Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions on a Commission Recommendation on the active inclusion of people excluded from the labour market {SEC(2008)2589} {SEC(2008)2590}
Date: 2008-10-03
Institutions: European Commission
Subjects: European social policy, aid to disadvantaged groups, consultation procedure, labour market, marginalisation, poverty, social integration, social security

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 3.10.2008 
COM(2008) 639 final 

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

on a Commission Recommendation on the active inclusion of people excluded from the 
labour market 

{SEC(2008)2589} 
{SEC(2008)2590} 

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

on a Commission Recommendation on the active inclusion of people excluded from the 
labour market 

1. 

THE FIGHT AGAINST EXCLUSION AND POVERTY: AN EU PRIORITY 

Combating social exclusion and poverty is among the priorities of the European Union, whose 
action in this area is based on Article 137 of the EC Treaty. With regard to fundamental social 
rights, the latter provides that 'the Community shall support and complement the activities of 
the Member States in […] the integration of persons excluded from the labour market'. Two 
Council Recommendations1 dating back to 1992 express the Member States' determination to 
promote the right of all to basic resources and to preserve the quality of their social protection 
systems.  The  Member  States  have  implemented  those  Recommendations  progressively  and 
more recently with the support of the Open Method of Coordination (Social OMC), on social 
protection and social inclusion which is linked to the Lisbon Strategy for jobs and growth and 
the European Employment Strategy (EES). 

The Guidelines for the employment policies of the Member States (e.g. Integrated Guideline 
No 19)  emphasise  the  necessary  interaction  between  employment  policies,  social  services, 
social protection and tax systems with a view also to mobilising those furthest from the labour 
market and capable of working. Nonetheless, rates of poverty and long-term unemployment 
have  not  fallen  significantly.  Other  negative  indicators  (e.g.  number  of  early  school-leavers 
and those living in jobless households) confirm the emergence of new social risks linked to 
changes  in  our  societies,  as  highlighted  by  the  social  reality  stocktaking  conducted  by  the 
Commission in 20072. Despite the progress made, national policies have not always identified 
the right response to the growing complexity of multiple disadvantages affecting vulnerable 
persons furthest from the labour market.  

Greater  attention  has  been  paid  at  Community  level  to  the  design  and  effectiveness  of  the 
systems  in  use  in  the  Member  States.  This  is  shown  in  particular  by  the  Joint  Reports  on 
Social Protection and Social Inclusion, the Commission's Social Agenda for 2005-10, the two 
public consultations launched by the Commission in 2006 and 20073, the common objectives 
on social inclusion under the OMC adopted by the 2005 European Council (and confirmed in 
2008), the conclusions of the EPSCO Council meeting of December 2007 and the subsequent 
work  in  the  Social  Protection  Committee4.  The  social  partners'  recent  commitment  to 
negotiating  an  autonomous  agreement  promoting  the  integration  into  enterprises  of  those 
furthest from the labour market is also worth noting. 

1 

2 
3 
4 

Council  Recommendation  92/441/EEC  (OJ  L  245,  26.8.1992,  p.  46)  and  Council  Recommendation 
92/442/EEC (OJ L 245, 26.8.1992, p. 49). 
SEC(2008) 1896. 
COM(2006) 44; COM(2007) 620. 
Council Conclusions 16139/07 and SPC orientation note on active inclusion of 3 July 2008. 

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All this work has produced a broad consensus  confirming that the European Union can and 
must  give  new  impetus  to  the  fight  against  exclusion  and  poverty  while  fully  respecting 
subsidiarity. The 1992 Council Recommendation on sufficient resources and social assistance 
in  social  protection  systems  is  still  a  reference,  provided  the  principles  set  out  therein  are 
better  implemented  and  integrated  into  a  more  comprehensive  strategy,  involving  common 
principles  for  inclusive  labour  markets  and  access  to  quality  services  addressing  the  special 
situation of those excluded from society and the labour market. A holistic approach involving 
all actors concerned, better indicators and monitoring and evaluation procedures will ensure 
that  synergy  between  those  three  pillars  produces  the  best  results  by  integrating  into 
employment more of those who are currently excluded. 

By  issuing  a  Recommendation  and  this  accompanying  Communication,  the  Commission  is 
following  up  its  announcements  at  the  start  of  the  second  consultation  in  2007,  in  the  July 
2008 Communication on a renewed Social Agenda and in the Communication on reinforcing 
the  Social  OMC.  The  concept  of  active  inclusion  the  Commission  is  presenting  here  fits  in 
perfectly  with  the  Lisbon  Strategy  and  the  integrated  approach  that  it  advocated  for  the 
renewed Social Agenda based on three principles: opportunities, access and solidarity. It also 
complements  the  Commission  work  to  promote  flexicurity  and  to  respond  to  demographic 
developments  and  to  the  challenges  of  globalisation  by  easing  transitions  for  all  and 
mobilising the forces of production. 

2. 

ACTIVE INCLUSION: THE NEED FOR FURTHER ACTION 

2.1. 

The  socio-economic  context:  the  persistence  of  poverty  and  joblessness  and 
growth of multiple disadvantages 

Getting a job is the safest route out of poverty for those who can work. But the difficulty for 
some of accessing that route seems to be hardly diminished by economic growth and rise in 
employment. Long-term unemployment still amounts to 3%. 16% of the population is at risk 
of  poverty  (see  figure  1  in  the  annex),  one  in  five  live  in  substandard  housing.  Even  more 
worrying for the future, the percentage of children at risk of poverty stands at around 19% and 
the  percentage  of  early  school-leavers  is  still  high  at  about  15%.  The  percentage  of  people 
living  in  jobless  households  remained  stable  at  around  10%  between  2000  and  2005  before 
falling by one percentage point thereafter, with almost no decline (0.3 percentage points) in 
the number of jobless households with children. 

The  difficulties  and  obstacles  facing  those  at  risk  of  poverty  are  cumulative:  new  social 
challenges, linked to the transition to a post-industrial economy,  globalisation, demographic 
change and social trends such as greater individualisation have emerged in recent years. The 
reality  of  poverty  and  social  exclusion  has  become  even  more  complex:  multiple 
disadvantages  and  deprivation,  compounded  by  various  risk  factors  such  as  a  lack  of  basic 
resources, family problems, a lack of learning capacity and of digital skills, precarious health, 
inadequate and remote housing, exclusion from the information society, and a lack of social 
support, aggravated in certain cases by ethnic discrimination. 

2.2. 

Adequacy and coverage of minimum income schemes still to be improved 

Minimum Income (MI) schemes have undoubtedly had a positive effect on the reduction of 
poverty, albeit marginally in the case of several Member States. The figures show that social 
transfers  in  general  have  a  significant  impact  in  reducing  the  poverty  rate,  with  an  average 

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pre-transfer risk rate of 26%, compared with a post-transfer rate of 16% (See figure 2 in the 
annex). 

They  also  suggest  that  social  protection  in  countries  without  an  established  MI  scheme  like 
Greece and Italy has a more limited capacity in terms of reducing poverty. These facts point 
to the continued relevance of the 1992 Council Recommendation, and that its implementation 
needs to be improved. 

In most Member States and for most family types, social assistance alone is not sufficient to 
lift beneficiaries out of poverty. As shown in figure 3 in the annex the UK is the only Member 
State  where,  once  housing-related  benefits  are  taken  into  account,  the  net  income  of  social 
assistance recipients in all household types rises above the agreed EU definition of the at-risk-
of-poverty  threshold,  i.e.  60%  of  median  household  income.  Only  in  Denmark,  the 
Netherlands, Sweden and Ireland do single-person households in receipt of social assistance 
emerge above the poverty threshold. In all other Member States they fall well below. 

The effectiveness of MI schemes is determined not only by the amount of benefits but also by 
their  specific  design  and  delivery  provisions.  A  significant  percentage  of  those  targeted  by 
such  schemes  may  not  actually  benefit  from  them,  either  because  they  do  not  claim  their 
entitlements  or  for  some  other  reason  (non-eligibility,  miscalculation  of  amounts,  payment 
deadlines, penalties and suspensions, and benefit deductions for debt reimbursement). 

Estimates of take-up rates of social assistance in UK, FR, DE and NL are in a range of 40% to 
80%5. But the EU average shows a starker reality: only 18% of the non-working population 
at-risk-of-poverty  is  in  receipt  of  social  assistance  (even  if  this  figure  must  be  qualified:  it 
does not take into account receipt of other types of benefits6). 

2.3. 

Improved  consistency  with  active  labour-market  policies  and  access  to  quality 
services is needed 

The 1992 Council Recommendation made it clear that MI schemes should be consistent with 
an  incentive  to  work.  In  addition,  in  order  to  fight  poverty  effectively,  they  need  to  be 
integrated  in  a  wider  strategy,  ensuring  that  beneficiaries  have  access  to  training  and  job 
support  and  to  enabling  social  support.  The  evidence  shows  that  there  are  still  major 
shortcomings  in  those  three  areas,  although  several  Member  States  are  engaged  in 
thoroughgoing structural reforms. 

Work still does not always pay 

The design of tax and benefit systems still generates significant disincentives against entering 
the labour market for some segments of the labour market, such as the low skilled with low 
earning  prospects.  Some  Member  States  are  already  implementing  reforms  to  make  work 
more attractive than welfare but more needs to be done. 

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6 

Hernanz et al. (2004) Take-up of welfare benefits in OECD Countries: a review of the evidence; OECD 
Social, employment and migration WP no. 17.  
2008 Ecorys study commissioned by the Commission on active inclusion and Immervoll et al. (2004) 
Benefit coverage rates and household typologies: scope and limitations of tax-benefit indicators, OECD 
Social, employment and migration WP, no. 20. 

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Recent OECD findings show that the extra income (compared with unemployment benefits) 
that an unemployed person can derive from taking up a new job is considerably reduced by an 
average effective tax rate (AETR) of over 60% in almost all countries in all household types 
examined (See table 1 in the annex). This is due to the fact that when people start working, 
they not only have to pay taxes on their salaries but also lose the benefits to which they were 
previously entitled. This sort of work disincentive is addressed by recent policy developments 
in  MI  schemes,  e.g.  by  combining  adequate  out-of-work  support  with  in-work,  such  as  the 
working  families'  tax  credit  (WFTC)  in  the  UK  and  the  planned  adoption  of  a  revenu  de 
solidarité active (RSA) in France. 

People most excluded from work need more personalised pathways to employment 

People lacking basic learning capacities or suffering from long periods of unemployment do 
not easily benefit from standard training or rehabilitation policies. Moreover, once they are in 
employment,  they  are  still  in  a  vulnerable  position  in  the  absence  of  a  supportive 
environment.  Studies  on  transitions  from  unemployment  to  work,  including  fixed-term 
contracts, show that there is a hard core of working-age persons who remain unemployed and 
whose risk of joblessness increases with age7. 

To tackle this issue, some Member States (e.g. the Netherlands) have set about fully reshaping 
their  reintegration  and  rehabilitation  policies.  Others  are  developing  targeted  labour-supply 
policies  to  reach  out  to  those  most  excluded  through  instruments  such  as  micro-loans  or 
incentives  for  the  social  economy.  Such  worthwhile  innovations  in  general  require  an 
integrated service delivery. 

Enabling social support: a missing link 

The  absence  of  affordable  childcare  is  a  clear  example  of  the  hurdles  facing  some  of  those 
most excluded from work, especially lone parents with children. OECD estimations show that 
net out-of-pocket childcare costs represent 12% of the net income of a lone parent with two 
young children in half of the Member States for which estimates are available. That amount is 
close  to  the  net  benefit  of  moving  from  unemployment  to  gainful  employment  when  the 
METR  for  lone  parents  is  taken  into  account;  it  clearly  constitutes  a  disincentive  to  work  – 
and a poverty trap. 

Health  is  an  important  requirement  for  participation  in  the  labour  market.  People  suffering 
from chronic health impediments cannot successfully participate in lasting employment8 or in 
training  in  preparation  for  employment.  This  is  especially  true  of  people  at  risk  of  poverty, 
who suffer more than average from ill health and who have less access to medical care (See 
table 2 in the annex). 

Decent, stable, independent accommodation can also be an important condition for staying in 
employment. Although data on homelessness and non-decent housing are difficult to collect, 
there is some evidence that this is a growing phenomenon, in particular among young adults, 
who are affected more than average by unemployment or limited to temporary and fixed-term 
work  contracts.  Several  NGOs  in  the  EU  address  the  needs  of  homeless  people,  including 

7 
8 

Employment in Europe 2004, chapt. 4. 
Employment in Europe 2005, chapt. 5. 

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through  support  for  stable  employment.  But  they  also  report  a  vicious  circle  in  that  such 
support often remains unsuccessful owing to a lack of access to decent, affordable housing9. 

3. 

TOWARDS  AN  INTEGRATED  ACTIVE  INCLUSION  APPROACH  BASED  ON  COMMON 
PRINCIPLES 

3.1. 

An integrated approach for active inclusion  

Design of the integrated approach 

The  previous  analysis  suggests that  the  active  inclusion  of  people  excluded  from  the  labour 
market requires the design and implementation of a comprehensive strategy combining in an 
integrated  way  adequate  income  support,  inclusive  labour  markets  and  access  to  quality 
services. Policy design should define the right mix of the three strands of the active inclusion 
strategy;  take  account  of  their  joint  impact  on  the  social  and  economic  integration  of 
disadvantaged  people  and  their  possible  interrelationships,  including  synergies  and  possible 
trade-offs. 

Active inclusion policies should ensure consistency with the following objectives: 1) support 
implementation  of  fundamental  rights;  2)  promote  gender  equality  and  equal 
the 
opportunities;  3)  address  the  complexities  of  multiple  disadvantages  and  the  specific 
situations and needs of the various vulnerable groups; 4) improve territorial cohesion taking 
into account local and regional circumstances; and 5) be consistent with a lifecycle approach 
to  social  and  employment  policies  so  that  they  can  support  intergenerational  solidarity  and 
break the intergenerational transmission of poverty. 

For  this  integrated  approach  to  be  effective,  coordination  between  public  agencies  and 
services needs to be enhanced. In addition, local, regional, national and EU authorities - with 
their particular roles, competences and priorities – also need to strengthen their cooperation. 
Furthermore, other relevant actors, including those affected by poverty and social exclusion, 
the  social  partners,  NGOs  and  service  providers  have  to  participate  actively  in  the 
development, implementation and evaluation of strategies. 

3.2. 

Common principles for active inclusion  

While  active  inclusion  policies  must  reflect  the  different  national  situations,  EU  Member 
States  face  similar  challenges  as  explained  in  section  2.  Therefore,  it  seems  appropriate  to 
reach  a  consensus  at  EU  level  on  a  series  of  common  principles  for  active  inclusion.  The 
ground  for  these  principles  has  been  prepared  by  the  outcome  of  the  Commission's  public 
consultations  and  of  intensive  discussions  with  and  among  the  Member  States  within  the 
Social  Protection  Committee  and  the  active  contribution  of  the  Employment  Committee. 
These principles, which are specific for each of the three strands, could help Member States in 
the establishment and implementation of their integrated active inclusion strategies in order to 
make  them  more  efficient  and  more  effective.  As  indicated  in  July  in  its  renewed  social 
agenda  the  Commission  considers  that  a  recommendation  on  active  inclusion  could  help  to 
guide  Member  States  in  the  establishment  and  implementation  of  their  integrated  active 
inclusion strategies. 

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FEANTSA report for the European Parliament 2008 and FNARS 'Manifesto for social inclusion' 2007. 

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3.3. 

Implementation and monitoring of the common principles at EU level 

The  implementation  of  active  inclusion  strategies  needs  to  be  properly  coordinated  and 
monitored  at  national  and  EU  levels  if  it  is  to  be  successful.  To  that  end,  the  Commission 
welcomes the work in the Social Protection Committee. It proposes that by the end of the year 
Member States adopt Council Conclusions, based on the attached recommendation defining a 
set  of  common  principles.  These  can  form  the  basis  for  joint  coordination  and  monitoring 
work by the Commission and the Member States within the social OMC in close cooperation 
between the Social Protection Committee and the Employment Committee. 

Progress made in the implementation of active inclusion strategies should then be presented in 
the  Joint  Reports  on  Social  Protection  and  Social  Inclusion  as  well  as  in  the  frame  of  the 
Lisbon  Strategy.  In  addition,  the  Commission  is  ready  to  take  the  measures  necessary  to 
improve  or  establish  the  indicators  for  quantitative  monitoring.  The  network  of  local 
authorities' observatories which will be financed by the Progress programme will also provide 
analysis  of  the  development  and  implementation  of  active  inclusion  strategies  at  the  local 
level and promote mutual learning. 

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ANNEX: GRAPHS AND TABLES  

Figure 1: At-risk-of-poverty rate for people at work by gender (population 18 and over) 

16

14

12

10

8

6

4

2

0

CZ BE DK NL FI MT SI BG DE IE FR AT SK CY HU SE EE EU
25
Total

Females

Males

UK ES IT LT LU LV PT PL EL

Source:  EU-SILC  (2006):  income  year  2005;  except  for  UK  (income  year  2006)  and  for  IE  (moving  income 
reference period 2005-2006) except for BG: national HBS 2006 (income data 2006). Data for RO not available. 

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Figure  2:  Impact  of  social  transfers  (excluding  pensions)  on  reduction  of  poverty  rate, 
2006 - % of poverty rate before social transfers 

60%

50%

40%

30%

20%

10%

0%

EL IT ES BG LV RO LT CY PT EE PL MT UK EU
25

SK LU BE IE HU FR AT SI DE NL CZ  FI DK SE

Source:  EU-SILC  (2006):  income  year  2005,  except  for  UK  (income  year  2006)  and  for  IE  (moving  income 
reference period 2005-06). 

Figure  3:  Net  income  of  social  assistance  recipients  —  2006  As  a  %  of  the  at-risk-of-
poverty threshold for 3 jobless family types, incl. housing benefits. 

140%

120%

100%

80%

60%

40%

20%

0%

LT SK PT MT EE HU ES LV CZ BE PL

LU CY FR SI AT DE FI SE DK UK IE NL

single

lone parent, 2 children

couple with two children

Only countries where non-categorical social assistance benefits are in place are considered. 
Source: Joint EC-OECD project using OECD tax-benefit models, and Eurostat. 

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Table 1: Average effective tax rates for short-term unemployed persons (previous work 
at  67%  of  Average  Wage,  full-time)  re-entering  full-time  employment  –  2006  - 
percentages 

Single person, 
no children 

Lone parent 

BE 
CZ 
DK 
DE 
EE 
IE 
EL 
ES 
FR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
SI 
SK 
FI 
SE 
UK 

83 
63 
91 
76 
64 
77 
57 
80 
81 
72 
61 
88 
79 
88 
78 
61 
86 
67 
82 
82 
94 
44 
76 
87 
68 

Source: OECD Tax-Benefit Models. 

77 
62 
91 
87 
64 
12 
66 
80 
86 
63 
72 
100 
76 
86 
79 
64 
83 
72 
99 
87 
83 
35 
85 
91 
72 

One-earner 
couple, 2 
children 
73 
69 
89 
85 
61 
88 
69 
79 
85 
61 
82 
100 
77 
102 
78 
68 
87 
81 
89 
85 
86 
30 
92 
95 
78 

Two-earner 
couple, 2 
children 
75 
73 
94 
90 
64 
53 
49 
82 
79 
71 
72 
85 
79 
86 
78 
34 
76 
76 
71 
85 
84 
49 
74 
87 
41 

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Table  2:  Inequalities  in  access  to  health  care  (unmet  need  for  medical  examination  by 
income  quintile  for  3  reasons:  too  expensive,  waiting  time  too  long,  too  far  to  travel), 
SILC 2005 

Inequalities  in  access  to  health  care  (unmet  need  for  care  by 
income quintile for three reasons: too expensive, waiting time too 
long, too far to travel), SILC 2006 

1st quintile 

2nd quintile 

3rd quintile 

4th quintile 

5th quintile 

eu25 

be 

cz 

dk 

ee 

ie 

gr 

es 

fr 

it 

cy 

lv 

lt 

lu 

hu 

mt 

nl 

at 

pl 

pt 

si 

sk 

fi 

se 

uk 

6.2 

1.8 

1.4 

0.2 

14.4 

2.7 

7.9 

0.9 

4.3 

9.2 

6.6 

28.9 

13.6 

0.8 

3.9 

3.4 

0.9 

1 

13.3 

9.6 

0.3 

6.4 

4.7 

4.1 

2.6 

4.1 

0.4 

0.7 

0.3 

7 

2.1 

7.8 

0.9 

1.4 

5.1 

4.7 

20.5 

10.5 

0.1 

3.2 

1.9 

0.3 

0.5 

11 

6.8 

0.2 

3.4 

3.3 

3.9 

1.7 

3 

0.2 

0.5 

0.2 

5.9 

2.4 

7.3 

0.5 

1.2 

4 

2.6 

10.2 

7.9 

0.2 

2.4 

1.6 

0.3 

0.2 

8.9 

4.9 

0.1 

2.2 

2.1 

3.3 

1.5 

2.5 

: 

0.5 

0.2 

6.3 

1.9 

4.1 

0.4 

0.3 

3.1 

1.5 

9.8 

5.2 

0.2 

1.7 

1.2 

0.3 

0.3 

7.2 

2.7 

0.1 

1.5 

1.7 

2 

1.7 

0.1 

0.2 

0.2 

3.1 

0.7 

2 

0.2 

0.6 

2.1 

0.5 

5.9 

3.9 

0.4 

0.8 

0.8 

0.3 

0.3 

6.4 

1.1 

0.2 

0.8 

0.9 

1.1 

2.4 

1.5 

Source: EU-SILC 2006. Note: Data should be interpreted with care when comparing levels across countries, due 
to  inconsistencies  in  the  translation  of  the  questionnaire  used.  Data  for  Germany  is  not  included  because  of  a 
strong methodological bias in the data collection.  

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