Communication from the Commission to the Council, the European Parliament, the European Economic and Social committee and the Committee of the Regions - Draft joint Report on Social Protection and Social Inclusion {SEC(2005)69}
Date: 2005-01-27
Institutions: European Commission
Subjects: EU Member State, EU policy, marginalisation, poverty, report, social integration, social policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.01.2005 
COM(2005)14 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Draft joint Report on Social Protection and Social Inclusion 

{SEC(2005)69} 

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TABLE OF CONTENTS 

Introduction .............................................................................................................................. 3 

1. 

2. 

3. 

4. 

Social Protection and Social Inclusion: Responding to Change ............................ 3 

Promoting Social Inclusion ....................................................................................... 4 

Pensions and Active Ageing ...................................................................................... 8 

Key Policy Messages .................................................................................................. 9 

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INTRODUCTION 

The Lisbon strategy aims at promoting a model of sustainable development for the Union 
which  raises  the  standard  of  living  of  all  European  citizens  by  combining  economic 
growth  with  a  strong  emphasis  on  social  cohesion  and  the  preservation  of  the 
environment.  In  so  doing,  it  stresses  the  need  to  improve  EU  level  coordination 
mechanisms  in  order  to  foster  consistent  and  mutually  reinforcing  policies  in  the 
economic, employment and social areas.  

While  robust  economic  and  employment  growth  is  a  vital  precondition  for  the 
sustainability  of  social  protection  systems,  progress  in  achieving  higher  levels  of  social 
cohesion  is,  together  with  effective  education  and  training  systems,  a  key  factor  in 
promoting growth. In this context, this first Joint Report on Social Protection and Social 
Inclusion  advocates  efforts  to  modernise  social  protection  systems  through  decisive  and 
credible reform strategies.  

Social  inclusion  and  the  national  strategies  to  fight  poverty  and  social  exclusion  feature 
prominently in the present report, drawing on two rounds of the OMC on social inclusion 
at the level of EU15, plus its successful extension to the 10 new Member States in 2004. 
Pensions are also addressed, although to a lesser extent. The basic input is the 2003 Joint 
report on adequate and sustainable pensions. More recent work by the Social Protection 
Committee  (SPC)  provides  additional  material,  together  with  the  results  of  bilateral 
exchanges between the European Commission and the new Member States held prior to 
their accession. 

This  Joint  Report  is  intended  to  complement  the  Joint  Employment  Report  and  the 
Implementation report of the BEPG so as to present a balanced and integrated view of the 
main challenges Member States have to tackle if they want to reach the ambitious Lisbon 
goals.  It  echoes  the  recommendations  of  the  Report  of  the  High-Level  Group  of 
Independent Experts (Kok Group) on the need for a stronger focus on implementation of 
the Lisbon goals and stronger political commitment at all levels. 

1. 

SOCIAL PROTECTION AND SOCIAL INCLUSION: RESPONDING TO CHANGE 

A high level of social protection affords societies with the means to face adversity and to 
eliminate  and  prevent  the  most  severe  and  inhumane  forms  of  poverty.  Well-designed 
social  protection  systems  also  contribute  to  economic  development  by  providing  a 
favourable  environment  for  economic  growth,  in  which  people  and  businesses  consume 
and  invest  with  confidence;  they  facilitate  structural  change  by  cushioning  workers 
against  the  effects  of  restructuring;  they  also  stabilise  aggregate  demand  throughout 
economic cycles and create favourable conditions for recovery. 

In  order  to  achieve  their  key  role  in  European  society  and  economy,  social  protection 
systems  need  to  be  responsive  to  wider  social  trends.  The  complex  set  of  demographic, 
economic  and  societal  factors  that  have  driven  and  will  continue  to  drive  structural 
changes  across  the  EU  have  put  social  protection  systems  under  pressure  to  adapt  and 
modernise.  

Major shifts in the age structure of the population will have important implications for the 
full  range  of  social  policies.  The  decline  in  the  age  cohort  0-14  underscores  the 
importance of creating a child-friendly environment including adequate support for early 

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development and basic education. Decreasing numbers in the age cohort 15-29 amplifies 
the  importance  of  optimising  transitions  from  school  to  work.  Rapid  growth  in  the  age 
cohort 50-64 greatly raises the importance of active ageing. The increase in those aged 65 
years and over accentuates the urgency of making adequate pensions sustainable. Finally, 
the expansion of the age cohort 80+ will result in a progressive rise of the need for age-
related health and long-term care. 

Higher net immigration could help address the imbalance arising from such demographic 
changes  by  offsetting  labour  supply  shortages  and,  in  the  context  of  pension 
reforms,improving the financial sustainability of pension systems. Yet, societies will only 
reap such potential benefits if they create the necessary conditions for the integration of 
immigrants  into  the  formal  labour  market  and  if  they  learn  to  manage  inter-cultural 
tensions  and  are  able  to  break  down  barriers  to  the  economic  and  social  integration  of 
immigrants.1 

Demographic  changes  are  compounded  by  wider  changes  in  cultural  values,  social 
relationships, the organisation of families and the nature of work.  

Social demands have become more sophisticated and diversified, with a growing concern 
for  quality  of  life  and  work-leisure  balance.  Individual  choice  has  gained  importance. 
Diversity  has  an  important  ethnic  dimension,  particularly  in  the  big  urban  centres.  The 
increased  feminisation  of  the  labour  force  is  reflected  in  new  social  demands  (e.g.,  for 
care  facilities  for  children,  elderly  and  dependent  people)  and  in  a  new  basis  for  the 
division  of  responsibilities  within  the  household.  Notable  changes  in  family  structures 
have taken place, in terms both of a reduction of household sizes and increasing diversity 
–  driven  by  lower  rates  of  partnership  formation  and  higher  rates  of  dissolution.  As  a 
consequence, family links are weakening and, in cases of need, more people have to rely 
on  alternative  forms  of  support.  Finally,  the  working  environment  has  become  far  more 
volatile and heterogeneous. The increasing demand for advanced skills co-exists with the 
creation of many low productivity jobs. 

In this changing context, social protection systems need to be shaped so as to respond to 
the economic and social needs of the future. Social inclusion policies, for instance, are not 
only  important  to  prevent  and  combat  poverty  but  may  also  contribute  to  increasing 
labour  supply,  through  developing  people's  capacity  to  work  and  a  judicious  use  of  the 
“make work pay” principle. Reforms to ensure sustainable and adequate pensions should 
aim  at  providing  the  right  incentives  both  for  workers  to  stay  active  longer  and  for 
employers to hire and retain older workers. Accessible, quality and sustainable health care 
systems  play  a  vital  role  not  only  in  combating  disease  and  vulnerability  to  social 
exclusion but also in maintaining a productive workforce.  

2. 

PROMOTING SOCIAL INCLUSION 

2.1. 

The situation of social inclusion in the 25 Member States 

The fight against poverty and social exclusion remains a major challenge for the European 
Union  and  its  Member  States.  The  numbers  affected  by  poverty  and  social  exclusion 
across  the  Union  are  very  significant,  with  more  than  68  million  or  15%  of  the  EU 

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the  Commission'  proposal  for  an 

See 
COM(2004)881, "Green paper on an EU approach to managing economic migration".  

in-depth  discussion  on  economic  migration 

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population living at risk of poverty in 2002. They range from 10% or less in the Czech 
Republic,  Sweden,  Denmark,  Hungary  and  Slovenia  and  20%  or  more  in  Ireland,  the 
Slovak Republic, Greece and Portugal.  

The  risk  of  poverty  tends  to  be  significantly  higher  for  the  unemployed,  single  parent 
households (mainly headed by women), older people living alone (also especially women) 
and  families  with  several  dependants.  Children  tend  to  experience  higher  levels  of 
poverty: children who grow up in poverty are more likely to suffer from poorer health, do 
less well educationally and are at higher risk of future unemployment and of anti-social 
behaviour.  There  is  also  evidence  of  a  link  between  environmental  pollution  and  social 
deprivation.  

The measure of poverty risk only shows part of the picture and recent data illustrate the 
extent  of  material  deprivation  particularly  in  those  countries  with  significantly  lower 
levels of the national poverty threshold.  

Poverty and material deprivation are often compounded by an inability to participate fully 
in social life, as a result of an inadequate access to employment, education and training, 
housing, transport or healthcare.  

Employment is a key factor for social inclusion, not only because it generates income but 
also because it can promote social participation and personal development and contributes 
to maintaining adequate living standards in old age through the accrual of entitlement to 
pension  benefits.  Shifting  from  unemployment  to  employment  considerably  lowers  the 
likelihood  of  being  exposed  to  the  risk  of  poverty;  furthermore,  the  well-being  of  the 
unemployed or the inactive of working age is even more at risk if there is no income from 
work within the household.  

Available  statistical  evidence  at  EU  level  on  poverty  and  social  exclusion  still  does  not 
cover some of the most exposed groups. The NAPs/inclusion highlight that immigrants, 
ethnic minorities and the Roma, people with disabilities, the homeless, victims of people 
trafficking,  people  in  or  leaving  care  institutions  and  subsistence  farmers  face  very 
particular  risks.  Also  important  is  the  concentration  of  disadvantage  in  particular 
communities  and  geographic  areas,  both  urban  and  rural,  where  people  are  confronted 
with deep-seated factors of exclusion that tend to be transmitted across generations.  

The  years  immediately  preceding  the  set-up  of  the  new  strategy  have  witnessed  a  trend 
reduction in the level of relative poverty, with the average for the EU (15 Member States) 
declining from 18% in 1995 to 15% in 2000. This can be attributed to a large extent to the 
significant  improvement  of  the  labour  market  situation.  There  is  now  the  clear  risk  that 
the  recent  economic  slowdown,  accompanied  by  rising  unemployment  and  fewer  job 
opportunities,  puts  more  people  at  risk  of  poverty  and  social  exclusion  and  worsens  the 
position of those who are already affected. 

The challenge is even greater in many of the new Member States, where rapid economic 
growth  is  underpinned  by  widespread  industrial  and  agriculture  restructuring,  which,  if 
not  flanked  by  appropriate  social  inclusion  policies,  may  result  in  rising  numbers  of 
people at risk of poverty. 

2.2. 

Key policy priorities 

A positive result of the social inclusion process has been the emergence of greater clarity 
as to the key policy priorities for tackling poverty and social exclusion, as reflected in the 

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policy approaches being adopted by Member States. Seven key policy priorities stand out 
across the Union: 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Increasing  labour  market  participation:  Seen  as  the  most  important  priority  by 
most Member States, this translates into expanding active labour market policies 
and  ensuring  a  better  linkage  between  social  protection,  lifelong  learning  and 
labour market reforms so that they are mutually reinforcing. 

Modernising  social  protection  systems:  This  means  ensuring  that  sustainable 
social  protection  schemes  are  adequate  and  accessible  to  all  and  that  benefits 
aimed at those who are able to work provide effective work incentives as well as 
enough security to allow people to adapt to change.  

Tackling  disadvantages  in  education  and  training:  Emphasis  is  being  laid  on 
preventing  early  departure  from  formal  education  and  training;  facilitating  the 
transition  from  school  to  work,  in  particular  of  school  leavers  with  low 
qualifications;  increasing  access  to  education  and  training  for  disadvantaged 
groups  and  integrating  them  into  mainstream  provision;  promoting  lifelong 
learning,  including  e-learning,  for  all.  Many  recognise  the  need  to  invest  more, 
and more efficiently, in human capital at all ages. 

Eliminating  child  poverty:  This  is  seen  a  key  step  in  combating  the 
intergenerational  inheritance  of  poverty.  Particular  focus  is  given  to  early 
intervention  and  early  education  in  support  of  disadvantaged  children;  and 
enhancing income support and assistance to families and single parents. Several 
countries also put increasing emphasis on promoting the rights of the child as a 
basis for policy development. 

Ensuring  decent  accommodation:  In  some  Member  States  attention  is  being 
given to improving housing standards; in others, to the need to address the lack 
of  social  housing  for  vulnerable  groups.  Several  Member  States  are  developing 
more integrated approaches to tackling homelessness. 

Improving  access  to  quality  services:  This  includes  improving  access  to  health 
and  long  term  care  services,  social  services  and  transport,  improving  local 
environments, as well as investing in adequate infrastructure and harnessing the 
potential of new, accessible ICT for all.  

Overcoming  discrimination  and  increasing  the  integration  of  ethnic  minorities 
and  immigrants:  The  fight  against  high  levels  of  exclusion  experienced  by 
specific groups, especially the Roma, involves a mixture of increasing access to 
mainline  services  and  opportunities,  enforcing  legislation  to  overcoming 
discrimination  and  developing 
to  address  particular 
situations. 

targeted  approaches 

In pursuing these priorities, Member States need to develop integrated and co-ordinated 
strategies at local and regional levels and especially in those urban and rural communities 
facing multiple disadvantages. Such strategies should adapt policies to the local situation 
and  involve  all  relevant  actors.  It  will  also  be  essential  to  ensure  that  gender  is 
mainstreamed throughout these priorities with a view to promoting gender equality. 

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2.3. 

Strengthening the social inclusion process 

The  development  and  implementation  of  NAPs/inclusion  by  all  Member  States  clearly 
shows the intention to increase efforts to tackle poverty and social exclusion. In particular, 
the strong political commitment demonstrated by the EU10 Member States has given new 
impetus to the process and, more generally, underlines the relevance of the OMC. 

The  approach  adopted  by  the  Member  States  varies  widely  depending  on  the  initial 
situations,  the  welfare  regime  and  the  experience  of  developing  anti-poverty  strategies. 
Most Member States have developed a comprehensive approach to tackling poverty and 
exclusion  covering  a  wide  range  of  policy  fields.  Institutional  arrangements  for 
mainstreaming  social  inclusion  concerns  into  national  policy  making  are  being 
strengthened.  More  attention  is  being  paid  to  the  co-ordination  of  different  government 
departments  and  levels  so  as  to  achieve  a  more  integrated  response.  Finally,  increased 
attention  is  being  paid  to  encouraging  the  participation  of  key  stakeholders  (social 
partners, NGOs and enterprises). 

Overall the OMC on social inclusion has made a useful contribution to date and provides 
a good basis for further action. The Community action programme on social exclusion has 
contributed significantly in this regard by promoting studies, peer reviews, transnational 
exchange  projects  and  EU  level  networking.  However,  it  is  also  clear  that  if  the  social 
inclusion process' overall aim of making a decisive impact on the eradication of poverty 
by 2010 is to be achieved, much more will be needed both at national and at EU level. In 
this regard Member States should: 

– 

– 

– 

– 

Establish stronger links with economic and employment policy: Such links need 
to  be  strengthened,  most  notably  by  introducing  greater  transparency  on  the 
budgetary  resources  necessary  to  achieve  the  objectives  and  targets  set  in  the 
NAPs/inclusion  and  on  how  Structural  Funds  are  being  used  to  address  social 
inclusion goals. 

capacity: 

implementation 

Strengthen 
strengthening 
administrative  and  institutional  capacity  –  including  social  protection  systems, 
social services and instruments for assessing gender mainstreaming -, better co-
ordination  across  different  Government  branches  and  levels  (i.e.,  national, 
regional, local); improving mechanisms for involving stakeholders. 

this  will 

include 

Focus  on  key  issues  and  set  more  ambitious  targets:  The  process  would  be 
significantly  strengthened  by  Member  States  identifying  the  issues  that  are 
crucial  for  them  and  setting  quantified  outcome  targets  for  each  of  these. 
Progress  towards  their  achievement  should  then  be  monitored  and  reported  on. 
Member States who are lagging behind in certain areas could usefully  consider 
the performance of the best performing Member States as a benchmark. 

Strengthen  monitoring  and  evaluation  of  policies:  A  key  to  better  delivery  will 
be  putting  in  place  more  effective  arrangements  for  monitoring  and  evaluating 
policy  impact,  involving  all  stakeholders  including  the  social  partners,  and 
developing more timely and relevant data.  

At the EU level, the Commission and the Council should: 

– 

Strengthen  the  mainstreaming  of  social  inclusion  objectives  across  all  EU 
policies: Taking social inclusion into account in the design and implementation 
of EU policies is essential for ensuring that they are supportive of national efforts 
to promote social inclusion. This will be assisted by enlarging the OMC to health 

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– 

– 

– 

care  and  long-term  care,  aiming  to  ensure  accessible,  quality  and  sustainable 
systems. 

Make greater use of the OMC's potential to contribute to effective delivery: The 
exchange  of  good  practice  needs  to  be  supplemented  by  a  transparent 
identification of good and bad practice in order to be of effective use for Member 
States  in  policy  making.  The  common  indicators  should  play  a  key  role  in  this 
regard. 

Ensure  that  Structural  Funds  continue  to  play  a  key  role  in  promoting  social 
inclusion: The potential contribution of the Structural Funds, especially the ESF, 
to  address  poverty  and  social  exclusion,  needs  to  be  enhanced  and  fully 
exploited. This key role will need to be taken into account in the debate on the 
future financial perspectives for 2007-2013. 

Further  develop  common  indicators  and  enhance  data  sources:  In  spite  of 
improvements to indicators and the underlying statistical capacity, most notably 
through  the  launch  of  EU-SILC,  there  are  still  gaps  in  the  timeliness  and 
relevance  of  data  that  hamper  comparative  analysis.  There  is  in  particular  the 
need  to  better  capture  the  multi-dimensional  nature  of  social  exclusion  and 
poverty. 

3. 

PENSIONS AND ACTIVE AGEING 

3.1. 

The sustainability and adequacy challenge to pension systems 

Member  States  have  long  been  aware  of  the  consequences  of  demographic  ageing  for 
their  pay-as-you-go  pension  systems  and  are  now  also  realising  the  challenges  that  it 
poses  to  funded  schemes  as  well.  This  requires  credible  reforms  aimed  at  securing 
adequate  future  benefits  in  a  financially  sustainable  way.  In  the  context  of  the  Lisbon 
strategy, the OMC on pensions was developed to promote such reform efforts centred on 
three  major  strands  of  common  objectives:  adequacy,  financial  sustainability  and 
modernisation so as to accommodate changes in society. 

The  first  Joint  Report  on  adequate  and  sustainable  pensions  showed  that  most  EU15 
Member States have already made significant progress in curbing future trends in public 
pension  expenditure.  Since  then,  a  number  of  Member  States  have  adopted  further 
reforms. The next round of national strategy reports will carry out a fresh assessment of 
progress achieved, including in the EU10 Member States.  

The  Joint  Report  stressed  the  inseparable  nature  of  sustainability  and  adequacy.  Future 
pension systems can (continue to) provide adequate pensions only if they are financially 
sustainable  and  if  they  are  well  adapted  to  the  changing  societal  context;  conversely,  if 
pension systems fail to provide adequate incomes to the retired, there will be additional 
costs, for instance in the form of increased social assistance spending. A major challenge 
will therefore be to achieve financial sustainability without jeopardising adequacy.  

The  joint  report  noted  that  many  reforms  aimed at  curbing  future  expenditure  rises  also 
included measures to prevent poverty by strengthening minimum income guarantees for 
older  people.  Some  of  the  reforms  will  translate  into  significant  declines  in  the 
replacement  rates  from  statutory  pension  schemes,  which  could  imply  major  adequacy 
problems  in  the  future  only  if  Member  States  do  not  respond  by  encouraging  people  to 
retire later and by making supplementary pension provision more accessible.  

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3.2. 

Two  main  policy  responses:  longer  working  lives  and  increased  private 
provision 

The modernisation of social protection systems can help to promote later retirement. It is 
important that pensions are only paid before the standard retirement age or before having 
fulfilled the standard working career to people who are genuinely unable to earn a living 
or who accept an actuarial reduction of their pension. At the same time, pension systems 
should  offer  opportunities  to  earn  higher  pension  entitlements  by  working  longer.  Thus 
raising the effective retirement age represents the key tool for reconciling adequacy and 
financial sustainability. 

A  study  by  the  SPC  showed  that  the  main  early  labour  market  exit  pathways  –  in 
particular early retirement schemes, unemployment benefits and invalidity benefits – are 
being  critically  reviewed  in  most  Member  States.  At  the  same  time,  more  opportunities 
for  achieving  higher  incomes  to  pensioners  are  being  offered,  by  granting  pension 
increments for deferring retirement or by allowing the combination of earned income with 
a  pension  (gradual  retirement  or  part-time  working  after  retirement).  However,  there  is 
still much scope for reform in many Member States.  

The  SPC  is  also  examining  the  role  of  privately  managed  pension  provision.  Most 
Member States expect private provision through occupational or personal schemes to play 
a  more  important  role  in  the  future,  although  public  schemes  will  remain  the  most 
important source of pensioners’ income in all but a few countries. Private provision can 
increase the complexity of pension systems, both at an aggregate level and at the level of 
individuals.  This  will  require  the  development  of  comprehensive  information  and 
monitoring  systems,  clarifying  the  links  between  private  provision  and  public  finances, 
notably through the tax treatment of private schemes, and the interaction between private 
pension  benefits  and  public  income  guarantees  for  pensioners.  Information  is  also 
extremely  important  for  individuals,  enabling them  to  make  difficult  choices  with  long-
term consequences on their incomes and living standards.  

3.3.  Modernising pension systems 

Adequate and equitable pensions for all can only be achieved if pension schemes are well 
adapted to the evolving needs of individuals. They need to take into account the greater 
diversity  of  employment  patterns  and  the  desire  for  greater  gender  equality.  Moreover, 
governance issues need to be considered, in particular the need to base reforms on sound 
information and a solid consensus.  

The modernisation of pensions and, more generally, social protection systems must also 
be seen as a crucial element for achieving the goals of the Lisbon strategy. Responding to 
the challenge of ageing calls for a review of the traditional life cycle patterns, with phases 
devoted to learning, working and caring becoming less distinct. Social protection systems 
have to accommodate such changes and allow and encourage people to make the most of 
the opportunities generated by a dynamic economy and labour market.  

4. 

KEY POLICY MESSAGES 

•  Improving social protection adequacy is essential for growth and employment 
as  well  as  for  social  cohesion.  Extending  working  lives  and  raising 
employment  levels  should  remain  key  drivers  of  the  modernisation  of  social 
protection.  Conversely  through  responding  to  the  evolving  needs  of 

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individuals  over  the  life  cycle,  social  protection  systems  will  facilitate  the 
management of new risks.  

•  At EU level, the planned extension to health care and the streamlining of all 
social protection and social inclusion processes in 2006 should be used to put 
stronger  focus  on  implementation  and  synergies  across  the  area  as  a  whole. 
This should be done while respecting the specificity of each strand - inclusion, 
pensions, health and long term care - within the OMC for social protection. 

•  In  the  area  of  social  inclusion,  the  results  gathered  so  far  suggest  that  both 
perseverance and ambition are justified. Perseverance will be needed, because 
tackling  the  roots  of  poverty  and  exclusion  will  require  concerted  effort 
beyond  2010;  ambition,  because  the  process  of  collective  action  by  all 
stakeholders across the EU is now firmly anchored.  

•  While policies for social inclusion must adapt to the diversity of challenges in 
the Member States, the key requirement for multi-faceted approaches remains 
a priority. The work undertaken to date confirms the relevance of several key 
policy  priorities.  Focussing  on  these  will  help  to  address  some  of  the  most 
pressing issues like preventing child poverty, supporting the caring capacity of 
families,  addressing  gender  inequalities,  tackling  homelessness  and  opening 
new routes to integration of ethnic minorities and migrants. 

•  The  forthcoming  evaluation  process,  to  take  place  in  2005,  should  focus  on 
delivery  in  order  to  prepare  for  a  new  cycle  of  the  OMC  after  2006.  The 
Member  States  and  the  Commission  should  particularly  assess  how  national 
strategies can be made more effective by the use of targets, benchmarks and 
indicators,  better  links  with  economic  and  employment  policies,  effective 
monitoring and evaluation provisions and the use of the structural funds and 
the European Social Fund. The extent to which national strategies have been 
able  to  involve  local  and  regional  government,  social  partners  and  other 
stakeholders, and to contribute to raising awareness about the critical issue of 
poverty and social exclusion should also be reviewed.  

•  Bringing  back  people  to  work,  maintaining  workers  in  employment, 
increasing employability and labour market participation are key for achieving 
the goals of competitiveness, employment and social inclusion of the Lisbon 
strategy.  The  latter  still  faces  huge  challenges  in  an  enlarged  Union, 
considering the situation of the most excluded from the labour market. On the 
basis of the lessons drawn from the OMC on inclusion and from the European 
Employment  Strategy,  the  Commission  should  consult  in  2005  the  social 
partners, the Member States and all relevant stakeholders on whether and how 
further action at EU level could be needed for addressing those challenges. 

•  In the area of pensions, maintaining older workers in employment stands as a 
key  challenge  across  the  European  Union.  It  should  be  given  priority  in  the 
process  of  reforms  to  secure  the  future  adequacy  and  financial  sustainability 
of  pension  systems.  Rising  life  expectancy  will  demand  further  increase  in 
labour  market  exit  ages,  implying  the  progressive  removal  of  various 
incentives for early retirement. Member States should assess the role of social 
protection systems in promoting longer working lives. 

EN 

10 

   EN