Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Proposal for the Joint Report on social protection and social inclusion 2008 {SEC(2008) 91}
Date: 2008-01-30
Institutions: European Commission
Subjects: EU employment policy, health policy, pension scheme, poverty, report, social integration, social policy, social security

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.1.2008 
COM(2008) 42 final 

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

Proposal for the Joint Report on Social Protection and Social Inclusion 2008 

{SEC(2008) 91} 

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KEY MESSAGES 

- Social and economic policies can and should be mutually supportive. In recent years social 
protection reforms and active inclusion policies have contributed to higher growth and more 
jobs. Still, more needs to be done to ensure that the improved economic framework translates 
into advantages also for those at the margins of society. Preventing and tackling poverty and 
social exclusion through further modernisation of social protection in a framework of sound 
fiscal  policies  ,  combining  both  social  adequacy  and  economic  sustainability,  is  therefore 
fundamental to Europe’s sustainable development. More generally, integrated policies – also 
mainstreaming  gender  equality  -  must  be  pursued  taking  into  account  the  objective  of  fully 
including  the  most  vulnerable  in  society.  Sustained  efforts  will  be  required  during,  and 
beyond, the next cycle of the Lisbon strategy. 

- Employment rates have risen for all categories of older workers. Active inclusion measures, 
pension  and  labour  market  reforms  have  improved  incentives  to  work  but  still  more  people 
need to work. Furthermore, they should stay economically active longer. Together with efforts 
to  improve  productivity  this  will  contribute  to  a  sounder  base  for  social  protection  systems 
and  adequacy  and  sustainability  of  pensions.  In  particular,  pension  reforms  can  promote 
active  ageing  by  raising  employability,  reducing  early  retirement  schemes,  increasing 
flexibility  in  retirement  and  strengthening  incentives  to  work  longer,  provided  that  labour 
markets are opened up to older workers. 

- Whereas pension reforms are well under way, they need to be monitored regularly as regards 
their  impact  on  future  adequacy,  poverty  risk  and  sustainability.  Awareness  of  the  risks 
associated with different pension schemes should be raised, promoting informed choices. 

- Out of the 78 million Europeans living at risk of poverty, 19 million are children. Ensuring 
equal opportunities for all, and successful educational outcomes for each child, is required in 
order  to  break  the  transmission  of  poverty  and  exclusion  to  the  next  generation.  Here 
inclusion  and  anti-discrimination  policies  need  to  be  reinforced,  not  least  in  relation  to 
immigrants and their descendants and to ethnic minorities. 

-  When  children  are  poor,  it  is  because  they  live  in  jobless  households  with  insufficient 
income  support  or  because  their  parents'  jobs  do  not  pay  sufficiently  to  prevent  or  address 
poverty. Therefore the implementation of balanced, comprehensive active inclusion strategies 
is an indirect but major element in promoting well-being of children and young people. The 
appropriate  balance  must  be  struck  between  helping  families  and  targeting  children  in  their 
own  right.  The  best  performers  target  the  most  disadvantaged  children  within  a  broader 
universal approach. 

- Social policies have a major impact on health and health is an important determinant of life 
chances.  Action  is  necessary  to  reduce  persistent  and  important  inequalities  in  health 
outcomes. Interventions need to adopt a health-in-all policies approach; social protection can 
ensure  equitable  access  to  healthcare  and  prevention  according  to  need,  including  the  most 
difficult to reach. 

-  Needs  for  long  term  care  are  rising.  Member  States  are  committed  to  increasing  access  to 
quality  services.  The  right  balance  needs  to  be  struck  between  public  and  private 
responsibilities and formal and informal care. Provision in a residential or community setting 
is preferred to institutional care but for many Member States providing such quality services 

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remains a challenge. The same goes for improved care coordination and ensuring support for 
informal carers. 

- The first cycle of the streamlined open method of coordination (OMC) has shown that the 
common social objectives agreed in 2006 have assisted the Member States in designing their 
policies.  Aiming  at  long  term  goals,  they  remain  valid  now  and  their  continuous 
implementation is crucial to the success of the Lisbon strategy.  

-  Focusing  on  key  themes  in  2007  was  an  innovation  in  the  OMC.  It  has  increased 
understanding,  promoted  mutual  learning  and  encouraged  better  monitoring  and  more 
focussed  reporting.  Member  States  and  the  Commission  will  implement  refined  working 
methods for reinforced delivery on European and national Strategies with a view to the 2008-
2011 OMC cycle and beyond. 

1. 

INTRODUCTION 

After  reforms  under  the  Lisbon  strategy,  growth  has  picked  up  and  jobs  are  being  created 
while unemployment is being reduced across Europe. Positive effects on social cohesion are 
visible,  e.g.  in  decreasing  long-term  unemployment.  Gender  gaps,  though  also  decreasing, 
generally remain considerable. The employment rate of older workers is now nearly 44% in 
the EU (34.8% for women, 52.6% for men); 9 countries have reached the 2010 target of 50%. 
Social  protection  reforms  and  social  inclusion  policies  are  starting  to  pay  off:  they  promote 
social cohesion directly but also support growth by enhancing labour supply and by making 
fiscal positions more sustainable. The funding of social protection is subject to a broadening 
of the financing base from labour taxation to other types of taxes. Optimising the quality of 
social spending is necessary to maintain adequate levels of social protection and sound public 
finances. 

But healthy growth and job creation do not automatically improve the situation of those most 
marginalised  within  our  societies.  Having  a  job  represents  the  best  chance  of  avoiding 
exclusion,  but  it  is  not  always  a  guarantee.  Some  8%  of  EU  citizens  live  at  risk  of  poverty 
despite being employed. Even in buoyant labour markets the share of jobless households can 
remain unaffected and some find themselves stuck in a cycle of low pay/no pay. Looking at 
the population overall, some 16% of EU citizens, i.e. almost 80 million people, are at risk of 
income poverty, with women more likely to be exposed. In most Member States children and 
young people are among the vulnerable groups facing an even higher risk. 

The  2007  Joint  Report  examined  the  first  set  of  national  strategic  reports  addressing  in  an 
integrated way policies dealing with social inclusion, pensions and health and long-term care1. 
The reports illustrated how joint consideration of all the objectives and a more strategic and 
focussed approach improves policy effectiveness and the quality of public spending. 2007 was 
a year without national reporting allowing for a focus on specific themes underlining the long-
term dimension of the European strategy. Section 2 summarises lessons learnt on the selected 
themes  while  section  3  looks  at  the  way  forward.  2007  also  marked  the  start  of  a  new 
programming  period  for  the  Structural  Funds  (SFs).  Most  Member  States  have  made 
significant efforts to use the SFs to target not just the "Growth and Jobs" priorities but also the 
common social objectives. For the European Social Fund (ESF) budget for 2007-2013, almost 

1 

In the course of 2007 some Member States have updated their strategies: AT, FR, NL, RO, FI, SE, SI 
and the UK 

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€10 billion will be spent directly on the social inclusion priority, i.e. 12.4% of the total. Apart 
from  this  direct  allocation,  other  ESF  activities  will  support  the  inclusion  of  disadvantaged 
people.  The  European  Regional  Development  Fund  (ERDF)  will  also  make  a  significant 
investment,  some  €17  billion,  in  social  infrastructure  (education,  health,  childcare,  social 
housing). Member States are drawing on the SFs to effectively complement national, regional 
and local funding and activities. 

A more detailed assessment across themes and a comprehensive analysis of the use of the SFs 
for the common social objectives2 are provided in the Supporting Document. 

2. 

MUTUAL INTERACTION BETWEEN THE OPEN METHOD OF COORDINATION AND THE 
LISBON STRATEGY FOR GROWTH AND JOBS  

The  March  2007  European  Council  stressed  that  the  common  social  objectives  of  the  EU 
should be better reflected within the Lisbon agenda. The Informal Council echoed the need to 
improve the integration and visibility of social priorities within the broader European strategic 
reform framework. Ministers emphasised that one of the most important tools for EU progress 
in  employment  and  social  issues  is  the  coordination  of  policies,  fundamental  both  for 
improving  the  quality  of  policies  and  for  advancing  towards  common  goals.  The  Social 
Protection Committee (SPC) responded by mandating a working group to identify examples 
of  positive  mutual  interaction  between  the  common  social  objectives  and  those  of  greater 
economic growth and more and better jobs. 

The report of the working group highlighted how economic, employment and social policies 
are closely inter-related and mutually supportive. Well-designed social protection systems and 
social  inclusion  policies  are  productive  factors  contributing  considerably  to  the  economic 
achievements of each Member State. Ongoing pension and healthcare reforms have a positive 
impact  both  on  the  sustainability  of  public  finances  and  on  labour  market  behaviour. 
Successful  action  on  healthcare  improves  quality  of  life  and  productivity.  Comprehensive 
active  inclusion  policies  for  those  furthest  away  from  the  labour  market  enhance  human 
capital  and  labour  supply  while  also  strengthening  society’s  cohesiveness.  Increasing  well-
being of children and youngsters helps future generations develop to their full potential hence 
enabling them to contribute more to society and to the economy.  

2.1. 

Efforts to reduce child poverty  

At  19%,  the  risk  of  poverty  among  children  in  the  EU  is  higher  than  that  of  the  general 
population.  The  rate  approaches  30%  in  the  worst  affected  countries.  About  10%  of  all 
children  live  in  households  where  nobody  works  and  60%  of  those  are  at  risk  of  poverty. 
Despite overall progress in the labour market, this figure has remained unchanged since 2000. 
When both parents work, only 7% of children are at risk of poverty, but the rate reaches 25% 
when only one parent works. Other factors, coupled with low work intensity, include living 
with  only  one  parent  or  in  a  large  family.  On  average  social  transfers  reduce  the  risk  of 
poverty  among  children  by  44%.  Child  poverty  results  from  a  complex  interaction  between 
these factors. The best outcomes tend to be achieved by countries addressing the issue on all 
fronts and striking an appropriate balance between targeting the family and targeting the child 
in its own right. This entails combining strategies to increase parents’ access and attachment 

2 

Some  other  EU  financial  instruments  such  as  the  European  Agricultural  Fund  for  rural  development 
also contribute to social inclusion. 

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to  employment  with  enabling  services  and  with  income  support  that  minimise  the  risk  of 
creating  trap  effects.  Success  requires  these  measures  to  form  a  well-balanced  policy  mix  – 
focused on early intervention, adequately resourced and underpinned by clear objectives and 
targets.  

If  children  are  poor,  it  is  generally  because  they  live  in  poor  households.  Improving  the 
material  situation  of  children  involves  increasing  family  income  through  direct  support  – 
either financial or in form of provision of basic social services – as well as through measures 
to facilitate the access of both parents to the labour market. Reconciliation between work and 
family life can play a major role, for instance through enhancing the quality and quantity of 
child  care  provision.  However,  any  action  to  strengthen  parents'  link  to  the  labour  market 
must  be  accompanied  by  measures  to  ensure  that  those  lacking  capacity  or  opportunity  to 
work  receive  sufficient  support  to  enable  them  and  their  families  to  live  in  dignity.  The 
incidence of children living at risk of poverty even when parents work highlights the need for 
better  quality  jobs,  an  environment  encouraging  job  retention  and  opportunities  for  career 
progression. In this context, it is encouraging in this context to see the strong emphasis given 
to  Active  Inclusion  in  Member  States'  proposals  for  use  of  ESF  to  address  obstacles  to 
participation facing disadvantaged people. 

The  best-performing  Member  States  ensure  an  appropriate  combination  of  universal  and 
targeted benefits. Universal measures create a generally favourable environment for families, 
are  not  conducive  to  trap  effects  and  do  not  carry  stigma.  However,  targeted  benefits, 
designed  so  as  not  to  discourage  work,  are  also  required  to  reach  those  most  in  need. 
Education  can  play  a  vital  role  in  compensating  for  socio-economic  disadvantage  and  in 
effectively paving the way for a child's successful development. Member States recognise the 
need to ensure equal opportunities for all children with respect to childcare and pre-schooling, 
while preventive measures are increasingly being adopted to tackle early school leaving. 

Nonetheless, more measures are needed to address the risk of social exclusion facing children 
and  young  people  suffering  from  multiple  disadvantages,  such  as  Roma  children,  often 
particularly  marginalised.  Targeted  education  programs  which  focus  on  such  disadvantaged 
groups and elicit the active cooperation of parents should be increasingly supported. 

The widespread social exclusion of young people who spend their childhood in institutional 
care  remains  a  serious  problem.  In  many  Member  States,  a  move  is  discernible  towards 
placing children in foster care, with the aim of providing a family environment, rather than in 
institutional  care.  This  is  only  one  of  many  areas  with  scope  for  policy  development  and 
mutual  learning  (assessment  and  training  of  foster  carers,  recruitment  to  cater  for  the 
envisaged increase in placements, etc.). 

National quantitative targets combined with strong political commitment can foster progress 
in implementation. Proper monitoring is crucial, and mechanisms are being established to this 
end, when not already in place. But it is essential to recognise that the situation of the most 
vulnerable  children,  e.g.  institutionalised  or  street  children,  cannot  be  monitored  using 
standard survey tools, but requires specific monitoring instruments. The SPC has endorsed a 
proposed set of recommendations for improved analysis and monitoring on the basis of work 
prepared by the ISG taskforce on child poverty and child well-being. 

Finally,  there  are  unexploited  synergies  between  anti-poverty  strategies,  children's  rights 
policies and efforts to fight discrimination. It is recognised that child poverty has to be seen in 

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broad  terms,  going  beyond  financial  poverty,  considering  e.g.  material  deprivation,  lack  of 
social participation and exposure to risks, including behavioural risks. 

2.2. 

Promoting longer working lives 

Extensive structural labour market and pension reforms have taken place in most countries in 
the past decade and still continue in some Member States. They build on a life-cycle approach 
by  strengthening  the  link  between  pension  contributions  and  benefits  and  on  active  ageing 
strategies  by  reducing  access  to  early  retirement  schemes,  strengthening  incentives  to  work 
longer and improving the employability of older workers. They need to be complemented by 
flexicurity measures along the life cycle to improve both the quantity and the quality of jobs 
particularly for those with less stable careers, low pay and difficulties to acquire an adequate 
pension.  Those  taking  up  early  exit  benefits  often  represent  around  20%  of  the  population 
aged  55-64.  Reducing  this  take-up  can  thus  make  a  major  contribution  to  longer  working 
lives. 

The recent improvement in the employment rates of those aged 55-64 benefits all categories 
of workers, including the low skilled. The ongoing reforms of early exits schemes should also 
focus on this group. 

Most Member States are engaged in reforms to reduce take-up of early exit benefits, focusing 
on the design of unemployment and early retirement benefits and access to disability pensions 
and rehabilitation. Some are also reviewing taxation and the design of private pensions. 

Key  aims  in  these  reforms  are  to  restrict  eligibility  conditions  while  creating  an  adequate 
framework  for  older  workers’  continued  participation  in  the  labour  market,  allowing  for 
exceptions in the case of particularly demanding or hazardous jobs; to increase incentives to 
work longer for employees and to hire or retain older workers for employers; and to enhance 
work  opportunities  for  the  disabled  and  low  qualified  by  improving  working  conditions, 
validating  non-formal  learning  and  providing  opportunities  for  skills  upgrading,  including 
ICT skills, retraining and life-long learning, often drawing on ESF funding. 

In some Member States, however, the take-up of early exit benefits is still increasing. More 
systematic reforms are thus needed to significantly reduce the period between the end of the 
last job and the take-up of statutory pension. Most measures reinforce the expected decrease 
in  future  public  pension  provision  at  a  given  age,  and  hence  increase  concerns  regarding 
future adequacy. The appropriate response is to ensure that more people work and that they 
work longer, which requires active efforts to reduce discrimination  against older workers in 
the  labour  market.  It  also  highlights  the  importance  of  complementary  private  pension 
provision. 

2.3. 

Securing privately funded pension provision 

Privately funded pension schemes are of growing importance. This generally means a shift in 
the sharing of risks between beneficiaries, governments, sponsoring undertakings and pension 
funds, which needs to be well evaluated and accompanied by appropriate regulation. 

The full impact on the adequacy of future pensions is not easy to assess and depends on the 
size  of  contributions  diverted  to  funded  schemes  and  on  their  actual  coverage.  While  fuller 
and more productive employment increase coverage of workers having less access to private 
pensions, specific policy measures seem necessary to increase coverage currently at 50-60% 
on  average  to  ensure  that  the  whole  working  population  will  accumulate  sufficient  private 

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pension rights – an objective set by many Member States. Future pension benefits will also 
depend  on  real  returns  on  accumulated  capital  as  well  as  actual  costs  and  fees  –  which  can 
affect lower pensions to a greater extent. 

In  those  Member  States  introducing  greater  reliance  on  private  pension  provisions  the 
mechanisms for transition are still in evolution. Moreover elements such as the age at which it 
is mandatory to join the statutory funded schemes, the treatment of non-contributory periods, 
indexation  rules,  the  design  of  guarantees  and  retirement  ages  can  have  a  strong  impact  on 
future pension benefits. 

But  funded  schemes  also  need  to  adapt  to  the  increase  in  life  expectancy.  With  increased 
reliance on funded pensions, the government's role needs to be clearly defined. This involves 
the definition of pay-out conditions, appropriate supervision, public information and financial 
literacy. 

2.4. 

Reducing inequalities in health outcomes  

Despite overall improvements in health there remain striking differences in health outcomes 
not only across Member States but also within each country between different sections of the 
population  according  to  socio-economic  status,  place  of  residence  and  ethnic  group,  and 
gender. On average, people with lower levels of education, wealth or occupational status have 
shorter  lives  and  suffer  more  often  from  disease  and  illness  than  more  well-off  groups  and 
these gaps are not declining. Income inequality, poverty, unemployment, stress, poor working 
conditions  and  housing  are  important  determinants  of  health  inequalities,  as  are  individual 
behaviour, and willingness and ability to bear the costs. 

While health care systems have contributed to significant improvements in health across the 
EU, access to health care remains uneven across social groups. A major challenge is allowing 
access  for  all  to  high  quality  care  reflecting  recent  technological  progress  while  ensuring 
sustainability. Hence, Member States are implementing policies to reduce these inequalities, 
e.g.  by:  addressing  risk  factors  through  health  promotion;  reducing  the  prevalence  and 
incidence  of  certain  diseases;  and  ensuring  more  effective  prevention  activities  in  various 
settings  (at  home,  school,  work).  Also  important  are  steps  to  increase  population  coverage, 
address financial barriers to care, emphasize promotion and prevention activities over curative 
care,  and  address  cultural  barriers  to  the  use  of  services.  The  SFs  will  be  used  to  support 
reform  and  capacity  building  mainly  in  Convergence  regions,  to  improve  access  and  to 
develop human resources. 

However,  a  combination  of  general  policies  and  those  tailored  to  lower  socio-economic 
groups is needed. Virtually all Member States have implemented universal or almost universal 
rights  to  care  and  have  adapted  services  to  reach  those  who  have  difficulty  accessing 
conventional  services  due  to  physical  or  mental  disability  or  to  linguistic  or  cultural 
inequalities  systematically  and 
to  address  health 
differences.  Few  have  begun 
comprehensively by reducing social differences, preventing the ensuing health differences, or 
addressing the poor health that results. This would ensure in practice equal access for equal 
needs. Finally, policies outside the health sector are also central to improving the health of the 
population and reducing the existing gaps in health care provision. 

2.5. 

Long-term care 

Demographic ageing and socio-economic change tend to be seen as the main drivers of higher 
future demand for long-term care services. In fact, increases in demand are driven mainly by 

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increases in life expectancy and the incidence of invalidity and dependency. Member States 
have realised the need to look at long term care as a new social risk to be covered by social 
protection  and  are  committed  to  ensuring  near  universal  access.  While  some  differences  in 
provision are inevitable, individuals' ability to pay or the share of private sources of financing 
must  not  hinder  accessibility  to  high  quality  services.  Despite  the  recognised  need,  current 
supply does not necessarily translate into a comprehensive and universal framework for long 
term care provision.  Member States are striving  to  ensure  a  sustainable  mix  between  public 
and  private  sources  of  finance.  Measures  include  changes  in  the  financing  mechanisms,  but 
secure financing of long-term care is yet to be achieved in many countries. 

The national reports showed that provision tailored to the dependent person in a residential or 
community setting is the preferred alternative to institutional care. Support for informal carers 
and exploiting new technology can help people to stay as long as possible in their own homes. 
The  SFs  will  be  used  to  promote  de-institutionalisation  and  reinforce  community-based 
services.  Stronger  coordination  between  healthcare  and  social  services  is  seen  as  crucial  to 
achieving an adequate continuum of care enabling a high level of quality and efficient use of 
resources in the provision of long-term care services in an institutional or community setting. 
To  ensure  a  high  level  of  quality,  measures  include  uniform  standards  and  quality 
accreditation mechanisms coupled with legally enforced evaluation methods. 

Equally important is the issue of the long-term care workforce, composed mainly of women. 
Particularly  in  countries  facing  shortages,  adequate  recruitment,  training,  and  retraining 
remain a challenge, which the ESF can potentially help addressing, as does the coordination 
of  formal  care  with  informal  care.  The  improvement  of  working  conditions  and  formal 
recognition  of  informal  carers  in  social  security  schemes  are  ways  to  ensure  high  level  of 
quality in informal provision. 

3. 

FUTURE DEVELOPMENTS OF THE OPEN METHOD OF COORDINATION 

The  2007  focus  on  selected  themes  provided  an  opportunity  for  deepened  analysis  of  the 
issues concerned and policy responses. Notably, the focus on child poverty has increased the 
shared  understanding  of  the  different  factors  that  determine  the  social  inclusion  and  well-
being of children and young people. Building further on this, and ensuring the same progress 
in  future  thematic  years,  will  strengthen  the  impact  of  the  OMC  on  the  common  social 
objectives. 

The  OMC  is  instrumental  in  promoting  a  common  understanding  of  the  priorities  for  social 
policy.  Its  framework  for  mutual  learning  and  exchanging  experience  has  encouraged  more 
efficient  political  strategies.  Progress  to  date  confirms  the  validity  of  the  common  social 
objectives. They provide a comprehensive framework for integrated action, and the analysis 
of the long-term challenges illustrates the urgency of stepping up efforts. 

Finding  ways  to  further  develop  cooperation  figured  high  on  the  2007  agenda  of  the  SPC. 
Reflections centred on how to enhance the mutual learning potential. Agreement was reached 
on a number of improvements to be implemented over the 2008-2011 cycle: 

-  A  shift  to  a  more  context-  and  process-oriented  approach,  also  looking  at  unsuccessful 
policies and the iterative development of policies in response to obstacles encountered. 

-  A  more  integrated  and  strategic  use  of  all  available  instruments  to  support  the 
implementation of the OMC (notably PROGRESS). 

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- More systematic incorporation of key results in policymaking, resulting from strengthened 
monitoring. 

- A reinforcement of the analytical framework, including social impact assessment. 

- Further governance improvements by ensuring the continuous involvement of stakeholders, 
including local authorities, throughout the OMC policy cycle. 

- Enhancement of the mutual positive interaction between the Social OMC and other relevant 
EU processes under the Lisbon Strategy. 

- Improved dissemination of results. 

With its initiative on active inclusion3 the Commission has invited Member States – and other 
stakeholders – to consider a proposal intended to reinforce further the capacity of the OMC to 
support Member States' efforts to realise the common social objectives. Subsidiarity and the 
divergent situations in different Member States must be taken into account. But the aim is to 
build  on  the  shared  understanding  of  agreed  key  challenges  to  develop,  in  consensus, 
guidance for implementation. The OMC would thus be made more effective in promoting best 
practices and in monitoring progress. 

3 

Consultation launched on 17 October 2007 on "Modernising social protection for greater social justice 
and economic cohesion: taking forward the active inclusion of people furthest from the labour market", 
COM(2007)620. 

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