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 2009 {SEC(2009) 141}
Date: 2009-02-13
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, 13.2.2009 
COM(2009) 58 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 2009 

{SEC(2009) 141} 

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KEY  MESSAGES  from  Member  States'  new  National  Strategic  Reports  (NSR)  outlining 
strategies to promote the EU's common social objectives: 

•  The  EU  can  build  on  the  values  of  solidarity  that  underpin  its  social  policies  and  on 
progress  in  structural  reforms  to  cushion  the  impact  of  the  economic  crisis  and  help 
recovery. Further strengthening the positive mutual interaction with action for growth and 
jobs  is  vital,  notably  by  allowing  social  protection  systems  to  fully  play  their  role  as 
automatic  stabilisers.  In  order  to  address  the  negative  impact  on  employment  and  social 
cohesion, long-term reforms need to be sustained while balanced with short-term measures 
aimed  at  preventing  job  losses  and  sustaining  household  incomes.  Recent  structural 
reforms  in  the  field  of  social  security  have  delivered  results,  bringing  more  people  into 
employment,  strengthening  the  incentives  to  work  and  the  resilience  of  labour  markets, 
prolonging working lives and enhancing economic growth. Valuable indications of this are 
provided by the European Economic Recovery Plan. 

•  The European Social Fund should be used to its full potential in a flexible and timely way 
to alleviate the social impacts of the crisis, by supporting rapid labour market re-entry of 
the  unemployed  and  focussing  on  the  most  vulnerable.  Simplified  implementation  of 
Structural  Funds  and  improved  coordination  with  social  policies  will  help.  The 
Commission  will  issue  a  regular  bulletin  to  monitor  social  trends.  Reports  from  Member 
States  could  facilitate  exchange  of  information  and  policy  experiences  in  the  Social 
Protection Committee. 

•  Comprehensive  Active  Inclusion  strategies  that  combine  and  balance  measures  aimed  at 
inclusive labour markets, access to quality services and adequate minimum income, need 
to  be  implemented.  A  boost  must  be  given  to  Member  States'  efforts  to  implement 
comprehensive  strategies  against  poverty  and  social  exclusion  of  children,  including 
accessible  and  affordable  quality  childcare.  Sustained  work  is  required  to  tackle 
homelessness  as  an  extremely  serious  form  of  exclusion,  to  address  the  multiple 
disadvantages the Roma people are facing and their vulnerability to social exclusion and to 
promote the social inclusion of migrants. Vigilance is needed as new risk groups, e.g. the 
young, as well as new risks may emerge. 

•  Long term adequacy and sustainability of pension systems depend on continued efforts to 
reach the Lisbon target of a 50% employment rate of older workers even in the downturn. 
It is important to ensure full coverage and to monitor pension adequacy notably for women 
and  low  wage  earners.  Long-term  oriented  strategies  and  the  regulatory  framework  have 
limited the impact of the crisis on private pension income for most of those retiring today, 
but some might face outcomes below their expectations. Funded scheme designs will need 
to be reviewed to boost their ability to cope with risk in the investment and pay-out phases 
and to improve coverage so they can fully realise their strength in coping with ageing. 

•  Member  States  strive  to  improve  the  value  for  money  of  healthcare  and  reduce  health 
inequalities  by  increased  attention  to  primary  care,  prevention,  health  promotion,  better 
coordination  and  rational  use  of  resources.  These  strategies  need  to  be  more  vigorously 
pursued,  in  particular  where  healthcare  systems  are  under-resourced.  This  also  implies 
addressing potential staff shortages in health care by measures to recruit, train, retain and 
develop health care professionals at all levels. 

•  Member States are also striving to establish and strengthen systems for quality long-term 
care, to create a solid financing basis, to improve care coordination and to ensure sufficient 
human resources as well as support for informal carers. 

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•  The current Social Open Method of Coordination (OMC) Cycle lasts until 2010, the target 
year  for  the  Lisbon  strategy.  Strong  commitment  will  be  needed  to  achieve  the  agreed 
objectives  on  social  protection  and  social  inclusion  and  the  2010  European  Year  for 
combating  poverty  and  social  exclusion  will  reaffirm  it.  While  the  decision  on  setting 
national quantified targets and their definition remains a core responsibility of the Member 
States,  the  positive  role  of  the  Social  OMC  could  be  further  strengthened  by  evidence-
based  national  target-setting.  Increased  attention  should  be  given  to  the  quality  and 
continuity  of  stakeholder  involvement  and  to  the  mainstreaming  of  social  considerations 
inter  alia  via  the  evaluation  of  social  impacts  as  a  vital  part  of  integrated  impact 
assessments. 

1. 

INTRODUCTION 

Between  2001  and  2007  average  economic  growth  in  EU-27  was  2.1%  per  year.  The 
employment rate in 2007 had risen to 65.4%, mainly thanks to higher employment of women 
and  older  workers.  New  jobs  helped  reduce  the  share  of  jobless  households  from  10.2%  in 
2005 to 9.3% in 2007, but only marginally benefited jobless families with children. The latest 
data show that 16% of Europeans are still living at risk of poverty. While there is no better 
safeguard for avoiding poverty than a quality job, in-work poverty at 8% illustrates that not all 
jobs provide this assurance. At the same time, data shows that in several Member States high 
growth  improved  the  absolute  living  standards  of  the  poor  while  their  relative  situation 
improved or remained the same. 

The  economic  outlook  has  changed  fundamentally.  While  the  labour  market  has  shown 
resilience in most Member States, unemployment has risen substantially in some of them, and 
forecasts point to further job losses ahead. 

Against this backdrop the contribution of social policy is crucial. Appropriate social policies 
will  not  only  mitigate  adverse  social  impact  on  the  most  vulnerable  but  also  cushion  the 
impact of the crisis on the economy as a whole. Social protection is a major countercyclical 
and  automatic  stabilising  element  in  public  expenditure.  Well-functioning  systems  in  a 
framework  of  continued  sustainability-reinforcing  reforms  can  help  stabilise  aggregate 
demand, underpin consumer confidence and contribute to job creation. 

The most badly hit victims of the crisis will be those households where breadwinners are at a 
disadvantage in the labour market and in society. Hence the need for social safety nets which 
are tight enough to prevent people from falling through and effective enough to launch them 
back into active social and labour market participation. 

Appropriate  flexicurity  measures  will  use  active  labour  market  policies  to  ease  transitions, 
avoid people becoming long-term unemployed, resist using early retirement to regulate labour 
supply,  enhance  skills  and  secure  transition  periods.  Comprehensive  active  inclusion 
measures are needed to address the situation of those furthest from the labour market. 

This  also  implies  adjusting  benefits,  when  needed,  to  safeguard  appropriate  support  for 
recipients. Member States are already acting to maintain the purchasing power of minimum 
benefits  and  basic  pensions.  The  severe  nature  of  the  recession  entails  a  need  for  closer 
monitoring of social impacts. 

The bulk of pension income of people retiring today derives from statutory pensions financed 
by current contributions. Income from funded private pension is substantial in a few countries. 
As pension funds invest part of the savings they hold in shares they have been affected by the 
dramatic  decline  in  financial  markets.  Long-term  strategies,  the  regulatory  framework  and 
action  by  the  authorities  have  limited  the  impact  for  most  of  those  retiring  today.  Scheme 

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designs will, nonetheless, have to be reviewed to ensure future adequacy and sustainability of 
funded schemes. 

Effective  health  and  preventive  care  services  are  of  particular  importance  when  the 
economy and the income declines and unemployment rises, but there is a significant risk that 
investment in health and long-term care will suffer. Postponement of plans to modernise and 
develop  local  healthcare  and  long-term  care  infrastructure  can  be  expected.  Such  delays 
would be most unhelpful in those countries that have under-resourced health sectors which are 
very unevenly distributed across the national territory. 

Several Member States have endeavoured to make the preparation of the renewed strategies a 
participatory exercise involving stakeholders and, to some extent, citizens at large. Local and 
regional  authorities  are  increasingly  involved  but  this  needs  to  be  taken  further.  Gender 
considerations  feature  more  than  in  the  past  but  could  be  mainstreamed  more  consistently. 
There  are  some  examples  of  good  practice  in  consultation  activities,  for  example  efforts  to 
ensure an interactive two-way dialogue and provide feedback on results. Some countries make 
a general commitment to uphold stakeholder involvement at all policy stages and throughout 
the reporting cycle. The participatory bodies established at various levels could help monitor 
structural social reforms and thus promote opportunities, access and solidarity in the present 
crisis. Increasingly, policy priorities are underpinned with quantified targets. When based on 
sound analysis, properly resourced and backed by clear political commitment, this can boost 
delivery in specific policy areas. 

2. 

FIGHTING POVERTY AND SOCIAL EXCLUSION 

Children face a higher poverty risk, at 19% in EU-27, than the population as a whole. This has 
not improved since 2000. The 2007 OMC focus on child poverty helped deepen the common 
understanding  of the  determinants  of child poverty in each country. It clarified the need for 
comprehensive  strategies  combining  adequate,  well-designed  income  support,  quality  job 
opportunities for parents and the provision of necessary services. 

Most  Member  States  who  made  the  issue  a  priority  in  2006  in  response  to  the  European 
Council's call for decisive action are now planning to reinforce their strategies and follow a 
more multi-dimensional and integrated approach. Many have mainstreamed child poverty in 
areas such as minimum income and wages, reconciliation of work and family life and family-
friendly  services.  Sustained  efforts  are  needed,  notably  to  ensure  accessible  and  affordable 
quality  child  care.  Drawing  on  the  improved  evidence-base,  22  Member  States  have  set 
targets in relation to child poverty, 16 of them using EU-agreed indicators. A few have also 
set intermediate targets for their specific challenges (jobless households, families most at risk, 
intensity of poverty, childcare). 

Roma  people  face  multiple  disadvantages  and  belong  to  the  most  excluded  in  European 
societies. In the new reports Member States with a sizable Roma minority have upgraded their 
coverage of the issue and, in general, there is a better recognition of the challenges it entails. 
Action taken or announced mainly focus on desegregation, access to employment, addressing 
educational  disadvantage  and  improved  access  to  basic  services  such  as  housing  and 
healthcare.  However,  in  most  countries  a  comprehensive  policy  framework  is  still  lacking, 
also due to the non-availability of data and an insufficient knowledge-base. 

The  NSRs  confirm  the  priority  given  to  the  inclusion  of  migrants  in  2006.  Increasingly 
adopting  a  holistic  approach,  Member  States  are  focusing  more  on  involving  both  migrants 
and  the  host  society  in  the  process,  and  several  are  attempting  to  create  synergies  between 
inclusion policies and anti-discrimination measures. 

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The  inclusion  of  disabled  people  continues  to  be  addressed,  but  disability  mainstreaming 
remains limited and NSRs scarcely refer to the implementation of the UN Convention on the 
Rights  of  persons  with  disabilities,  although  the  ratification  is  under  way.  Employment 
activation,  eliminating barriers to education and lifelong learning, and stricter conditionality 
generally dominate rather than the elimination of structural obstacles to full participation. 

As  in  the  2006  NSRs,  most  Member  States  have  active  inclusion  among  their  priorities. 
However, inclusive labour markets, access to quality services and adequate income are dealt 
with  separately  in  most  cases,  whereas  most  disadvantaged  people  suffer  from  multiple 
disadvantages  and  integrated  responses  are  essential.  Several  countries  have  taken  steps  to 
ensure that the purchasing power of minimum incomes is maintained. It remains essential to 
design better links between out-of-work benefits and in-work support, in order to create the 
right  incentives,  while  at  the  same  time  ensuring  adequate  income  support  and  prevent  in-
work poverty. Coordinated social and employment services are needed to tackle obstacles to 
full and lasting participation in society and the labour market. So more attention must be paid 
to optimising the interaction between the three strands and ensuring that due account is given 
to each. 

The  best  safeguard  against  poverty  and  social  exclusion  is  a  quality  job  for  those  who  can 
work.  For  those  for  whom  work  is  not  a  real  option,  adequate  income  support  and  social 
participation must be ensured. Particularly relevant measures taken by many Member States 
include  those  that  support  job  retention  or  speedy  re-entry  into  employment,  and  promote 
adaptability,  by  offering  opportunities  to  acquire  or  upgrade  skills  and  developing 
personalised action plans outlining pathways to the labour market. Attention should be paid to 
supporting job opportunities for the most vulnerable, including in the social economy. Most 
NSRs reflect the importance of access to quality services for tackling the social hurdles that 
hinder people's sustainable inclusion. 

Homelessness  is  one  of  the  most  severe  forms  of  exclusion  and  enhanced  efforts  in  some 
Member  States  must  be  extended  to  include  a  greater  supply  of  affordable  housing. 
Comprehensive,  multidimensional  strategies  aim  to  address  its  different  manifestations 
specifically,  while  another  approach  focuses  on  measures  integrated  in  wider  policy 
frameworks, e.g. relating to housing, employment, and health. Supported housing combining 
the  objective  of  independent  living  with  personalised  social  support  is  receiving  much 
attention.  Several  countries  have  set  targets  to  reduce  homelessness  or  strengthen  support 
structures. Lack of reliable data still impairs efforts to define and monitor effective policies. 
Promoting  financial  inclusion  is  crucial  to  prevent  homelessness,  particularly  in  the  current 
circumstances;  appropriate  support  and  advice  must  be  ensured  to  people  facing  eviction  or 
repossession. 

Inequalities  in  health  between  different  socio-economic  groups  persist  and  Member  States 
tend  to  complement  their  universal  approach  with  measures  targeting  the  most  vulnerable. 
Several NSRs present cross-sectoral policies, spanning both prevention and health promotion 
and  mobilising  a  wide  range  of  services  including  in  the  areas  of  education,  housing  and 
employment.  The  main  policy  orientations  are:  enhancing  primary  and  preventive  care, 
removing barriers to access and addressing the situation in deprived areas. 

Most  NSRs  emphasise  the  importance  of  education,  but  only  some  integrate  it  in  a 
comprehensive  long-term  strategy  to  prevent  and  tackle  social  exclusion.  Pre-primary 
education  is  seen  as  fundamental  both  as  a  key  element  in  levelling  socio-economic 
disadvantage, and as a means to facilitate work/family  life  reconciliation.  Efforts  also  focus 
on ensuring high quality standards in all schools, combating early school leaving, improving 
access to education for specific groups and introducing measures to validate prior learning. 

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Addressing financial  exclusion is vital in any strategy against  poverty; the crisis brings the 
issue even more to the fore. Some Member States report comprehensive policies, whereas one 
is tackling over-indebtedness as a priority. Most frequently quoted is debt advice, sometimes 
target group-based or focusing on early detection. Microcredit is provided in some countries 
to  people  who  cannot  access  the  mainstream  credit  market.  Financial  inclusion  is  a  pre-
condition for sustainable access to the housing market. 

3. 

ADEQUATE AND SUSTAINABLE PENSIONS 

During the last decade Member States have reformed their pension systems to better provide 
adequate  and  sustainable  pensions.  In  the  2008  NSRs,  countries  report  on  incremental 
progress  in  providing  adequate  pensions  without  jeopardising  financial  sustainability  and 
work incentives. The new economic outlook will make the fine-balancing required even more 
challenging. 

In  response  to  increased  longevity  reforms  of  pension  systems  have  aimed  at  raising  the 
employment rate of older workers and decreasing the economic dependency ratios, so as not 
to endanger the financial sustainability of public finances. Mostly this resulted in a decrease in 
the pension promises and in rules allowing workers to compensate for this by extending their 
working  lives.  Indeed  keeping  the  balance  between  contributory  lives  and  years  spent  in 
retirement will depend on more people working more and longer. This will entail lowering the 
entry age, avoiding long career breaks and postponing the effective exit age. At the same time 
more attention is being paid to ensuring that all employment periods are covered. 

The  employment  rate  of  older  workers  has  increased  over  the  last  decade,  and  11  countries 
now  meet  the  Lisbon  target  of  50%  employment  for  older  workers  by  2010.  Given  the 
increase in life expectancy, higher employment rates will be necessary in the medium term. 
Normal working age has to increase, and the reports show that Member States are starting to 
increase the pensionable age in statutory schemes. Early exit routes are being closed and 
incentives  to  early  retirement  removed.  These  are  important  signals  for  employers  and 
employees  to  improve  their  practises  of  age  management  and  postpone  retirement.  The 
current  economic  downturn  will  test  the  durability  of  these  achievements.  Further  efforts 
should  be  made  to  sustain  the  employment  of  older  workers,  including  making  full  use  of 
active  labour  market  policies.  It  will  be  crucial  to  avoid  that  the  effective  retirement  age 
begins to drop because early pathways out of the labour market are used again to deal with 
rising unemployment. 

The present economic outlook highlights the need to ensure that workers affected by periods 
of  unemployment  are  covered  in  appropriate  ways  by  the  pension  systems.  In  reformed 
systems  career  breaks  can  reduce  adequacy  significantly  and  monitoring  of  pension 
outcomes is important for those who have difficulty fulfilling the new eligibility conditions, 
notably  low  wage  earners  and  those  with  broken  careers,  among  whom  women  are  over-
represented. 

OMC  work  in  2008  has  concentrated  on  private  pension  provision.  A  number  of  Member 
States  have  taken  measures  to  ensure  funded  pensions,  dealing  with  coverage  and 
contributions,  levels  of  charges,  developing  regulatory  frameworks  for  annuities  (longevity 
risk)  and  investments  (financial  risk).  In  voluntary  schemes  there  is  ample  evidence  of  a 
strong socio-economic gradient in coverage and contribution levels. If private schemes are an 
essential source of future retirement income then coverage and contribution levels need to be 
set accordingly. 

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Current  designs  of  the  pay-out  phase  of  funded  schemes  may  give  insufficient  protection 
against  longevity  risk,  volatility  and  inflation.  Annuities  are  the  most  secure  means  of 
providing  an  income  in  retirement.  Shifts  in  the  portfolio  structure  when  approaching 
retirement (life-styling) can provide a certain degree of protection against volatility of capital 
value. Well-functioning supervisory bodies and effective financial regulatory frameworks are 
essential.  Shifts  to  multi-source  pensions  involving  complex  decisions  require  that  scheme 
members have access to unbiased information and to some financial education. 

Member  States  are  changing  their  minimum  income  provisions  for  older  people  to  increase 
benefits  and  ease  access.  In  as  much  as  benefits  tend  to  be  price-indexed  relative  incomes 
were likely to have fallen behind in recent years of growth. Yet, the relative erosion is mostly 
substantially  smaller  than  could  be  expected.  Most  Member  States  have  up  rated  minimum 
pensions and minimum provisions. 

Member States use the following national targets in the area of pensions: employment rate of 
older  workers  (even  beyond  the  EU  objective),  effective  retirement  age,  contribution  rates, 
theoretical  replacement  rates,  and  poverty  rate  of  older  persons.  This  suggests  that  pension 
modernisation follows long-term strategies in line with the agreed objectives. 

4. 

HEALTHCARE AND LONG-TERM CARE 

Virtually  all  of  the  2008-2010  reports  build  on  the  previous  2006  national  health  plans. 
Member  States  argue  that  essential  policies  contributing  to  good  health  and  longer  working 
lives  include  effective  workplace  health  policies,  health  promotion,  disease  prevention, 
curative care and rehabilitation. Moreover, greater coherence is necessary between economic, 
education, employment, environmental and social policy. 

Inequalities persist in health status and in life expectancy between different socio-economic 
groups  and  different  regions.  Evidence  shows  a  clear  correlation  between  ill  health  and 
poverty,  unemployment  and  low  education.  Many  NSRs  explicitly  recognise  that  social 
inequalities  in  health  hamper  people's  life  chances.  Several  present  cross-sectoral  policies, 
spanning  both  health-promotion  and  disease-prevention  and  mobilising  a  wide  range  of 
services  such  as  education,  housing  and  employment.  The  main  policies  aim  to  enhance 
primary  and  preventive  care,  to  remove  financial,  organisational,  informational  and  other 
barriers to access and to address the situation in deprived areas. 

Indeed  all  countries  see  enhancing  primary  care  as  the  way  to  improve  access,  ensure 
coordination of care and contribute to sustainability and all the more so where resources are 
scarce. However, in many countries the shortages of general practitioners and nurses continue, 
and ageing may make them more acute. It is difficult to see how the ambition of enhancing 
primary healthcare can be achieved without a proper primary healthcare policy that includes 
measures to ensure a sufficient supply of motivated healthcare professionals. 

Health  promotion  and  disease  prevention  are  universally  prioritised  as  a  way  to  improve 
health  and  functional  capacity,  thus  reducing  the  need  for  treatment  and  improving 
sustainability.  Member  States  recognise  that  the  campaigns  could  be  more  effective  and 
propose  making  them  more  local  and  targeted.  But  nonetheless  healthcare/treatment,  in 
particular hospital costs, consumes the largest part of the expenditure and many countries are 
still directing extra funds to this sector. Promotion and prevention receive a relatively small 
part of expenditure in relation to the goals they are supposed to achieve. 

Member  States  continue  in  their  efforts  to  improve  efficiency  and  effectiveness,  by 
rationalising  costs  and  introducing  cost-sharing  mechanisms.  Several  countries  have  been 
going down the avenue of privatisation. Whether such reforms promote quality and efficiency 

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depends  on  the  incentives  and  notably  the  nature  of  contracts  with  insurance  funds.  At 
national level, success depends on the institutional capacity to monitor, regulate, ensure risk 
equalisation  and  identify  what  the  private  and  what  the  public  can  do  better.  Private  and 
public provision also needs to be coordinated to create synergies and avoid duplication. 

The national reports show a growing awareness of quality issues among Member States and 
present  different  initiatives  aiming  at  providing  their  citizens  with  good  quality  and  safe 
preventive care and treatment, such as elaboration and implementation of quality standards or 
clinical  guidelines  based  on  evidence-based  medicine  or  health  technology  assessment. 
However, only a few countries have made patient safety, one of the cornerstones of quality, a 
key  priority,  and  set  up  appropriate  structures  and  systems.  Huge  disparities  are  observed, 
with  some  Member  States  well  advanced  in  the  implementation  of  quality  and  safety 
strategies and in providing a patient-centred approach, and with others only at the beginning 
of  the  process.  These  disparities  may  be  explained  by  the  limited  resources  allocated  to 
healthcare  and  the  insufficient  awareness  about  long-term  advantages  that  good  quality  of 
care may bring. While a large number of countries see increased patient choice as a dimension 
of patient centeredness, it is not acknowledged that free choice is related to increased costs of 
care. 

Care  coordination  remains  an  issue.  Member  States  have  made  progress  on  an  integrated 
approach  for  the  management  of  some  chronic  diseases,  but  there  is  still  much  to  do  to 
improve coordination between levels of government, between types of medical care, between 
health and social care, between public and private provision, between the public and the third 
sector. This is all the more so for long-term care. 

The NSRs reaffirm the commitment to ensure universal access to high quality and affordable 
long-term  care.  Nonetheless,  a  sustainable  mix  of  financing  is  yet  to  be  found  in  many 
countries, hence the share of private sources of finance is relatively high. These can be private 
health  insurance  coverage  (often  supplementary  or  for  high  income  groups)  or  private 
household  payments  (either  co-payments  for  publicly  provided  care,  and/or  out-of-pocket 
payments for which very little or no reimbursement is offered). 

Dependent  people  prefer  long-term  care  in  a  residential  or  community  setting  rather  than 
institutional care, but in many countries institutional care still accounts for more than half of 
public expenditure. Additionally, there is a widespread consensus on the need to address the 
expected  workforce  shortages  in  the  long-term  care  sector  (formal  care)  as  well  as  devising 
ways  to  support  family  or  informal  carers.  Adequately recruiting,  (re)training,  and  retaining 
long-term care workers remains a challenge. 

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This analysis is developed further in the annexed country profiles and supporting document. 

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