COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Council Recommendation on access to social protection for workers and the self-employed
Date: 2018-03-13
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU Member State, European social policy, labour force, labour market, self-employed person, social security

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   EUROPEAN COMMISSION  Brussels, 13.3.2018 SWD(2018) 71 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Council Recommendation  on access to social protection for workers and the self-employed {COM(2018) 132 final}  - {SWD(2018) 70 final}   
 
 
Executive Summary Sheet 

Impact Assessment on Council Recommendation on access to social protection for workers and self-employed  

A. Need for action 

Why? What is the problem being addressed?  
Globalisation,  technological  change,  changes  in  labour  market  institutions  and  demographic 
change  have  raised  the  speed  of  change  in  European  labour  markets  and  made  employment 
opportunities steadily more diverse. Careers are also becoming less linear. 
Social protection systems were primarily developed for and remain geared towards workers in 
‘standard  employment  relations’,  implying  a  long-term,  full-time  work  relationship,  and  in 
many countries the self-employed were never fully included in social protection systems. There 
is a growing number of people in non-standard forms of work or in self-employment who, due 
to their labour market status, are left without sufficient access to social protection.  
Such gaps increase risks to the welfare of the affected individuals and their families who endure 
greater  economic  uncertainty  and  give  rise  to  new  inter-  and  intra-generational  inequalities. 
Negative  consequences  are  also  felt  at  the  aggregate  level  putting  at  risk  the  financial 
sustainability  of  the  systems  and  impeding  social  protection  systems  to  act  as  automatic 
stabilisers dampening welfare-reducing economic cycles.  
What is this initiative expected to achieve?  
The  general  objective  of  the  initiative  "Access  to  social  protection  for  workers  and  slef-
employed" is to support all self-employed and non-standard workers people who, due to their 
contract type or labour market status, are not sufficiently protected by social protection schemes 
regarding  unemployment,  sickness,  maternity  or  paternity,  accident  at  work  and  occupational 
diseases,  disability  and  old-age.  More  specificly,  the  initiative  aims  at  encouraging  Member 
States to allow these groups to 
   adhere to corresponding social protection systems (closing formal coverage gaps), 
  accrue  and  take  up  adequate  entitlements  (adequate  effective  coverage)  and  facilitate 

transferability of social protection entitlements between schemes, 

  have transparent information about their social protection entitlements and obligations  
What is the value added of action at the EU level?  
The problem of insufficient access to social protection for a growing number of people in the 
labour  market  and  its  negative  consequences  on  social  fairness,  labour  market  dynamism  and 
sustainable  growth  are  wide-spread  across  Member  States.  While  the  design  and  financing  of 
social  protection  systems  is  a  national  competence  and  some  countries  are  introducing  some 
partial  reforms,  action  at  EU  level  can  uphold  principle  12  of  the  European  Pillar  of  Social 
Rights  and  ensure  that  progress  is  not  partial  or  uneven  but  is  instead  secured  across  groups, 
social  protection  branches  and  Member  States,  creating  a  level  playing  field  for  economic 
agents in the internal market. The EU action can avoid short-term distortions of competition and 
ensure that all Member States move in the same direction at the same time promoting upward 
convergence, to the benefit the EU economy as a whole.  

B. Solutions 

What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? 
Why?  
The instruments considered for the initiative are a Council Recommendation, a Directive and an 
increased focus on social protection in the context of existing instruments, notably the European 
Semester  and  Social  Open  Method  of  Coordination  (OMC).  The  preferred  instrument  is  a 
Council Recommendation as it is regarded as the most effective and proportionate instrument at 

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this  point  in  time.  The  key  added  value  of  a  Recommendation  at  this  stage  is  to  create 
momentum  supporting  and  complementing  national  debates  and  reforms,  guiding  Member 
States'  efforts  towards  upwards  convergence.  Given  the  evolving  nature  of  the  problem,  the 
ongoing reforms in some Member States and statistical limitations, a Council Recommendation 
is a more proportionate approach than a Directive. Although a Directive could be more effective 
from a strictly economic point of view in reaching the objectives of this initiative, consultations 
imply that it is doubtful that it would gather support from all Member States, making it the less 
effective instrument overall. 
Alongside the baseline scenario (package A), two alternative policy packages are assessed, each 
combining measures addressing three specific objectives of the initiative.  
Package  B  aims  at  i)  extending  formal  coverage  on  a  mandatory  basis  for  the  non-standard 
workers and on a voluntary basis for the self-employed, ii) adjusting time thresholds of social 
protection schemes and ensuring preservation, transferability and aggregation of entitlements in 
case individuals change job or employment status, iii) ensuring that generic and  personalised 
information  about  social  protection  entitlements  and  obligations  is  available  to  the mentioned 
groups.  
Package  C  aims  at  i)  extending  formal  coverage  on  a  mandatory  basis  for  the  non-standard 
workers  and  for  the  self-employed,  ii)  adjusting  time  thresholds  of  social  protection  schemes 
and introducing personal accounts tying social protection entitlements to the individuals and not 
to  conracts,  iii)  ensuring  that  generic  and    personalised  information  about  socal  protection 
entithlements and obligations is avaialble to the mentioned groups. 
The preferred option (package B) leaves more flexibility in tailoring choices of formal coverage 
to  the  self-employed,  given  the  special  characteristics  of  and  heterogeneity  of  this  group. 
Moreover  there  is  a  lack  of  clear  consensus  among  stakeholders,  and  in  particular  among 
representatives of the self-employed, on the approach to formal coverage of the self-employed. 
Package  B  represents  therefore  a  good  compromise  between  the  different  views  expressed 
throughout the consultation process and the EU political objectives set out for this initiative.  
Who supports which option?  
The social partner consultation and the open public consultation show rather divergent views. 
Regarding the policy approach, around 2/3 of the respondents to the open public consultation 
and all trade unions favour mandatory social protection for every kind of job . On the other side, 
employers  held  different  views  on  the  options.  Some  agree  that  social  protection  should  be 
mandatory  but  employees  should  have  the  right  to  choose  the  form  of  coverage  (public  or 
private)  and  the  freedom  of  choice  for  the  self-employed  was  particulary  highlighted.  Other 
employers  favour  voluntary  formal  coverage  to  take  into  account  the  diversity  of  forms  of 
employment and the heterogeneity within the self-employed.  
Regarding the choice of instrument, some stakeholders (trade unions, representatives of crowd 
workers,  NGOs,  some  self-governing  social  insurance  bodies,  few  Member  States)  would 
favour a directive setting a minimum of standards. Others (employers, representatives of liberal 
professions,  most  Member  States)  underline  the  European  semester  and  the  Social  OMC  as 
vehicles to ensure that gaps in social protection are addressed. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
Key decisions on financing and design of measures are left to the Member States, in line with 
subsidiarity  requirements  enshrined  in  Art.  153  TFEU.  These  decisions  drive  the  size  of 
benefits.  Overall,  the  number  of  protected  non-standard  workers  and  the  self-employed  will 
increase markedly. This entails a reduction in the individualisation of risk, income uncertainty, 
precariousness and notably a reduction in these groups' risk of poverty. Reducing differences in 
access  to  social  protection  is  expected  to  encourage  transitions  between  contract  types  and 

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labour market statuses, promoting labour market dynamism. Reducing the possibility of over-
reliance on contracts exempted from social protection contributions is set to create a more level 
playing field between firms. Stemming the trend of an increasing share of people outside social 
protection systems avoids weakening their role in the stabilisation of economic cycles and may 
have positive effects on their fiscal sustainability. 
What are the costs of the preferred option (if any, otherwise main ones)?  
The level of costs and their distribution between public budgets, insurance providers, the newly 
covered groups and taxpayers also strongly depend on key decisions left to Member States for 
subsidiarity reasons, including on the organisation of schemes, their financing and the level of 
protection provided. Direct costs are mainly related to the provision of benefits, with exemplary 
simulations  on  the  extension  of  coverage  by  unemployment  and  sickness  benefits  to  the  self-
employed  suggesting  a  limited  cost.  Indirect  costs  could  result  from  behavioural  changes  in 
response to the increased social protection coverage. 
How will businesses, SMEs and micro-enterprises be affected?  
Businesses could benefit from reduced unfair competition, a possible in increase in productivity 
of individuals in the newly protected forms of employment and from positive effects on labour 
market dynamism. Depending on financing choices, companies could experience an increase in 
the cost of managing fluctuations in production in line with some cost increase for non-standard 
employment and employing self-employed people. The self-employed mostly work with micro 
enterprises, and much less with SMEs and large firms. Non-standard employees are particularly 
common in SMEs.  
Will there be significant impacts on national budgets and administrations?  
Costs  for  the  provision  of  benefits  to  previously  uncovered  groups  through  public  social 
protection systems could arise where, depending on Member States’ financing decisions, the net 
cost  to  public  budgets  for  the  provision  of  benefits  could  be  reduced  to  the  latter's  social 
protection contributions. To the extent that previously uncovered groups currently rely on safety 
nets of last resort such as social assistance, expenditure for other parts of the budget could be 
reduced. Some costs for provision of personalised information would also arise.  
Will there be other significant impacts?  
A  simulated  extension  of  coverage  of  unemployment  benefits  to  the  self-employed  indicates 
significant reductions of at-risk-of-poverty for the self-employed and their households. Similar 
effects (not simulated) can be expected regarding the poverty risk of non-standard workers.   

D. Follow up 

When will the policy be reviewed?  
The  Commission  will  monitor  implementation  in  the  Member  States  and  review  the 
Recommendation  in  cooperation  with  the  Member  States  and  after  consulting  the  concerned 
stakeholders, ensuring a sufficiently long period to evaluate the effects of the initiative after it 
has been fully implemented. 

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