; LT; LU; RO

c. health || LV; LT; RO; SI;

d. transportation || BE; AT

e. housing || AT; BE; BG; DK; FR; LT; LU; RO; SI; ES;

f. childcare || AT; CY; HU; LU; MT; PL;

g. banking || CZ; DK;

h. other ______________ || EE (in-kind benefits (varies by municipality)); IE (education); IT (social card); PT (in kind benefits/ associated rights (local level in response to the crisis)); UK (school meals for children).

Source: Country Surveys on Implementation of Active Inclusion Strategies 2008-2011

Among countries reporting better access to housing, BE has set up a national framework to reimburse housing-related costs, funded by the autonomous Committee for Regulation of Electricity and Gas. Those on social benefits automatically get ‘social’ rates (equalling the lowest rate on the market), and there are ceilings on the maximum rates for gas and electricity. Beneficiaries can also claim fixed-price heating allowances (stookoliefonds).

In AT, the new means-tested social assistance scheme (BMS) also assesses housing needs and costs. Previously, there was a separate procedure to request a housing allowance. Since 2009, RO has a lower eligibility threshold for heating allowances, which benefits low-income households. For households on social assistance, heating and gas expenses are fully covered by the state. In its NRP, BG allocates funds to expand modern social housing for the most vulnerable. Housing allowances are provided on a very discretionary basis and access depends on the municipality. In 2009, there was a shift from means-tested in-kind heating allowances (e.g. coal blocks) to in-cash heating allowances paid directly to electricity providers.

Six Member States (AT, CY, HU, LU, MT and PL) report better access to childcare services for the poor. In 2009, AT introduced compulsory pre-school education (on a half-day basis) at federal level. In 2011, the government decided to create an additional 5000 early childhood education and care institutions between 2012 and 2014. In Vienna, childcare for children up to the age of six is free of charge. Since 2009, LU has run a ‘cheque service’ (child-care service voucher) system, reducing childcare costs, especially for low-income families and SA recipients.

MT, PL and HU report commitments to increasing the number of childcare and toddler institutions (‘Maluch’ Programme in PL). Using the ESF, CY planned a 2011 reform of its care system, providing partial reimbursements of costs associated with care for children, the disabled and older people. However, the reform is intended primarily to further women’s participation in the labour market, rather than to improve the situation of the poor in general.

In a number of countries (PT, SK, SI, UK, LT) not reporting better access to childcare services, there are nevertheless more in-kind services, such as subsidised transportation, school supplies and free school meals for children of SA recipients.

Box 2. Client input into service delivery: Belgium — Expert by Experience § Involvement of 26 ‘Experts by Experience’ who are experiencing or have experienced poverty, spread over 22 administrations, to improve access to social services for all citizens (including the poor and those most detached from the labour market) § Problem: legislation and practices are designed by and for middle class — > use of ‘Experts by Experience’ aims to improve accessibility and to make known the views of users, so as to improve tailored services § Support to experts: training and mentoring system § Challenges: dissemination of information about the role of EbyE, define/build up profile of EbyE, make sure there is effective communication with colleagues about EbyE, improve support systems for coaches and mentors Source: SPC Multilateral surveillance on active inclusion, MS presentation, February 27 2012

As for healthcare services, a number of countries provide full cover for SA recipients (CY, LU, MT, LV, CZ, UK, SI, ES). BE did not report improvements, but grants SA recipients the automatic right to substantial reimbursements of medical costs and a guarantee that health expenses do not exceed a certain threshold. In BG, PL and PT, the coverage of SA recipients’ health expenses is heavily discretionary and depends on the municipality.

With regard to social assistance services, some governments provide a wide range of services at national level. These comprise psycho-social, alcohol and drug counselling and family assistance (e.g. DE, SE). In the UK, counselling services are delivered by voluntary organisations (Citizens Advice Bureaux). In EE and IT, the availability of such services depends on the municipality. Since reforms in 2008, FI has a thorough social assistance service, linking assessments of the individual’s capacity to work with job-seeking assistance and the setting up of employment plans with rehabilitation. The delivery of cash and in-kind social assistance is spread across agencies, social workers and other professionals.

Banking and transport services were reported by a few Member States. CZ has introduced financial literacy courses at secondary school level and is planning versions for primary schools, and may be one of the most innovative service providers. Analysis of country surveys shows that banking services (debt, mortgage, counselling and legal assistance) are not confined to reporting countries (CZ and DK), but can also be found in DE, HU, NL, UK, SI, EE, IT, LV. The same applies to free public transport. AT grants free access to public transport to SA recipients, as do CY and LU, as well as FR, at least partially. Subsidised public transport is available to SA recipients in BG and PT.

The EU social inclusion experts[97] provide examples of measures that improve the inclusiveness of education and training opportunities. BE is reforming tertiary and secondary education systems to widen access and is improving transitions from education to work through better career guidance and partnerships with enterprises. DK is developing effective lifelong learning strategies and increasing the number of young unemployed people being trained through apprenticeship schemes. It is developing jobs and skills development packages for young people who are academically weak. In the Estonian NRP, a lot of attention is paid to preventing and reducing youth unemployment by providing high-quality education, reducing school drop-out rates and preparing young people more effectively for working life.

In a number of Member States, food aid is available in various forms. In EE and IT, ‘social cards’ make people on low incomes eligible for food aid. In PL and PT, food aid was introduced as an immediate response to the social consequences of the crisis. RO has increased the number of social canteens in urban areas. They provide two hot meals a day for SA recipients and families on low incomes. In SI, NGOs provide free packages of food, vaccination and clothing. In the UK, those on income support or jobseeker allowance can apply for ‘healthy start vouchers’ to be spent on milk, fresh fruit and vegetables or infant formula.

Especially non-EU migrants face difficulties when accessing certain enabling services. In particular, migrants face obstacles when it comes to access to education (especially higher education), employment services (including information on job vacancies), financial services, and family and child benefits. These obstacles are often due to problems related to the transferability of the rights to access social assistance, unemployment benefits or other related services, the appropriate recognition of qualifications and the long contribution periods required to use some of these benefits (unemployment benefits, social assistance).[98]

4.3.1.1.Focus on childcare

The availability and affordability of childcare has a crucial influence on parents’ access to the labour market. This holds true particularly for second earners and single parents on low incomes. The availability, quality and affordability of childcare remain an issue in many countries, as highlighted in nine of the country-specific recommendations the European Council adopted in July 2010 (CZ, DE, IT, SK, UK, MT, PL, AT, and HU). The challenge is even greater for households on a low income.

Persisting low access to childcare for households on low income

The latest information from EU-SILC shows that most Member States are lagging behind EU targets for childcare set in 2002, the so-called Barcelona targets. In 2010, there was provision for 28 % of children below the age of three and 83 % of children between the ages of three and six. Access appears to be most difficult for households with low incomes. Those on low incomes make far less use of childcare. This is also the case in countries close to achieving the target, with a few exceptions, such as Denmark or Sweden.[99] This gradient shows the additional obstacles that households on low incomes face when they seek childcare, which include:

· employment status — the more hours one or both parents work, the greater their need for childcare;

· eligibility criteria — e.g. places may be reserved for parents that are employed;

· lack of services, particularly in disadvantaged or rural areas;

· lack of affordable services.

Affordability remains a major challenge

Chart 9: Public expenditure on early child care and education by income quintile

Source: M. Vaalavuo

Despite the redistributive effects of government support, the cost of childcare is still an obstacle for families on low incomes, as it can significantly reduce disposable income. Even after deducting government support, out-of-pocket expenses for two preschool children can add up to 20 % or more of a family budget.[100] Single parents are least able to afford childcare.

The cost of childcare can be an obstacle to parents wanting to go back to work, especially for single parents and second earners on a low income. These costs appear to create significant inactivity traps in a number of EU countries, by reducing net income gains from employment to such an extent that parents are better off caring for their children themselves[101] at home. The pattern of such disincentives varies in different countries: high childcare costs (IE and MT), low earning prospects (in CZ, SI) or a combination of both (BG, LV).

These barriers could be addressed if government assistance to reduce the cost of childcare targeted low-income families more effectively.

5. Comprehensive policy design, integrated implementation, vertical coordination, and active participation of relevant actors 5.1. Integrated Approaches

The 2008 Recommendation advocated an integrated approach to active inclusion which should have yielded a one-stop-shop approach, delivering on all pillars in an integrated manner that could reduce the administrative burden on both customer and provider. An integrated, comprehensive approach should be based on:

· comprehensive policy design,

· integrated implementation,

· vertical coordination,

· participation of relevant stakeholders.

Assessment of the effectiveness of active inclusion strategies requires further analysis based on adequate, up-to-date data. Limited evidence available[102] shows that Member States have not yet developed fully-fledged integrated, comprehensive strategies, though several have taken encouraging steps. This may be due to the greater fiscal and administrative burden of implementing such a strategy.

A fully comprehensive policy has to define the right mix of the three strands of active inclusion, taking into account their joint impact on the social and economic integration of disadvantaged people and their possible interrelationships, including synergies and trade-offs.

According to the independent experts’ analyses,[103] such a strategy is only evident in about a quarter of Member States (DK, FI, FR, MT, NL, PL, SE) for those who can work and in just two Member States (NL, SI) for those who cannot. Only six Member States (BE, DK, FR, MT, SI, SE) have developed effective systems for integrated implementation of active inclusion policies for those who can work and only three (LU, MT, SI) for those who cannot.

The extent to which there is effective policy coordination among local, regional, national (and EU) authorities in the light of their particular roles, competences and priorities varies significantly across countries. Five (BE, DK, FI, LU, NL) are assessed as having such coordination arrangements for active inclusion measures both for those who can work and for those who cannot. The results of the full analysis are summarised in Table 5 in the Annex.

The assessment of the country surveys on active inclusion shows that most Member States report a fully-integrated strategy. Only six countries report a partially-integrated strategy, and IT and EL report a non-integrated approach. A closer analysis of the active inclusion policies reported[104] reveals what Member States understand by an integrated strategy.

Table 4. Integrated active inclusion strategy among the Member States

a.) fully integrated: minimum income scheme is linked to labour activation measures and access to services || AT; BE; CY; DK; FI; DE; HU; LV; LU; MT; NL; PL; PT; SK, SI; SE; UK; CZ; RO

b.) partially integrated: minimum income scheme linked with labour activation measures || BG; FR; IE; LT; ES; EE

e.) not integrated || EL; IT

Source: Country Surveys on Implementation of Active Inclusion Strategies between 2008-2011 ||

For countries classifying themselves as providers of fully-integrated strategies, e.g. AT, BE, UK, an integrated strategy means minimum income recipients have an ‘automatic right’ (enshrined in law) to services and to participation in ALMPs.

However, as in the case of the UK, policies are often designed to strengthen the link between MI and ALMPs rather than linking MI-ALMPs-Services, and services are often focused mostly on childcare.

Countries report significant obstacles to a full-fledged strategy. These involve problems with implementation at local level, e.g. due to coordination problems between public employment services (PES) and social agencies; policy competences scattered across policy levels; restricted access to services due to lack of funding (e.g. in PT) and lack of political prioritisation.

Countries classifying themselves as providers of partially-integrated strategies report the following obstacles. In FR, RSA recipients registered with the public employment services do not automatically receive support in training and education; access to services depends heavily on the financial situation in a region. In BG, few employment services are specifically targeted to minimum income recipients. In LT, not all recipients of minimum income benefit from their right to a housing allowance. The situation varies substantially by municipality.

Civil society organisations report a different picture. There is consensus that fully-fledged integrated and comprehensive strategies have not yet been developed by Member States, and that there has been too much emphasis on the employment pillar. Civil society organisations refer to various reasons for the lack of fully-fledged integrated and comprehensive strategies: lack of political will, coordination problems, competences fragmented across policy levels, the economic crisis and austerity measures.

This is partly echoed by researchers[105] on poverty and social exclusion, who note that the European agenda on combating poverty and social exclusion appears to be moving towards a largely employment-focused analysis of poverty. They make a claim for greater clarity on concepts and objectives within a coherent, multidimensional model of social and economic disadvantage.

5.2. Participation of relevant actors

No involvement or very limited involvement of all relevant actors[106] in the development, implementation and evaluation of active inclusion strategies is reported by larger social networks (EAPN, Eurodiaconia, and Cities for Active Inclusion -EUROCITIES).

Whilst EAPN members can highlight no current examples of participation of stakeholders in the design and delivery of an explicit AI strategy, they highlight active participation in the National Action Plans/Social Reports under the Social OMC (2000-2010) and/or NRPs, often promoting strong proposals on Active Inclusion.. In the first NRPs of Europe 2020, whilst 13 National Networks were invited to participate in the NRP process (AT, BE, BG, DK, EE, FR, DE, IE, LU, NL, PT, ES, SE), the level of meaningful stakeholder participation was scored very low (2.38 of 10), with most scoring very low (AT, BG, CZ, DK, EE, IE, IT, MT, NL, PL, RO, SK, SE, UK), with only Belgium and Spain giving a positive rating (7 and 8). However, even in these countries, it was difficult to get proposals taken on board, and in the case of Spain, to get implementation.

Eurodiaconia confirms that its members in DE, SE, DK were not involved in the development, implementation and evaluation of the strategies, with the exception of CZ which had been consulted via EAPN.

CfAI-EUROCITIES reports that involvement of relevant actors differs between cities. At local level, cities rely largely on involving relevant stakeholders such as NGOs. However, the extent to which cities are consulted at national level is not always satisfactory. As AGE Platform Europe reports, in several (BE, FR, ML, SI) of its member countries, AGE organizations are involved in regular consultation processes on social policy and can comment on draft reports upon request.

5.3. Case studies –Recent developments at national level

RSA (revenue de solidarite active) in France[107] The Revenu de Solidarité Active (RSA) can be seen as a cornerstone of France’s current antipoverty policy, in combination with the minimum wage and employment subsidies. The declared objectives are to integrate and simplify existing benefit schemes, to combat poverty more efficiently and to foster the transition into work. The RSA itself integrates several pre-existing schemes: • Revenu Minimum d’Insertion (RMI ― the mainstream guaranteed minimum income); • Allocation de Parent Isolé (API ― single parent benefit); and to some extent; • Prime Pour l’Emploi (PPE ― a large-scale tax credit scheme designed to encourage part-time or low-paid employment and affecting 9 million households). The RSA encourages the take-up of work by exempting 62 % of any earnings in calculating benefit. Experiments have been conducted in 34 ‘départements’; the scheme has been mainstreamed as from June 2009. The following parameters sketch an overall picture of the scheme: • The RSA scheme is equivalent to a negative income tax. A basic benefit of € 410 (for a single adult) or € 590 (for a couple with no children) applies to claimants who do not work; for those who work, earnings are topped up by an in-work RSA supplement in such a way that 62 % of their net earnings are exempted. The implicit tax rate is set so as to make the benefit expire as the claimant’s earnings approach the poverty threshold (SMIC = approx. € 1 200 gross/ € 950 net). In comparison with the pre-existing schemes, the RSA focuses more on the lowest income group and, above all, strengthens the work incentive component. • 0.8 million households are expected to receive just the basic RSA (at zero earnings level) each trimester, while 1.8 million others would receive the RSA in-work supplement. Among the latter, 400 000 households would earn less than the basic benefit and would therefore receive both the basic and the in-work RSA. Overall, 6.9 million persons will be covered. • As the basic RSA will just replace existing schemes, the additional cost of the RSA will be attributable entirely to the (extra) in-work benefit payments, which will amount to € 1.5 billion per year. Savings on unemployment benefits because of increased employment have not been estimated. One of the explicit aims of the law is also to strengthen the activation pillar of social assistance. The issue of the access to RSA for citizens of other EU Member States demonstrating a real link with the French labour market is under assessment. Evaluations of the RMI system had revealed that only a minority of beneficiaries held a reintegration contract. An objective of the RSA reform is to assign a personal adviser to each household, to adopt a ‘rights and duties’ strategy from day one, and to transfer individuals more effectively into work or other activities.

UK: administrative simplification and stronger work incentives through the universal credit[108] To tackle administrative complexity whilst increasing incentives to work, the UK will progressively introduce from 2013 to 2017 a single Universal Credit. Most means-tested benefits and tax credits for working adults (including Income Support, income-related Jobseeker’s Allowance and Employment and Support Allowance) will be replaced by a single benefit. Claimants will receive just one monthly payment, paid into a bank account in the same way as a monthly salary. Support with housing costs will also go directly to the claimant as part of their monthly payment. The principal aim of Universal Credit is to simplify the system, making it easier for people to understand, and easier and cheaper for staff to administer. Claimants in need of various forms of support will spend less time claiming multiple benefits and can receive one single streamlined payment. People can apply through their local authorities or online, and can manage their claim through an online account. By eliminating multiple benefit applications and improving access, this system is expected to improve take-up of benefits by those who are entitled to them. As the Universal Credit integrates both in- and out-of-work benefits, it seeks to smooth the transitions into and out of work and reduce disincentives to entering the labour market. The reform also aims to increase work incentives through a lower withdrawal rate (65 %) and stricter rules on benefit loss if an individual refuses a job offer. From May 2012, lone parents will be required to actively seek work when their youngest child begins full-time education. A cap on the total amount of benefit that can be claimed could boost incentives to work and generate savings, however declining benefit levels could also translate into increased risk of poverty for claimants. High housing costs will also still mean that households in many areas will continue to face high marginal withdrawal rates up to a relatively high point in the income distribution. Universal Credit has the potential of improving the accessibility of benefits to those entitled to them, though the success of this strategy will depend on its successful administration and proper response to the above challenges. Progress will be monitored on the national and EU level in the framework of the European Semester.

Iceland: Monitoring the Welfare System[109] Early in 2009, the government set up a new body to monitor welfare developments during the crisis, aiming to provide early warning of issues of concern as well as providing guidelines to administrators, government and social organisations in the third sector. The body is called Welfare Watch (WW — see website: http://www.velferdarraduneyti.is/velferdarvaktin). It is based at the Ministry of Social Affairs (later the Ministry of Welfare) and composed of representatives from government (ministries and institutes), municipalities, social organisations and unions. Various subgroups were also formed with the aim of focusing on special areas of concern. It was thus primarily a consultative body with powers to issue guidelines and have influence on detailed policy decisions. The WW has been quite active. It has commissioned reports and assessments of various policy areas, sent out recommendations to targeted actors and reported regularly to government. The WW has focused mainly on the following: · Welfare of children · Problems of young individuals, aged 16-25 · Employment issues and job search · Rationalisation measures of municipalities (esp. related to provision of welfare to the most needy — concerning the last stop in the welfare system) · Social services of local communities · Issues of disabled pensioners (a group traditionally subject to financial hardship and social exclusion) · Position of the elderly · Issues concerning immigrants Welfare Watch has been an important and interesting innovation to emerge during the crisis, directly addressing crisis-related issues. Iceland has a tradition of allowing grassroots voices to be heard and one of WW’s valuable roles has been to channel these voices into bigger awareness-raising movements, with pressure to get issues of local importance aired more generally.

BMS (Bedarfsorientierte Mindestsicherung) in Austria The BMS, a nationwide means-tested minimum income scheme, replaced former Austrian social assistance programmes on 1 September 2010. Its aim is to prevent social exclusion and poverty, strengthen support for those returning to work and to harmonise to a certain degree the various social assistance programmes of the Länder. Today, the nine Länder define minimum income schemes according to the BMS, which may, however, be supplemented by additional regionally defined benefits. The Länder are responsible for the administration and financing of the scheme. In 2012, the gross social assistance rate (including a basic housin