Social Protection Committee annual report 2023 : review of the Social Protection Performance Monitor (SPPM) and developments in social protection policies : key social challenges and key messages.
Date: 2023-10-18
Institutions: Directorate-General for Employment, Social Affairs and Inclusion
Subjects: EU Member State, activity report, coronavirus disease, energy poverty, poverty, social indicator, social policy, social security, social situation, social statistics, unemployment

Social Protection Committee
Annual Report 2023

Review of the Social Protection Performance Monitor (SPPM)  
and developments in social protection policies
Key social challenges and key messages

EUROPEAN UNION

EUROPEAN COMMISSION 

Directorate-General for Employment, Social Affairs and Inclusion 
Directorate D — Social Rights and Inclusion  
Unit D.1 — Social Policies, Child Guarantee, SPC 
E-mail:  EMPL-D1-UNIT@ec.europa.eu   

European Commission 
B-1049 Brussels 

2 

 
 
Social Protection Committee 

Annual Report 2023 

Review of the Social Protection Performance Monitor (SPPM) 
and developments in social protection policies  

-  Key social challenges and key messages -  

3 

 
 
 
 
 
 
 
 
 
Manuscript completed in October, 2023 

This document has been prepared for the European Commission however it reflects the views only of the authors, 
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PDF  ISBN 978-92-68-08077-1  ISSN 2315-1552  doi 10.2767/967292       KE-BG-23-001-EN-N 

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TABLE OF CONTENTS 

Acknowledgments ............................................................................................... 7 

Key messages ...................................................................................................... 8 

I. Introduction ..................................................................................................... 17 

II. Progress on the 2030 target on reducing poverty and social              

exclusion ........................................................................................................ 18 

III. Overview of developments in the social situation in the EU .................. 26 

(a)  Development in the social situation up to 2022 ................................... 26 

-  Main trends to watch from the SPPM dashboard update ............. 34 

-  SPPM dashboard update (2022 EU-SILC and LFS data) ............ 40 

-  Latest indications from Eurostat flash estimates of income 

developments in 2022 .................................................................... 44 

(b)  Economic and labour market outlook setting the context for      

developments in the social situation over 2023 ................................... 46 

(c) Trends in the take-up of selected standard social benefit schemes .... 47 

IV.  Overview of key social challenges and good social outcomes in                 
EU Member States ....................................................................................... 50 

V. Main recent social policy developments in EU Member States .............. 52 

V.i  Overview of social policy developments ................................................... 52 

Reforms in the areas of social protection and social inclusion .............. 53 

Reforms in the area of pensions ............................................................. 57 

Reforms in the area of healthcare........................................................... 60 

Reforms in the area of long-term care .................................................... 64 

V.ii  Policy measures to tackle energy poverty and rising energy prices           

across the Member States. ....................................................................... 67 

Annex 1:  SPPM Country Profiles ........................................................................  

Annex 2:  Underlying data and detailed information on measures to         
address energy poverty and high energy prices, and to            
cushion the impact of high inflation in general ...............................  

Annex 3: Technical Annex ....................................................................................  

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Abbreviation 

Full name 

EU27_2020 

European  Union  (27  countries 
composition from 2020) 

EA18/19 

Euro area (18/19 countries) 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

EL 

ES 

FR 

HR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

Belgium 

Bulgaria 

Czechia 

Denmark 

Germany  

Estonia 

Ireland 

Greece 

Spain 

France 

Croatia 

Italy 

Cyprus 

Latvia 

Lithuania 

Luxembourg 

Hungary 

Malta 

Netherlands 

Austria 

Poland 

Portugal 

Romania 

Slovenia 

Slovakia 

Finland 

Sweden 

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Acknowledgments 

The  present  report  has  been  prepared  as  part  of  the  mandate  given  to  the  Social  Protection 
Committee (SPC) by the Treaty on the Functioning of the European Union (TFEU) to monitor the 
social situation in the European Union and the development of social protection policies (art. 160 
of the TFEU).  

The  report  is  prepared  by  the  Secretariats  of  the  Committee  and  its  Indicators  Sub-Group.  The 
Directorate-General  for  Employment,  Social  Affairs  and  Inclusion  provided  the  SPPM  dashboard 
calculations  used  in  the  report  with  the  extensive  assistance  and  data  provision  of  Eurostat.  The 
principal authors are Paul Minty and Georgi Karaghiozov, with specific support from Maria Baroni, 
Katalin  Szatmari  and  Sara  Baiocco.  The  members  of  the  SPC  and  its  Indicators  Sub-Group 
contributed  extensively  to  the  drafting  of  the  report  and  its  key  messages.  The  report  was 
approved by the SPC on  26 September 2023. The Council of the European Union endorsed the 
key messages of the report on 9 October 2023. 

7 

 
 
Key messages 

(Endorsed by the Council of the European Union on 9 October 2023) 

1.  Delivering  on  its  mandate  as  set  out  in  Article  160  of  the  TFEU,  the  Social  Protection 

Committee (SPC) has produced for the Council its annual review of the social situation in the 

EU and the policy developments in the Member States, based on the most recent data and 

information available. On this basis, the SPC highlights the following findings and common 

priorities, which should guide the preparatory work for the 2024 Annual Sustainable Growth 

Survey. 

2. 

In  2022,  Russia’s  war  of  aggression  against  Ukraine  came  at  a  time  when  Europe  was 

showing  strong  signs  of  recovery  from  the  unprecedented  economic  shock  due  to  the 

COVID-19  pandemic.  It  led  to  a  subsequent  sharp  downturn.  Economic  growth  in  the  EU 

slowed  down  over  2022,  but  despite  fears  of  recession,  positive  growth  in  the  first  half  of 

2023  has  demonstrated  the  resilience  of  the  European  economy  in  a  challenging  global 

context. Total employment continued to expand in 2022, though at a slower pace over the 

course of the year, and with the employment rate of people aged 20-64 reaching 75.3% in 

the first quarter of 2023. The unemployment rate remained very stable at 6.2% over 2022 

(which is well below the rate of 6.5% in March 2020, just before the COVID-19 crisis began), 

and  hit  a  new  record  low  of  5.9%  in  April  2023,  with  high  participation  and  employment 

rates.  

3.  Prices  rose  markedly  from  February  2022  when  Russia  launched  its  war  of  aggression. 

Whereas  these  price  increases  were  initially  driven  by  energy  price  rises,  pressures 

broadened as higher energy costs passed through to food, services and other goods. This 

had  an  impact  on  consumer  prices  and  consequently  households’  purchasing  power, 

especially for lower income families who spend a higher fraction of their income on energy 

and food. However, after peaking in 2022, headline inflation continued to decline in the first 

quarter of 2023 amid a sharp deceleration of energy prices.  

4.  Year-on-year  growth  in  real  aggregate  household  income  in  the  EU  declined  over  2022, 

turning negative in the third and fourth quarters. This mainly reflected the impact of rising 

inflation and falls in the real compensation of employees and of the self-employed, as well 

as a negative year-on-year real contribution from (net) social benefits. In the first quarter of 

8 

2023, household incomes have remained broadly stable over one year in real terms (+0,3%), 

reflecting  that  the  decline  in  real  wages  (contribution  of  -0.9%)  was  mostly  balanced  by 

taxes, benefits and other transfers (contribution of +0.9%). 

5.  As regards progress towards the 2030 poverty reduction target,  there has been an overall 

stability  in  the  EU  in  2022  compared  to  the  previous  year  (with  a  0.1  percentage  point 

decrease  in  the  at-risk-of-poverty-or-social-exclusion  rate)  and  over  the  last  3  years.  This 

stability reflects decreases in the number of people at risk of poverty1 and in those living in 

(quasi-)  jobless  households,  but  a  rise  in  the  severe  material  and  social  deprivation 

component. At Member State level, around a quarter of countries recorded significant falls 

in  their  at-risk-of-poverty-or-social-exclusion  rates  in  2022.  Most  of  the  Member  States 

recorded  no  significant  change  in  their  rates.  In  contrast,  in  a  few  Member  States,  with 

lower-than-average rates, an increase took place, while most of those with higher than the 

average  rates  actually  saw  the  rates  decline,  indicating  some  degree  of  convergence  in 

Member  States’  performances.  Eurostat’s  flash  estimates  referring  to  2022  incomes  also 

suggest that poverty remained broadly constant on average in 2022.  

6.  This stability is also the result of income support measures in place to mitigate the impact of 

high  inflation,  which  sustained  disposable  income  in  nominal  terms.  This  confirms  the 

positive impact of the exceptional measures adopted both at EU and Member States level in 

the  last  three  years.  They  have  effectively  been  cushioning  the  negative  impacts  of 

pandemic, energy and inflation crises on incomes, unlike what was experienced in the wake 

of the 2008 financial crisis. The increase in the cost of living, however, affects real incomes, 

as partially captured by the estimation of the AROP rate anchored in 20212, that shows an 

increase for approximately half the Member States and points to a possible deterioration of 

living  standards  in  several  countries.  Indeed,  while  the  EU  median  disposable  household 

income is estimated to have increased by about 7% in nominal terms, it decreased by about 

2% in real terms.  

7.  Concerning the complementary target, child poverty also remained broadly stable in 

2022, with the number of children at risk of poverty or social exclusion showing only 

1 

This refers to income in 2021. 

2   People at-risk-of poverty anchored at 2021 are those with an equivalised disposable income below the at-risk-of-poverty threshold 
calculated  in  2021 adjusted  with the  evolution  of HICP  between  2021 and  2022.  The  AROP  anchored  indicator  is  defined  as  the 
percentage  of  persons  in  the  total  population  who  are  under  this  inflation-adjusted  poverty  threshold.  The  indicator  partially 
captures the price evolutions and their impact on incomes. 

9 

 
 
a marginal rise (up 0.3 million) compared  to  2021. This is due to a small decline in 

the  child  population  at  risk  of  poverty,  a  more  substantial  drop  in  the  number  of 

children living in (quasi-)jobless households, and a rise in those experiencing severe 

material and social deprivation. Still, in 2022 the number of children at risk of poverty 

or social exclusion was higher than in the reference year 2019 by 0.9 million.  

8.  Certain  positive  developments  in  the  social  situation  could  be  observed,  despite 

remaining  challenges,  with  more  Member  States  registering  positive  changes  than 

those recording negative ones in the following areas: 

- 

reductions in the share of the population living in (quasi-)jobless households in 

almost  half  of  the  Member  States  in  long-term  unemployment  in  almost  one 

third, and continued rises in the employment rate of older workers in almost all 

Member States, reflecting improvements in the labour market; 

- 

the situation for youth also improved, with declines in the number of those not 

in employment education or training  (NEETs)  in many Member  States  and  the 

overall EU rate also declined;  

- 

there  were  also  significant  declines  in  the  depth  of  poverty  (i.e.  the  relative 

median  poverty  risk  gap)  for  the  general  population  in  more  than  a  third  of 

Member States as well as for the child population. 

9.  Nevertheless, there were some areas to watch concerning the latest developments, 

namely: 

- 

increases in the severe material and social deprivation  rate and in the standard 

material and social deprivation rate for the general population and for children 

in  around  a  third  of  Member  States,  reflecting  that  real  disposable  income  of 

households worsened  in 2022, as the affordability of many items declined  due 

to the rise in inflation. This was also reflected in significant rises in the  housing 

cost overburden rate in a number of countries; 

- 

a  deterioration  in  the  poverty  and  relative  income  situation  of  older  people 

(aged 65 or older), with rises in their at-risk-of-poverty-or-social-exclusion rate 

10 

in  more  than  half  of  MS.  Relative  incomes  from  pensions  as  reflected  by  the 

aggregate replacement ratio worsened in a similar number of Member States.  

-  mixed  developments  with  regard  to  income  inequalities,  with  deterioration  in 

almost  half  of  the  Member  States  but  improvements  in  a  similar  number  of 

Member States. 

10.  The European Pillar of Social Rights sets forth the necessary framework for actions 

at EU and Member State levels. Together with the three EU headline targets in the 

areas  of  employment,  skills  and  reduction  of  poverty,  the  Pillar  will  contribute  to 

achieving upward social convergence among Member States. Since the targets are 

interdependent  and  mutually  reinforcing,  coherent  policy  actions  should  be  taken 

across the policy areas. 

11.  Member States should continue to take  targeted actions to  mitigate  the impact of 

price  increases  and  volatility. Households’  purchasing  power  should  be  protected, 

especially for lower income families who spend a higher fraction of their income on 

energy  and  food  (and  other  essential  services),  and  which  are  consequently 

increasingly affected by material and social deprivation. In this context distributional 

impact assessment of policies and reforms can help prevent adverse social effects of 

measures on poverty and inequalities and should be used more systematically when 

designing reform measures and during budgeting. 

12.  In  the  current  uncertain  international  and  economic  environment,  the  positive 

employment dynamics of the post COVID-19 recovery  should  be accompanied  by 

social protection and inclusion policies supported by social investment to ensure fair 

growth, further improve the resilience of the economies and  societies and  reduce 

the  risks  for  vulnerable  households  and  individuals,  including  those  related  to  the 

green and digital transitions.  

13.  Member  States  should  continue  to  modernise  their  social  protection  and  social 

inclusion  systems,  paying  attention  to  the  adequacy,  coverage  and  take  up  of 

benefits,  effectively  combined  with  active  inclusion  measures,  also  building  on  the 

lessons  learned  during  the  COVID-19  crisis  while  designing  more  permanent 

11 

 
measures.  They  should  provide,  and  where  necessary  strengthen,  robust  social 

safety  nets,  by  integrating  adequate  income  support  (through  minimum  income 

benefits  and  other  accompanying  monetary benefits),  in-kind  benefits,  and  access 

to  enabling  and  essential  services,  in  line  with  the  Council  Recommendation  on 

adequate  minimum 

income  ensuring  active 

inclusion.  Simplification  and 

streamlining  of  benefits  are  required  also  to  ensure  take-up,  while  their adequate 

indexation is key in the context of the current high inflation rates. 

14.  Social protection for all workers  and  the self-employed should  be fostered, in line 

with the 2019 Council Recommendation on access to social protection for workers 

and the self-employed. The report on the implementation of the Recommendation 

shows that there is considerable variation in the level of ambition of Member States 

in  ensuring  formal  and  effective  coverage  by  adequate  and  transparent  social 

protection  schemes.  Around  half  of  the  Member  States  have  planned  important 

reforms to improve participation to social protection schemes for specific categories 

of people on the labour market, however they are not yet all implemented. In many 

Member  States,  less focus has been devoted  in  the  national  implementation plans 

to ensuring effective coverage notably by adapting the rules governing entitlements 

and improving transparency. Therefore, further implementation efforts are needed 

to close existing gaps.  

15.  Against  a  worsening  of  child  poverty,  measures  to  break  the  inter-generational 

transmission  of  poverty  are  necessary,  including  through  implementation  of  the 

Council  Recommendation  establishing  a  European  Child  Guarantee.  In  particular, 

the availability, quality and affordability of early childhood education and care is key 

to  support  the  development  of  children’s  skills  and  competences,  and  support 

parents’ labour market participation. 

16.  The  energy  crisis  underlined  the  need  to  ensure  access  to  essential  services, 

especially  to  mitigate  the  negative  social  impacts  of  rising  prices.  The  recent 

Commission report on access to essential services confirmed that, while the majority 

of the population in the EU has access to essential services (including energy, water, 

12 

sanitation,  transports  and  digital  services),  people  at  risk  of  poverty  or  social 

exclusion  and  the  most  marginalised  face  the  greatest  barriers  in  accessing  such 

services. The report highlighted that affordability can constitute an important barrier 

to equal access especially for energy, followed by digital communications, transport, 

water  and  sanitation.  Addressing  energy  poverty  is  therefore  key  to  ensuring 

fairness  in  the  green  transition,  in  line  with  the  Council  Recommendation  on 

ensuring a fair transition towards climate neutrality. Availability and accessibility also 

pose challenges to access, sometimes linked to other barriers, such as lack of skills 

or  geographical  factors  (the  urban–rural  divide,  remote  and  insular  regions).  EU 

funding, including the RePower EU Plan, can support Member States efforts both in 

tackling  the  current  uncertain  scenarios  and  the  structural  challenges  in  access  to 

essential services. 

17.  The 2023 Thematic Social Reporting has taken stock of the existing and exceptional 

measures of the Member  States in  facing  the energy and  cost of living  crisis.  In a 

forward-looking  perspective,  continued  focus  on  policies  to  tackle  energy  poverty 

are needed. Long-term national strategies require to combine adaptations of social 

protection  and  social  inclusion  systems  along  with  social  services.  Permanent 

measures, such as especially indexation mechanisms on wages and social benefits, 

contribute  to  mitigate  the  effects  of  high  inflation  on  real  incomes  and  living 

standards.  In  this  respect,  it  can  be  noted  that  so  far  these  measures  have  not 

translated into ‘further surges in inflation’. Support measures to specifically combat 

energy poverty by improving energy affordability are mostly temporary (82%) and 

tend to be universal. Most of these temporary measures will be over by the end of 

2023,  which  points  to  a  potential  need  for  continued  focus  on  policies  tackling 

energy poverty more structurally. Targeted approaches are also needed to mitigate 

more  effectively  the  negative  impacts  of  the  crisis  for  those  who  are  more 

vulnerable and more affected. Dedicated structures to assess, monitor and address 

energy  poverty  should  be  implemented,  also  with  a  view  of  better  targeting 

emergency policy measures.  

13 

 
18.  Further  efforts  should  be  made  to  provide  affordable  housing,  including  social 

housing and/or affordable rental housing, through plans, reforms and investments. 

Member States should also pay attention to specific housing needs, such as housing 

for  people  in  vulnerable  situations  and  persons  with  disabilities.  Prevention  of 

evictions  and  Housing  First  policies  for  the  homeless,  should  be  implemented  as 

well as desegregation policies. Stronger monitoring frameworks and coordination of 

housing policies (including rent controls and taxation) with other social policies (e.g. 

income support and housing benefits) and services (e.g. transportation) are needed. 

Member  States  are  working  within  the  framework  of  the  European  Platform  for 

Combating Homelessness towards ending homelessness by 2030. 

19.  In the context of high inflation and spiking energy cost measures, retired people can 

be more fragile as they have less control and flexibility in adjusting their income in 

response  to  changing  circumstances.  Member  States  should  protect  the  living 

standards  of  the  retired  population  by  adopting  measures  targeting  vulnerable 

groups,  such  as  low-income  pensioners.  In  line  with  national  specificities,  besides 

indexation  of  pensions,  additional  targeted  measures,  such  as  means-tested 

payments,  could  be  considered,  depending  on  the  design  of  the  pension  system. 

Efforts  to  safeguard  the  effectiveness  of  social protection  in  old  age,  adequacy  of 

pensions and sustainability of the pension systems should be continued by Member 

States,  in  a  context  of  structural  reforms  to  face  the  challenges  of  an  ageing 

population,  shrinking  number  of  working-age  Europeans,  and  evolving  labour 

markets.  Fostering  increased  participation  in  the  labour  market  in  general  or 

specifically supporting employment of older workers can help improve the level of 

pensions and the fiscal sustainability of the pension system.  

20.  Systemic weaknesses in the national care systems need to be addressed to ensure 

access to high quality affordable long-term care services, against the background of 

strong  increase  in  the  demand  for  health  and  long-term  care  services  and  less 

people  of  working  age  contributing  to  social  protection  schemes. 

  The 

implementation  measures  of  the  2022  Council  Recommendation  on  access  to 

affordable  and  high-quality  long-term  care  can  help  address  these  challenges. 

14 

Provision  of  long-term  care  is  key  also  in  the  context  of  women’s  labour  market 

participation and upholding basic human rights of persons in need of care.  While 

expanding the offer of high-quality services that are person-centred and respect the 

freedom of choice, investments in healthy ageing, prevention and rehabilitation can 

help reduce the demand for long-term care. Better integration of health and long-

term  care  services  can  respond  better  to  care  needs  and  also  ensure  best  use  of 

limited  financial  and  human  resources.  Stronger  focus  is  needed  on  quality 

standards  and  quality  assurance.  Measures  to  improve  working  conditions  and 

retain  and  attract  staff  need  to  be  pursued.  Digitalisation  and  other  innovative 

solutions  can  help  improve  working  conditions  as  well  as  empower  longer 

independent living at home.  

21.  After  the  COVID-19  pandemic,  Member  States  should  continue  to  address  the 

existing challenges of the European health systems and improve their resilience and 

preparedness  for  possible  future  crises.  Reforms  should  include  upgrading  health 

facilities,  improving  public  health  capacities,  addressing  workforce  shortages, 

improving  preventive  care  and  introducing  innovations.  The  Recovery  and 

Resilience  Facility  provides  significant  support  for  the  national  reform  efforts. 

Effective safety nets for providing healthcare access to the most vulnerable have to 

be ensured. Further efforts to improve integrated care, including co-ordination with 

social  services,  will  be  crucial  to  improve  the  efficiency  of  care.  The  roll-out  of 

telemedicine and  other digital solutions taking into  consideration the digital divide 

should  continue  to  improve  the  accessibility  of  care  and  promote  better  health 

outcomes  for  the  population.  Strengthening  health  promotion  and  disease 

prevention will be key to  improve health outcomes.  Mental health was particularly 

challenged  by  the  COVID-19  pandemic  having  significant  social  impacts  and 

negatively  affecting  the  overall  well-being  and  quality  of  life  of  the  individuals, 

especially among young people. In line with the recent Commission initiative on the 

comprehensive  approach  to  mental  health,  efforts  are  necessary  to  build  an 

integrated,  cross-sectorial  approach  to  mental  health,  also  by  integrating  mental 

health services into primary care and shifting to community-based care.  

15 

 
22.  The  European  Semester  remains  an  effective  coordination  tool  for  fostering 

sustainable  and  inclusive  economic  growth,  competitiveness,  employment  and 

adequate social protection and social inclusion. Since many of the reform measures 

taken by the Member States are part of the national Recovery and Resilience plans, 

it remains essential that the EPSCO Council and its advisory bodies are kept closely 

involved in the ongoing monitoring of the implementation of these plans.  

23.  To strengthen Social Europe and support the implementation of the European Pillar 

of  Social  Rights  at  EU  and  Member  State  level,  with  due  regard  for  respective 

competences, constructive dialogue should be maintained between EU institutions, 

Member States, social partners and civil society organizations.  

24.  In the joint horizontal opinion with the EMCO on the 2023 European Semester for 

the  June  2023  EPSCO  Council,  EMCO  and  SPC  called  for  establishing  closer 

coordination  between  economic,  fiscal,  employment  and  social  policies.  In  this 

context,  the  Committees  acknowledge  the  need  to  modernise  their  monitoring 

tools, while avoiding risks of increased administrative burden. The social monitoring 

frameworks,  including  the  analytical  tools  used  in  the  SPC  annual  report,  are 

currently  being  reviewed  by  the  Committee,  some  jointly  with  EMCO  as 

appropriate, to simplify and consolidate the existing tools.  

25.  The European Commission is invited to take into account the above policy guidance 

in the preparatory work of the 2024 Annual Sustainable Growth Survey.  

16 

I. Introduction 

The  SPC  is  an  advisory  policy  committee  to  the  EPSCO  Council  that  provides  a  representative 

forum  for  multilateral  social  policy  coordination,  dialogue  and  cooperation  at  EU  level.  It  brings 

together  policy  makers  from  all  EU  Member  States  and  the  Commission  in  an  effort  to  identify, 

discuss and implement the policy mix that is most fitted to respond to the various challenges faced 

by  Member  States  in  the  area  of  social  protection  policies.  It  uses  the  social  open  method  of 

coordination (OMC) and is assisted in carrying out its tasks by the Indicators Sub-Group. 

The yearly activities of the SPC are defined in the SPC work programme, which is set at the start of 

each  year  and  is  presented  at  the  spring  meeting  of  the  Employment  and  Social  Ministers.  The 

programme is prepared taking into consideration the most current EU policy priorities and topics 

of the incoming Presidencies of the EU and the Commission. In 2023, in addition to the activities 
listed in its annual programme (3), the SPC also engaged (jointly with the Employment Committee) 

in an examination of the proposal made by some Member States for the introduction of a Social 

Imbalances  Procedure  (now  renamed  as  Social  Convergence  Framework)  in  the  European 
Semester (4)(5), and in the collection of information on social policy measures taken in response to 

the Russian war of aggression in Ukraine. 

The  main  objective  of  the  present  report  is  to  deliver  on  the  mandate  of  the  Committee  to 

monitor  the  social  situation  in  the  European  Union  and  the  development  of  social  protection 

policies (Article 160 of Treaty on the Functioning of the European Union (TFEU)), and, through its 

analysis, to provide input to the Council on the main social policy priorities to recommend to the 

Commission in the context of the preparation of the 2024 Annual Sustainable Growth Survey. On 

the  basis  of  the  Social  Protection  Performance  Monitor  (SPPM)  and  Member  States'  social 
reporting, the report aims at i)  monitoring the social situation (6), especially the progress towards 

the  2030  target  on  reducing  poverty  and  social  exclusion  and  highlighting  the  common  social 

trends  to  watch,  and  ii)  identifying  the  key  structural  social  challenges  facing  individual  Member 

States  as  well  as  their  good  social  outcomes,  and  iii)  reviewing  the  most  recent  social  policy 

developments  in  Europe.  An  overview  is  also  provided,  making  use  of  the  available  information 

and some more timely, non-standard data sources, on the very latest evolution in developments in 

the social situation in the EU and its Member States. 

A separate annex to the report provides the SPPM country profiles for each Member State. 

(3)   Working programme of the SPC for 2023 
(4)   Opinion on the proposal by Belgium and Spain for the introduction of a Social Imbalances Procedure in the 

European Semester (2022) 

(5)  SPC-EMCO key messages on the Social Convergence Framework submitted to the EPSCO Council meeting on 12 

June 2023 

(6)   The figures quoted in this report are generally based on data available around early July 2023, unless otherwise 

stated. 

17 

 
 
II. Progress on the 2030 target on reducing poverty 
and social exclusion  

On 4 March 2021, the European Commission published its Communication on the European Pillar 
of  Social  Rights  Action  Plan (7),  outlining  concrete  actions  to  further  implement  the  Pillar 
principles (8)  as  a  joint  effort  by  the  Member  States  and  the  EU.  As  part  of  the  Action  Plan  the 

Commission proposed three EU headline targets to be achieved by the end of the decade in the 
areas of employment, skills, and social protection (9): 

•  At least 78% of the population aged 20 to 64 should be in employment by 2030; 

•  At least 60% of all adults should participate in training every year; 

•  The number of people at risk of poverty or social exclusion (10) should be reduced by at least 

15 million by 2030 (compared to 2019). 

The  European  Council  welcomed  these  three  targets  at  the  Porto  Summit  in  May  2021.  The 
historical Porto Social Commitment (11) and the Porto Declaration (12) will drive the implementation 

of the European Pillar of Social Rights in the coming years. 

As under the Europe 2020 Strategy, Member States have proposed national targets to support the 

achievement of the common EU headline targets for 2030  (Table 1). These were discussed by EU 

employment  and  social  affairs  ministers  at  the  Council  meeting  of  15  June  2022,  and  reveal  a 

strong  commitment  to  achieving  the  target,  as  shown  by  the  individual  poverty-reduction 

ambitions  of  the  Member  States  summing  to  a  figure  higher  than  the  EU  level  commitment  to 
reduce poverty and social exclusion by 15 million (13). Complementary goals were also set out by 

the Action Plan, which aim to support the achievement of the headline targets.  With regard to the 

poverty  and  social  exclusion  target,  out  of  the  15  million  people  to  lift  out  of  poverty  or  social 

exclusion, at least 5 million should be children. Nineteen Member States have set complementary 

targets for reducing the number of children at risk of poverty or social exclusion (Table 2). 

The national targets will contribute to the shared ambition of reaching the EU headline targets by 

2030  in  the  areas  of  employment,  skills, and  poverty reduction and  their  implementation  will be 

closely monitored by the Social Protection Committee and the Employment Committee, including 

in  the  context  of  the  European  Semester,  the  EU's  coordination  framework  for  economic  and 

employment policies. 

(7)  ST 6649/21 + ADD 1-2 
(8)  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32017C1213%2801%29  
(9) For reference, starting values for the targets were 73.1% (2019), 37.4% (2016), and 92.2 million (2019) respectively.   
(10)  The  definition  of  AROPE  (and  its  components  regarding  material  deprivation  and  (quasi-)jobless  households) 
changed in 2021 and this revised indicator is now used to monitor poverty and social exclusion. For further details see 
the Eurostat Glossary: At risk of poverty or social exclusion (AROPE) - Statistics Explained (europa.eu)) and the 2021 SPC 
annual report, and note that previous years’ values since 2015 have been re-calculated according to the new definition. 
(11) Porto Social Commitment (Portuguese Presidency Website, 7 May 2021) 
(12) Porto Declaration (Consilium Website, 7 May 2021) 
(13) The national targets that are expressed in terms of the population at risk of poverty or social exclusion (i.e. not 
including those for DE, DK and MT) sum to around 15.6 million. Taking into account that the national targets for DE and 
DK are expressed in terms of subcomponents of AROPE and are expected to translate into similar declines in AROPE 
numbers, the overall ambition sums up to around 16.8 million. 

18 

 
Table 1: National minimum 2030 targets for the reduction of poverty and social 
exclusion  

Notes: * Countries that have expressed their national target in relation to an indicator different from the EU headline target 
indicator  (AROPE),  or  in  a  format  other  than  absolute  population  reductions.  Denmark  and  Germany (14)  express  their 
national  poverty  reduction  targets  as  a  reduction  in  the  number  of  persons  living  in  (quasi-)jobless  households  (i.e. 
households with very low work intensity) that are expected to translate into similar declines in the numbers of people in 
AROPE  over  the  decade.  MT  expresses  its  national  poverty  reduction  target  as  a  reduction  of  the  AROPE  rate  by  3.1 
percentage points.  

(14)   The reference year for the German national target is 2020. 

19 

 
 
 
 
Table 2: National minimum 2030 targets for the reduction of poverty and social 
exclusion for children 

Notes: * Countries that have expressed their national target in a format other than absolute population reductions. EL and 
MT  express  their  national  poverty  reduction  targets  for  children  as  a  reduction  of  the  AROPE  rate.  No  targets  set  for 
reduction of child poverty and social exclusion in DK, DE, IT, LV, LT, HU, NL and RO. 

20 

 
Progress towards the 2030 EU poverty and social exclusion target 

Despite the lasting effects of the COVID pandemic, the Russian war of aggression against Ukraine, 
and  the  substantial  rise  in  inflation,  EU-SILC  figures  for  the  EU27  aggregate suggest  an  overall 
stability in the social situation in the EU in 2022 compared to the previous year (Figure 1), with the 
figures  showing  a  marginal  decrease  in  the  overall  EU  population  at  risk  of  poverty  or  social 
exclusion  (down  around  0.3  million).  This  reflects  underlying  decreases  of  1  million  in  the 
population at risk of poverty and of around 2.2 million in the number of people living in (quasi-
)jobless households, but with a rise of 1.5 million in those experiencing severe material and social 
deprivation.  This  equates  to  a  slight  0.1  percentage  point  decrease  in  the  at-risk-of-poverty-or-
social-exclusion rate, from 21.7% to 21.6%, and with the rate having remained very static over the 
last 3 years.  

At Member State level,  around a quarter of countries recorded significant falls in their at-risk-of-
poverty-or-social-exclusion rates in 2022, with the most notable declines of around 2 percentage 
points (pps) observed in ES, EL, LU and PT. The majority of Member States recorded no significant 
change in their rates. In contrast, rates rose in a few Member States, most notably by around 2 pps 
in FI and FR, and by 3 pps in EE (Table 3). The changes indicate some degree of convergence in 
Member  States’  performances, with  the  AROPE rates of  several  Member  States  that  were  below 
the EU average in 2021 increasing in 2022 (e.g. CZ, FR, FI, SE), while those of most Member States 
that were above the EU average decreased (e.g. EL, ES, IT and PT). 

Figure 1. Evolution of the risk of poverty or social exclusion indicator and its 
components, EU27 (figures in 1000s), 2015-2022 

Source: Eurostat (EU-SILC)  

Note:  AROPE  –  population  at-risk-of-poverty-or-social-exclusion;  AROP  –  population  at-risk-of-poverty;  (Quasi-)jobless 
HHs  -  population  living  in  very  low  work  intensity  households;  SMSD  –  population  in  severe  material  and  social 
deprivation. For the at-risk-of-poverty indicator, the income reference year is the calendar year prior to the survey year. 
Similarly, the (quasi-)jobless households indicator refers to the previous calendar year while for severe material and social 
deprivation it is the current survey year. Major break in series in 2020 for AROPE and its components, due to underlying 
breaks in  DK,  DE,  IE,  FR  (also  for  2022)  and  LU.  In  many  Member States, the  COVID-19 pandemic  emerged  during  the 
data-collection period for the main social indicators. Although often difficult to clearly assess possible impacts on the final 
results, caution is warranted regarding the 2020, and probably to a lesser extent, the 2021 figures. 

21 

 
 
 
 
Table 3. At-risk-of-poverty-or-social-exclusion rate (%), evolution (in pp) 2021-2022 

Source: Eurostat (EU-SILC) 

Note: i) Only significant (for the definition of this see table in the section on SPPM methodology in Annex 4) changes have 
been highlighted in green/red (positive/negative changes). For FR, major break in series in EU-SILC data in 2022, due to 
the new inclusion of overseas departments and regions, which has a significant negative effect on many social indicators, 
including AROPE, and may mean the change is not significant. 

Compared to the reference year 2019, figures published by Eurostat suggest the population at risk 
of poverty or social exclusion has risen by 3.1 million, reflecting rises of 0.6 million in the population 
at risk of poverty and in the number of people experiencing severe material and social deprivation, 
and of close to 1 million in the number of people living in (quasi-) jobless households. However, 
the comparison to 2019 is affected by a major break in series for EU-SILC data in Germany in 2020. 
A  break-free  series  has  been  estimated  (see  Box  1)  to  provide  more  meaningful  figures  that 
suggest  the  EU  population  at  risk  of  poverty  or  social  exclusion  in  2022  remained  essentially 
unchanged  compared  to  2019.  The  total  EU  population  at  risk  of  poverty  or  social  exclusion 
adjusted for the re-estimated AROPE population in Germany in 2019 (17.4 million instead of 14.1 
million),  amounted  to  95.48  million  people  (instead  of  the  unadjusted  total  of  92.20  million).  
Comparing this with the EU AROPE population in 2022 of 95.28 million suggests that the AROPE 
population has actually remained broadly unchanged compared to 2019 (down 0.2 million). 

Box 1: Break-free estimates of AROPE and its components for Germany and the EU 
relative to 2019  

Why the need for adjusted break free estimates relative to 2019 

The agreed reference year against which progress is to be assessed towards meeting the EU target 
of  a  reduction  of  15  million  in  the  population  at  risk  of  poverty  or  social  exclusion  (AROPE)  by 
2030,  as  part  of  the  Action  Plan  for  the  European  Pillar  of  Social  Rights,  is  the  year  2019.  For 
meaningful comparisons to this year, time series are required that are free from major breaks.  

In 2020, the German EU-SILC survey, on which the AROPE indicator is based, was integrated into 
the  newly  designed  German  microcensus (15),  leading  to  a  substantial  break  in  the  time  series 
between  2019 and  2020,  with  income  variables  being the  most  affected by  the  break.  Given  the 
size of the German population in the EU aggregate, the break has important implications not only 
for assessing progress in Germany but also for the EU as a whole. Consequently, efforts have been 
made by Eurostat to produce an adjusted break-free time series for AROPE and its components 
both for Germany and the EU aggregate. 

The break-free estimates of AROPE and its components are to be used for the express purpose of 
assessing  the  overall  progress  towards  the  2030  poverty  and  social  exclusion  target,  and  not  to 
assess progress on individual Member State related targets.  

(15) For EU-SILC, a new rotation scheme and a full multi-mode-design were implemented along with completely new and 
complex IT tools for survey management and data collection.  

22 

EU27_2020BEBGCZDKDEEEIEELESFRHRITCY202221.618.732.211.817.120.925.220.726.326.021.019.924.416.72021-2022 change in pp-0.1-0.10.51.0-0.2-0.13.00.7-2.0-1.81.8-1.0-0.8-0.6LVLTLUHUMTNLATPLPTROSISKFISE202226.024.619.418.420.116.517.515.920.134.413.316.516.318.62021-2022 change in pp-0.11.1-1.7-1.0-0.2-0.10.2-0.9-2.3-0.10.10.92.11.4 
 
 
 
 
 
How are the estimates made 

In 2020, DESTATIS ran two parallel data collections: a new microcensus-based data collection was 
started (with a new sample) [“new sample”]; the previous data collection (based on the old sample) 
was  extended  for  one  more  year  (in  2020)  to  ensure  some  continuity  of  the  longitudinal  data 
collection  [“old  sample”].  Using  the  old  sample,  the  growth  factor  between  2019  and  2020  was 
estimated as the 2020 value divided by the 2019 value. This growth factor was applied to the 2020 
value from the new sample to obtain a break-free 2019 value for the number of people at risk of 
poverty or social exclusion. The same treatment was applied to the three components, to ensure a 
consistent  approach.  The  result  gives  re-based  2019  estimates  more  in  line  with  the  new  survey 
figures for 2020 onwards.   

EU-SILC figures for the EU27 aggregate also suggest a  broadly stable social situation for children 

in  2022,  with  the  figures  showing  only  a  marginal  rise  (up  0.3  million)  compared  to  2021  in  the 

child  population  at  risk  of  poverty  or  social  exclusion  (Figure  2).  Underlying  this  were  a  very 

marginal  decline  in  the  child  population  at  risk  of  poverty  (down  0.1  million),  a  more  substantial 

drop  of  0.5  million  in  the  number  of  children  living  in  (quasi-)jobless  households,  and  a  rise  in 

those experiencing severe material and social deprivation of around 0.7 million.  

The  slight  increase  of  the  EU-aggregate  regarding  the  number  of  children  at  risk  of  poverty  or 

exclusion results from diverse trends in Member States’ performance (Table 4). In FR and SK, the 

share  of  children  at  risk  of  poverty  or  social  exclusion  rose  by  about  five  percentage  points 

between 2021 and 2022. Slight increases were recorded in six other Member States (BG, DE, LT, PL, 

FI,  SE).  At  the  same  time,  19  other  Member  States  recorded  a  decrease  in  the  share  to  varying 

degrees, with EL, LU, and HU witnessing a decrease of around four percentage points or more.  

Table 4. At-risk-of-poverty-or-social-exclusion rate for children aged 0-17 (%), 
evolution (in pp) 2021-2022 

Source: Eurostat (EU-SILC) 
Note: i) Only significant (for the definition of this see table in the section on SPPM methodology in Annex 4) changes have 
been highlighted in green/red (positive/negative  changes). For FR, major break in series in EU-SILC data in 2022, due to 
the new inclusion of overseas departments and regions, which has a significant negative effect on many social indicators, 
including AROPE, and may mean the change is not significant. 

Compared to the reference year 2019, figures published by Eurostat suggest the child population 

in  the  EU  at  risk  of  poverty  or  social  exclusion  has  risen  by  1.6  million,  with  underlying  rises  of 

around  0.7  million  in  the  number  of  children  at  risk  of  poverty  and  in  the  number  experiencing 

severe material and social deprivation, and of close to 1 million in the number of children living in 

(quasi-)jobless  households.  However,  again  these  comparisons  to  2019  are  affected  by  a  major 

break in series for EU-SILC data in Germany in 2020. Estimated break-free figures suggest the EU 

child population at risk of poverty or social exclusion in 2022  has increased by a more limited 0.9 

million compared to 2019. 

23 

EU27_2020BEBGCZDKDEEEIEELESFRHRITCY202224.719.633.913.413.824.016.622.728.132.227.418.128.518.12021-2022 change in pp0.3-0.90.9-0.3-0.20.3-0.8-0.1-3.9-1.24.7-0.5-1.2-1.1LVLTLUHUMTNLATPLPTROSISKFISE202219.822.424.018.123.113.921.616.720.741.510.324.714.919.92021-2022 change in pp-0.30.8-5.4-5.2-0.1-1.0-1.20.2-2.2-0.2-0.75.01.70.2 
 
 
 
Figure 2. Evolution of the risk of poverty or social exclusion indicator for children 
and its components, EU27 (figures in 1000s), 2015-2022 

Source: Eurostat (EU-SILC). 

Note:  Major  break  in  series in  2020  for  AROPE  and its  components,  due  to  underlying breaks in  DK,  DE,  IE,  FR  (also in 
2022) and LU. 

Summary of developments in the AROPE populations at Member State level 

Individual Member States’ figures for 2022 (Table 5) show mixed trends in the population at risk of 

poverty or social exclusion compared to the year before. A substantial rise of 1.6 million in France, 

as well as noticeable rises in Finland and Sweden, were more than offset by  strong falls in Spain 

(0.9  million),  Italy  (0.5  million)  and  Poland  (0.4  million),  as  well  as  of  around  0.2  million  in  both 

Greece  and  Portugal.  Looking  at  developments  since  the  reference  year  2019,  there  have  been 

noticeable  absolute  reductions  in  the population  at  risk  of  poverty  or  social  exclusion  of  around 

100  thousand  or  more  in  9  MS  (most  notably  in  Greece,  Italy,  Poland  and  Romania),  and 

substantial rises in only 3 (most notably France). 

Further  information  and  summary  charts  on  the  progress  of  Member  States  towards  their 

individual  national  2030  targets  in  the  domain  of  poverty  and  social  exclusion  are  provided  in 

Annex 1. 

24 

 
 
 
 
 
 
 
Table 5. Developments across Member States in the population at risk of poverty or 
social exclusion (16), and comparison to national poverty reduction target 

Source: Eurostat (EU-SILC). Note: * Countries that have expressed their national target in relation to an indicator different 
from the EU headline target indicator (AROPE), or in a format other than  absolute population reductions. Denmark and 
Germany express their national poverty reduction targets as a reduction in the number of persons living in (quasi-)jobless 
households (i.e. households with very low work intensity) that are expected to translate into similar declines in the numbers 
of people in AROPE over the decade. MT expresses its national poverty reduction target as a reduction of the AROPE rate 
by 3.1 percentage points. + For DE, major break in time series in 2020 for EU-SILC data, so figure for change compared to 
2019  uses  a  recent  Eurostat  estimate  of  a  break-free  series  which  suggests  that  the  AROPE  population  in  DE  in  2022 
actually remained broadly unchanged compared to 2019, and that this has also been the case for the EU aggregate (down 
by  a  slight  0.2  million).  For  FR,  major  break  in  series  in  EU-SILC  data  in  2022,  due  to  the  new  inclusion  of  overseas 
departments and regions, which has a significant negative effect on many social indicators, including AROPE. 

(16) The definition of AROPE (and its components regarding material deprivation and (quasi-)jobless households) 

changed in 2021 and this revised indicator is now used to monitor poverty and social exclusion. For further details 
see the Eurostat Glossary: At risk of poverty or social exclusion (AROPE) - Statistics Explained (europa.eu)) and the 
SPC 2021 annual report, and note that previous years’ values since 2015 have been re-calculated according to the 
new definition. 

25 

National target (reduction of AROPE in 1000s vs 2019 figures)AROPE population 2019 (1000s)AROPE population 2020 (1000s)AROPE population 2021 (1000s)AROPE population 2022 (1000s)Mini charts of trends to latest available yearChange 2019-2020 (1000s)Change 2020-2021 (1000s)Change 2021-2022 (1000s)Overall change 2019-2022 (1000s)EU27_2020+-15,00095,48194,77195,56395,284-710792-279-197BE-2792,2602,3072,1422,14447-1652-116BG-7872,3242,3402,1932,20616-14713-118CZ-1201,2641,2051,1321,209-59-7377-55DK*(-30 VLWI)9949701,000997-2430-33DE*+(-1200 VLWI)17,40116,73517,25517,336-66652081-65EE-39311300293332-11-73921IE-901,0051,0021,0051,046-334141EL-8603,0592,8802,9712,722-17991-249-337ES-2,81512,16912,65813,04012,189489382-85120FR-1,10011,71612,19312,22813,853477351,6252,137HR-298841806817752-3511-65-89IT-3,20014,80314,82114,83414,3051813-529-498CY-10162156154150-6-2-4-12LV-95506473488482-3315-6-24LT-223712685661690-27-2429-22LU-411911912612107-52HU-2921,9231,8541,8651,750-6911-115-173MT*(-3.1 AROPE p.p.)1001011031031203NL-1632,8092,7392,8622,863-70123154AT-2041,4341,4601,5191,555265936121PL-1,5006,5756,3076,2965,873-268-11-423-702PT-7652,1732,0562,3122,084-117256-228-89RO-2,5327,0326,8976,5866,525-135-311-61-507SI-927929527527616-201-3SK-70795744841888-51974793FI-100838810773891-28-3711853SE-151,8791,8321,7901,941-47-4215162 
 
 
 
III.  Overview  of  developments 
situation in the EU  

in 

the  social 

This  section  provides,  following  a  scene  setting  on  the  main  economic  and  labour  market 

developments,  a  review  of  the  latest  trends  from  the  Social  Protection  Performance  Monitor 

(SPPM) dashboard. It is mainly based on the July 2023 update of the dashboard, a tool that uses a 

set of key EU social indicators for monitoring developments in the social situation in the European 

Union. The latest update of the SPPM dashboard is based on the set of 2022 EU-SILC data, and 

the 2022 Labour Force Survey data. 

In  addition,  some  indications  are  also  provided  on  the  more  recent  developments  in  income, 

based on Eurostat flash estimates, together with a summary of the outlook for 2023 as a whole. 

(a)  Development in the social situation up to 2022 

Russia’s  war  of  aggression  against  Ukraine  that  started  in  February  2022  has  had  a  dramatic 

impact on the political, economic and social situation in Europe. It came at a time when Europe 

was  showing  strong  signs  of  recovering  from  the  unprecedented  economic  shock  due  to  the 

COVID-19 pandemic, and led to a subsequent sharp downturn in economic growth and aggregate 

household income, although employment continued to expand at a healthy rate (Figure 3).  

Economic growth in the EU started to slow down in the second quarter of 2022, with year-on-year 

GDP growth falling to 4.3% compared to 5.7% in the first quarter. It continued to decline over the 

rest of 2022, and by the fourth quarter had fallen to 1.3%. Total employment continued to expand 

in 2022, but growth also eased off over the course of the year. The unemployment rate in the EU 

remained  very  stable  at  6.1%  from  May  through  to  the  end  of  the  year,  despite  the  balance  of 

consumers’ expectations being for unemployment to rise over the next 12 months (Figure 4). The 

unemployment rate fell further over the first half of 2023 (down to 5.9% by June) and  is still well 

below the previous low of 6.5% in March 2020, just before the COVID crisis began.  

Year-on-year growth in real aggregate household income in the EU27 (as measured through real 

GDHI,  gross  disposable  household  income)  also  declined  over  the  year,  turning  negative  in  the 

third and fourth quarters. The declines in 2022 mainly reflected the impact of rising inflation and a 

strong slowdown and then falls in compensation of employees and of the self-employed, as well 

as a negative year-on-year contribution from (net) social benefits (Figure 5). In the first quarter of 

2023,  year-on-year  growth  in  GDHI  returned  to  slightly  positive  in  real  terms  (+0.3%),  reflecting 

that  the  decline  in real  wages  (contribution  of  -0.9%) was  mostly  balanced  by changes  in  taxes, 

benefits and other transfers (contribution of +0.9%). 

26 

Figure 3: Real GDP, GDHI and employment growth in the EU, quarterly 2012-2023 
(% change on same quarter of previous year) 

Source: Eurostat, National Accounts (DG EMPL calculations for GDHI), data not seasonally adjusted. 

Note: GDHI EU aggregate for Member States for which data are available. Nominal GDHI is converted into real GDHI by 
deflating with the deflator (price index) of household final consumption expenditure. 

Figure 4: Unemployment rate versus unemployment expectations in the EU 

Source: Eurostat, series on unemployment; European Commission, Business and Consumer Surveys [une_rt_m, ei_bsco_m]. 
Data seasonally adjusted 
Notes:  Unemployment  expectations:  consumers'  expectations  for  unemployment  in  the  country  over  next  12  months, 
moving average over past 3 months The right scale is the balance between the share of respondents who expect higher 
unemployment and those who expect a lower one. 

27 

 
 
 
 
Figure 5: Real GDP growth, real GDHI growth and its main components - EU 

Source: Directorate-General for Employment, Social Affairs and Inclusion (DG EMPL) calculations based on Eurostat data, 
national accounts [nasq_10_nf_tr] and [namq_10_gdp], data non-seasonally adjusted 

Notes:  The  nominal  GDHI  is  converted  into  real  GDHI  by  deflating  with  the  deflator  (price  index)  of  household  final 
consumption expenditure.  

The cost of living crisis 

Following  the  launching  by  Russia  of  its  war  of  aggression  against  Ukraine,  inflation  has  risen 

sharply  across  the  EU  (Figure  6).  Although  prices  were  already  increasing  substantially  from  the 

lows  during  the  pandemic,  especially  for  energy  commodities,  and  with  firms  passing  on  rising 

input costs in many sectors, they rose markedly further from February 2022 when Russia launched 

its  war  of  aggression.  Whereas  price  increases  were  initially  driven  by  energy  price  rises,  which 

have  since  been  retreating  from  recent  peaks,  pressures  broadened  as  higher  energy  costs 

passed-through to food, services and other goods, impacting on measures of inflation such as the 
harmonised  index  of  consumer  prices (17)  and  consequently  households’  purchasing  power, 
especially for lower income families who spend a higher fraction of their income on energy and 

food. 

The  indices  of  inflation  have  jumped  markedly  across  Member  States  since  February  2022,  with 

particularly strong rises in the Baltic States and some Central and Eastern European Member States 

(Figure  7).  As a result,  the  indices of  inflation  in May 2023  were particularly  high  (above  the  140 

mark) in Czechia, Estonia, Latvia, Lithuania, Poland and Romania, and especially high in Hungary. 

Although relatively more contained, important rises have also been observed in the other Member 

States.  The  Commission  and  Member  States  have  taken  actions  taken  to  mitigate  the  impact  of 

rising energy and commodity prices on inflation and on rising energy poverty, including via recent 

EU initiatives such as the Social Climate Fund, as reported on ins section V.ii of this report. 

(17)  Index, 2015=100 

28 

 
 
Figure 6. EU27 Harmonised Index of Consumer Prices, 2020M1 to 2023M5 

Source: Eurostat, HICP - monthly data (index) [prc_hicp_midx], 2015=100 

Figure 7. Changes in the Harmonised Index of Consumer Prices across Member 
States, 2022M2 to 2023M5 

Source: Eurostat, HICP - monthly data (index) [prc_hicp_midx], 2015=100 

29 

 
 
 
 
 
 
 
Rising  prices  have  been  having  a  negative  impact  on  the  purchasing  power  of  households.  An 

indicator based on quarterly national accounts data - the “quarterly growth rate (in %, versus the 
previous  quarter)  of  the  Gross  (non-adjusted (18))  disposable  income  (seasonal  and  calendar 
adjusted) of households and NPISH (19) per capita in real terms” allows to monitor the evolution of 
purchasing power on a quarterly basis, although it is only available for around half of the Member 

States. 

This  indicator  shows  that  GDHI  in  real  terms  per  capita  dropped  slightly  in  some  quarters  (e.g. 

2021  Q4  and  2022  Q2),  and  slightly  increased  in  the  third  quarter  of  2022  (Figure  8).  Overall, 

between  the  third  quarter  of  2021  (which  corresponds  roughly  to  the  start  of  the  period  of 

acceleration  in  inflation)  and  the  third  quarter of  2022,  purchasing power,  as  shown by  GDHI  in 

real terms per capita, has been eroding by -0.5% at EU27 level.  

Figure 8 – Estimated quarterly growth rate (in % vs previous quarter) of the Gross 
disposable income of households + NPISH, in real terms per capita 

Source: DG EMPL computation on Eurostat data. 

Note:  Estimates  have  been  obtained  by:  dividing  “(non-adjusted  for  social  transfers  in  kind)  GDHI  for  households  and 
NPISH”  (in  current  prices  in  national  currency,  source:  ESTAT)  by  the  price  deflator  index  of  the  “final  consumption 
expenditure  for  households  and NPISH”  (in  national currency,  source:  ESTAT)  and  by  the  total  population  of  a  Member 
State  (source:  ESTAT)  (linearly  smoothing  over  quarters  the  population  between  year’s  start  and  year’s  end).  GDHI  and 
price index data used are seasonally and calendar adjusted. There is no break mentioned by ESTAT in GDHI quarterly data 
for EU27.  

This  erosion  in  purchasing  power  can  also  be  seen  for  the  Member  States  for  which  quarterly 

GDHI data is available (Figure 9). It appears that, in most Member States, GDHI in real terms per 

capita decreased in most of the quarters between 2021 Q3 and 2022 Q3 (e.g. amongst others in 

CZ, ES, FI, IE, SE), and only increased in AT, DE, NL and PL.  

(18)  Non-adjusted means that social transfers in-kind are not taken into account. 
(19)  Non-profit institutions serving households. 

30 

 
 
 
 
Figure  9  -  Estimated  quarterly  growth  rate  (in  %  vs  previous  quarter (20))  of  the 
Gross disposable income of households + NPISH, in real terms per capita  

Source: own computation on Eurostat data. 

Note:  Estimates  have  been  obtained  by:  dividing  “(non-adjusted  for  social  transfers  in  kind)  GDHI  for  households  and 
NPISH”  (in  current  prices  in  national  currency,  source:  ESTAT)  by  the  price  deflator  index  of  the  “final  consumption 
expenditure  for  households  and NPISH”  (in  national currency,  source:  ESTAT)  and  by  the  total  population  of  a  Member 
State  (source:  ESTAT)  (linearly  smoothing  over  quarters  the  population  between  year’s  start  and  year’s  end).  GDHI  and 
price  index  data  used  are  those  Seasonally  and  calendar  adjusted.  There  is  no  break  mentioned  by  ESTAT  in  GDHI 
quarterly data for the MS shown. Other MS are not shown as quarterly GDHI data (in current prices) is not available for 
them. 

Price  rises  are  having  an  impact  on  standards  of  living  and  the  affordability  of  some  material 

deprivation items have already shown an average increase in the EU. In particular, there has been 

an increase in energy poverty, as reflected in the share of the population declaring an  inability to 

keep their home adequately warm, which has increased from 6.9% in 2021 to 9.3% in 2022.  This 

reflects increases in the share in three-quarters of Member States, and with particularly strong rises 

of  around  3  pps  or  more  in  France,  Germany,  Ireland,  the  Netherlands,  Romania  and  Spain. 

Among the population at risk of poverty in the EU, the share increased even more strongly, from 

16.4% to 20.2%. 

(20) The chart also shows the overall growth rate between Q3-2022 and Q3-2021. 

31 

 
 
 
 
Financial distress among consumers 

In  line  with  the  sharp  rise  in  energy  prices  and  inflation  in  general,  the  “financial  distress“ 
indicator (21) derived from harmonised EU consumer surveys, which provides a timely indication 

of trends in the share of the population whose households are facing financial difficulties and how 

households in the different income quartiles have been affected, indicates that the overall share of 

people  in  the  EU  reporting  financial  distress  rose  sharply  from  March  2022  onwards.  By  March 

2023  the  share  of  the  overall  population  in  financial  distress  had  risen  to  16.8%,  well  above  the 

previous  peak  during  the  COVID  pandemic  and  returning  to  the  sort  of  levels  last  seen  in 

2013/2014  (Figure  10),  Underlying  the  March  2023  figure,  12.6%  reported  a  need  to  draw  on 

savings and 4.2% the need to run into debt. 

Figure 10: Reported financial distress in the EU by income quartile – 2012 to spring 
2023 

Source: European Commission, Business and Consumer Surveys. 12-month moving average (DG EMPL calculations) 

Notes:  Reported  financial  distress  by  income  quartile,  and  components  of  reported  financial  distress  (share  of  adults 
reporting necessity to draw on savings and share of adults reporting need to run into debt). The overall share of adults 
reporting having to draw on savings and having to run into debt are shown respectively by the light grey and dark grey 
areas, which together represent total financial distress. 

(21) European Commission joint harmonised EU business and consumer surveys include a question on household 
financial situations, which has been used to derive a “financial distress” indicator. The indicator focuses on 
households declaring that they had to “draw on their savings or go into debt in order to meet current expenditure”. 
While subjective, it can provide a timely indication of the deterioration/improvement in the financial situation of 
households, and help to signal expected developments in the main indicators derived from EU-SILC. Still, both its 
subjective nature and the limited information on sampling and data-collection issues require some caution in the 
interpretation of the results. 

32 

 
 
 
Financial distress was particularly high for those on low incomes, affecting more than one in four of 

those in the lowest income quartile, and with the rise in the financial distress indicator since spring 

2022  being  the  strongest  for  those  in  this  income  group  (up  4.8  percentage  points).  In  March 

2023, 28% of those in the lowest income quartile reported being in financial distress, compared to 

8.0% for those in the highest income quartile, and with the gap between them  increasing almost 

continuously  since  March  2022  (to  almost  20  percentage  points).  Shares  of  those  in  financial 

distress in the second and third quartiles were 18.2% and 13.0% respectively. The financial impact 

of the sharp rise in the cost of living is clearly felt much more strongly by those in the lower part of 

the income distribution. 

Financial  distress  among people  in  the  lowest  income  quartile  increased  in  most  Member  States 

between the first quarter of 2022 and that of 2023.  For around half of Member States, reported 

financial distress increased strongly, most notably in EE, HU, DK and PL (Figure 11). As a result, in 

the first quarter of 2023, Hungary was the country with the highest overall share of people in the 

lowest  income  quartile  reporting  financial  distress  (43.5%),  followed  by  Spain  (39.0%),  France 

(32.1%) and Estonia (31.8%). 

Figure 11: Reported financial distress in the lowest income quartile across Member 
States, 2022 Q1 and 2023 Q1 

Source: European Commission, Business and Consumer Surveys. 3-month moving average (DG EMPL calculations) 

33 

 
 
 
 
 
 
-  Main trends to watch from the SPPM dashboard update 

Main latest year trends 

The update of the Social  Protection Performance Monitor (SPPM) dashboard (22), which is mainly 
based on the latest annual 2022 EU-SILC data and 2022 LFS data (23), generally points to stability 
overall in the social situation in 2022, although with mixed developments for some areas (Figure 
12).  For  most  social  indicators  any  significant  improvements  or  declines  observed  affected  fewer 
than a third of Member States. 

Positive  developments  in  the  social  situation,  with  significantly  more  Member  States  registering 
positive changes than those recording negative ones, could be observed in the following areas: 

− 

reductions in the share of the population living in (quasi-)jobless households in 13 Member 

States, in long-term unemployment in 8 MS, and continued rises in the employment rate 

of  older  workers  in  almost  all  Member  States  (in  24 MS),  reflecting  improvements  in  the 

labour market; 

− 

the situation for youth also improved, with declines in the NEETs (24) rate in 13 MS;  

−  during the reference period there were also significant declines in the depth of poverty (25) 

(i.e. the relative median poverty risk gap) for the general population (11 MS) as well as for 

the child population (11 MS). 

Nevertheless, there were some areas to watch concerning the latest developments, namely  

− 

increases  in  the  severe  material  and  social  deprivation  rate  and  in  the standard  material 

and social deprivation rate for the general population and for children in around a third of 

MS,  reflecting  that  financial  conditions  of  households  worsened  in  2022 (26)  as  the 

affordability of many items declined due to the rise in inflation. This was also reflected in 

significant rises in the housing cost overburden rate in many countries (12 MS); 

−  a deterioration in the poverty and relative income situation of older people (65 or older), 

with  rises  in  their  at-risk-of-poverty-or-social-exclusion  rate  in  15  MS.  Relative  incomes 

from  pensions  as  reflected  by  the  aggregate  replacement  ratio  and  the  median  relative 

income ratio worsened in a similar number of Member States. This decline in the relative 

income  situation  of  older  people  is  a  reversal  of  the  general  trend  observed  in  recent 

years, and reflects to a large extent the evolution of the income situation of the working 

age population as the labour market situation and incomes from work have improved; 

−  mixed  developments  with  regard  to  income  inequalities,  with  deterioration  in  10  MS  but 

improvements in a similar number (12 MS). 

(22)  The SPPM dashboard is a tool which uses a set of key EU social indicators for monitoring developments in the social 
situation in the European Union (for details on the methodology see the appendix "SPPM dashboard methodology") 
(23)  Generally 2021-2022, but for healthy life years at 65 and real change in gross household disposable income the year 

refers to 2021 and the changes to 2021-2022, as no 2022 figures available. 

(24)  Those not in employment, education nor training. 
(25) EU-SILC 2022 survey results actually refer to income in the previous year, i.e. 2021. 
(26) Note that the available figures for the real change in gross household disposable income actually refer to 2020-2021 

and not the latest year change 2021-2022. 

34 

 
Figure 12: Areas of deterioration (social trends to watch) and improvement for the 
period 2021-2022 (or latest year available)+ 

Source: Social Protection Performance Monitor 
Notes:  +  The  changes  generally  refer  to  changes  for  2021-2022  (although  for  income  and  household  work  intensity 
indicators the changes actually refer to the change 2020-2021). At-risk-of-poverty rate (AROP), severe material and social 
deprivation rate (SMSD) and the share of the population in (quasi-)jobless households indicators are components of the 
AROPE indicator. Figures for healthy life years at 65 and real change in gross household disposable income refer to 2021 
and the change to 2020-2021 as no 2022 figures available. 

35 

 
 
Figure  13  highlights  per  country  the  number  of  significant  improvements  or  deteriorations  that 
have  taken  place  in  the  social  indicators  in  the  SPPM  dashboard  in  the  latest  reference  period. 
Around  two  thirds  of  MS  recorded  a  higher  number  of  indicators  showing  improvements  than 
declines. The Member States with the highest number of significant positive changes were Croatia, 
Greece,  Hungary,  Italy,  Portugal  and  Spain,  all  recording  improvements  on  at  least  13  indicators 
and generally with  relatively few indicators showing a deterioration. In contrast, developments in 
Czechia,  Estonia,  Finland,  France,  Ireland  and  Sweden  were  much  less  positive,  with  significant 
improvements  only  registered  on  a  few  indicators  and  with  a  larger  number  of  deteriorating 
indicators. 

Figure  13.  Number  of  SPPM  key  social  indicators  per  Member  State  with  a 
statistically significant improvement or deterioration from 2021 to 2022+ 

Source: Social Protection Performance Monitor 

Notes:  (i)  Bars  refer  to  the  number  of  SPPM  indicators  which  have  registered  a  statistically  and  substantively  significant 
deterioration or improvement between 2021 and 2022 (or 2020-2021 where 2022 figures not available); (ii)  + For EU-SILC 
based indicators for income and household work intensity, changes actually refer to the year before the survey. (iii) Figures 
for healthy life years at 65 and real change in gross household disposable income refer to 2021 and the change to 2020-
2021  as  no  2022  figures  available.  For  FR,  major  break  in  series  in  EU-SILC  data  in  2022,  due  to  the  new  inclusion  of 
overseas  departments  and  regions,  which  has  a  significant  negative  effect  on  many  social  indicators  and  may  mean 
changes for some indicators are not significant. 

36 

 
 
 
Main trends from the SPPM compared to 2019 

Looking at developments compared to 2019, the reference year for the  European Pillar of Social 
Rights Action Plan’s poverty and social exclusion target for 2030, the overall picture in the latest 
SPPM  update  is  one  of  generally  little  change  except  for  a  few  areas  (Figure  14).  The  COVID 
pandemic, the impacts of the Russian war of aggression against Ukraine, and the substantial rise in 
inflation  over  the  last  year  have  all  acted  as  brakes  to  making  significant  improvements  in  the 
social  situation.  As  a  result,  there  have  not  been  many  Member  States  recording  substantial 
improvements  in  the  risk  or  poverty  or  social  exclusion  or  the  related  components,  but  on  the 
other hand there have also not been many recording deteriorations in the situation, with the EU 
passing through the crises in reasonably good shape. 

Nevertheless,  the  dashboard  shows  there  have  been  improvements  in  raising  the  employment 
rates  for  older  workers  across  many Member  States  (13  MS)  compared  to  2019  and  in  reducing 
income  inequality  (9  MS)  and  the  risk  of persistent poverty  (10 MS).  In  contrast,  several  Member 
States  have  witnessed  declines  in  the  healthy  life  years  indicator,  especially  for  men,  and  in  the 
overall at-risk-of-poverty rate and the poverty risk gap for children. 

Figure  15  shows  the  number  of  indicators  in  the  SPPM  dashboard  for  which  a  given  country 
registered  a  significant  deterioration  or  improvement  over  the  period  2019  to  2022.  For  most 
Member States, there is a significantly higher number of indicators showing positive developments 
rather than negative ones, most notably in Belgium, Greece, Italy, Hungary, Poland, Romania and 
Slovakia. On the other hand, Member States such as Czechia, Estonia, France, the Netherlands and 
Sweden  have  a  significantly  larger  number  of  indicators  showing  a  deterioration  compared  to 
2019, and with few indicators showing an improvement. 

37 

 
 
 
 
Figure 14. Areas of deterioration (social trends to watch) and improvement for the 
period 2019-2022+ 

Source: Social Protection Performance Monitor 
Notes:  +  For  EU-SILC  based  indicators  the  changes  generally  refer  to  2019-2022  (although  for  income  and  household  work  intensity 
indicators the changes actually refer to 2018-2021). AROP, SMSD and (quasi-)jobless households indicators are components of the AROPE 
indicator. Figures for healthy life years at 65 and real change in gross household disposable income refer to 2021 and the change to 2019-
2021  For DE, major break in the time series in 2020 for EU-SILC, so changes for 2020-2022 are used.. For IE, break in EU-SILC series in 
2020, due to a change in the income reference period for Ireland and a change in the household definition, as well as due to  the fact that 
the survey in 2020 was conducted primarily via telephone as opposed to in-person. Results should therefore be interpreted with caution. 
For  FR,  major  break  in  series  in  EU-SILC  data  in  2022,  due  to  the  new  inclusion  of  overseas  departments  and  regions, 
which has a significant negative effect on many social indicators and may mean some changes are not significant. 

38 

 
Figure 15. Number of SPPM social indicators per Member State with a significant 
deterioration or improvement between 2019 and 2022 

Source: Social Protection Performance Monitor 

Notes: The bars refer to the number of SPPM indicators which have registered a statistically and substantively significant 
deterioration or improvement between 2019 and 2022. For DE, major break in the time series in 2020 for EU-SILC, so changes for 
2020-2022 are used.. For IE, break in EU-SILC series in 2020, due to a change in the income reference period for Ireland and a change in 
the household definition, as well as due to the fact that the survey in 2020 was conducted primarily via telephone as opposed  to in-person. 
Results  should  therefore  be  interpreted  with  caution.  For  FR,  major  break  in  series  in  EU-SILC  data  in  2022,  due  to  the  new 
inclusion of overseas departments and regions, which has a significant negative effect on many social indicators and may 
mean changes for some indicators are not significant. 

39 

 
  
 
 
-  SPPM dashboard update (2022 EU-SILC and LFS data) 

40 

 
41 

 
 
42 

 
Note: i)  Figures  are  for  data  extracted  from  the  relevant  source  on  6  July  2023;  ii)  Only  significant changes  have  been  highlighted in  green/red  (positive/negative  changes).  "~"  refers  to  stable 
performance  (i.e.  insignificant change),  "n.a."  refers  to  data  not  being  available. See table  at  end  of  document  for  full  details of  significance  tests;  iii)  The  method  used to estimate the  statistical 
significance of the net changes, based on regression and developed by Net-SILC2 (an EU funded network consisting of a group of institutions and researchers conducting analysis using EU-SILC) is 
still under improvement; iv); Figures for healthy life years at 65 and real change in gross household disposable income refer to 2021 and the latest changes to 2020-2021 and to 2019-2021; vii) For the 
LFS-based indicators Long term unemployment rate, Youth unemployment ratio, NEETs rate (15-24) and Employment rate of older workers, published recalculated data to avoid breaks in series are 
used. For "Early school leavers", data prior to 2021 aren’t recalculated, so break in series for 2021; viii) For FR, major break in series in EU-SILC data in 2022, due to the new inclusion of overseas 
departments and regions, which has a significant negative effect on many social indicators and may mean the changes for some  indicators are not significant; ix) For DE, major break in the time 
series in 2020 for EU-SILC, so figures for changes in EU-SILC based indicators are for 2020-2022. Break also in time series for LFS-based indicators, but figures for changes versus 2019 can be shown. 
The reduction of "healthy life years at 65 - males" and "the reduction of healthy life years at 65 - females" in Germany is mainly attributed to methodological adjustments. Therefore, comparability 
to previous years is limited; x) For IE, there is a break in the EU-SILC based indicators in 2020, due to a change in the income reference period for Ireland, and a change in the household definition, 
as well as due to the fact that the survey in 2020 was conducted primarily via telephone as opposed to in-person. Results should therefore be interpreted with caution; xi) In many Member States, 
the COVID-19 pandemic emerged during the data-collection period for the main social indicators. Although often difficult to clearly assess possible impacts on the final results, caution is warranted 
regarding the 2020, and probably to a lesser extent, the 2021 figures. 

43 

 
 
-  Latest  indications  from  Eurostat  flash  estimates  of  income 

developments in 2022 

In July 2023, Eurostat published flash estimates (27) of the expected developments in income and 
poverty for the income year 2022 (28). These provide a general indication of the expected annual 
change  in  certain  income-related  indicators (29)  compared  to  2021.  Results  are  based  on 

microsimulation  and  nowcasting  techniques  taking  into  account  both  the  impact  of  the  labour 

market evolution on employment income and the effect of social protection schemes and special 

crisis  support  measures  put  in  place  by  national  governments.  In  particular,  assessment  of  the 

relative evolution of different sub-groups is supported by detailed information on labour market 

changes and the simulation of policies via EUROMOD to support workers and households. 

The early flash estimates for 2022 incomes indicate that the at-risk-of-poverty rate remained stable 

at EU level, while disposable income in nominal terms increased in all EU countries. However, while 

the  EU  median  disposable  household  income  increased  by  about  7%  in  nominal  terms,  it 

decreased by about 2% in real terms. Moreover, the at-risk-of-poverty rate adjusted by the price 

evolution in 2022 signals a deterioration of living standards in several countries. 

The detailed findings from the early estimates are as follows: 

•  Estimates  for  2022  show  a  significant  overall  increase  of  6.8%  in  median equivalised 

disposable  income at  EU  level,  with  positive  changes  estimated  for  all  countries.  The 

increase in disposable income is supported by the positive evolution of the labour market 

and by several income support measures put in place to mitigate the impact of inflation, in 

particular to help low-income households.  

•  The at-risk-of-poverty  rate is  estimated  to  have  remained  stable  at  EU  level  (down  0.2 

percentage  points).  At  country  level,  statistically  significant  increases  were  estimated  for 

only  two  EU  countries  (Greece  and  Croatia).  Most  countries  showed  stability  or  non-

significant changes, while a statistically significant decrease was estimated for Italy, Bulgaria 

and Romania. 

• 

It  should be  noted  that  the  above  indicators  are  based  on  nominal  values  of  disposable 

income  and  therefore  do  not  incorporate  changes  in  the  cost  of  living  and  purchasing 

power.  Despite  the  high  nominal  increases,  the  nowcasted  median  disposable  income 

decreased in real terms in most EU countries. It is estimated that inflation led to a 1.9% 

decrease for EU median disposable income in real terms in 2022. At country level, 
the largest decreases were estimated in Estonia, Latvia, the Netherlands, Denmark, Slovakia 

and Czechia. 

(27)  For details on the methodology see here: e669ae1e-f130-d876-5cab-371d57246abb (europa.eu) 
(28)  For further details see the main document here: Early estimates of income inequalities - Statistics Explained (europa.eu) 
(29) All figures provided are part of the experimental statistics produced by Eurostat in the frame of advanced estimates 
on income inequality and poverty indicators. The flash estimates give a general message on the expected change, 
and estimates are currently produced for the at-risk-of-poverty rate (and some breakdowns including in-work 
poverty), the at-risk-of-poverty threshold for a single person household, and the income quantile ratio (S80/S20). 

44 

 
 
 
•  To assess the asymmetrical effects of inflation along the income distribution it is relevant to 

consider both the commodity groups most impacted by high inflation and the structure of 

expenditure of different household groups. Figure 16 provides the annual rate of change in 

2022 of the overall harmonised index of consumer prices (HICP) and a specific index that 

reflects  the  overall  increase  in  selected  product  categories  considered  as  essential  items, 

such as food, energy and transport, which were the main reason for the decrease of real 

income. This latter index registered in 2022 an annual rate of change of 16.8 % at EU level 

with the largest increases (>30%) in the Netherlands, Lithuania and Estonia, and the lowest 

(<11%) in France, Luxembourg and Malta. 

Figure 16: Annual rate of change in 2022 of overall HICP and a specific index that 
reflects the overall increase in selected product categories considered as essential 

•  The  effect  of  inflation  is  likely  stronger  for  low-income  households,  as  essential  items 

represent  a  higher  share  of  their  overall  consumption,  and  they  have  little  margin  for 

adjusting their consumption. The higher impact of inflation on low-income households is 

confirmed  by  additional  indicators  that  take  into  account  the  distributional  effects  of 

inflation.  In  this  context,  the  at-risk-of-poverty  rate  anchored  in  2021,  which partially 

captures  the  evolution  in  the  cost  of  living,  is  estimated  to  show  statistically  significant 

increases for about half of the EU countries. 

• 

In  2022,  flash  estimates  show  a  stable  trend  in  income  inequalities,  as  measured  by  the 

quintile share ratio (S80/S20). This can be explained by the joint movement of the deciles, 

i.e.  by  changes  along  the  different  parts  of  the  income  spectrum  not  being  particularly 

unbalanced. 

45 

 
 
 
 
(b)  Economic  and  labour  market  outlook  setting  the 
context for developments in the social situation over 
2023 

Russia’s war of aggression against Ukraine that started in February 2022 has dramatically changed 

the political, economic and social outlook in Europe. The shocks unleashed by the war hit the EU 

economy both directly and indirectly, setting it on a path of lower growth and higher inflation, with 

further  upward  pressures  on  commodity  prices,  renewed  supply  disruptions  and  increasing 

uncertainty. All this significantly eroded the purchasing power of households. 

However,  according  to  the  European  Commission’s  Spring  2023  Economic  Forecast (30) the 

European  economy  continues  to  show  resilience  in  a  challenging  global  context.  Lower  energy 

prices, abating supply constraints and a strong labour market supported moderate growth in the 

first  quarter  of  2023,  dispelling  fears  of  a  recession  and  lifting  the  growth  outlook  for  2023  and 

2024. 

The better-than-expected starting position lifts the growth outlook for the EU economy for 2023 

and marginally for 2024. EU GDP growth is revised up to 1.0% in 2023 and 1.7% in 2024. However, 

inflation in the EU also surprised again to the upside, and it is now expected at 6.7% in 2023 and 

3.1% in 2024. Core goods and services have now replaced energy as the primary driver of headline 

inflation  in  the  EU.  While  indexation  measures  and  measures  to  support  purchasing  power  in 

general  were  necessary  to  maintain  living  standards,  in  particular  for  those  on  lower  incomes,  it 

appears that so far these have not caused a wage-price spiral or ‘further surges in inflation’ and 

are not expected to do so at this point. 

The labour market has remained resilient, and the slower pace of economic expansion in the EU is 

set to have a limited impact on employment. Continued labour market tightness, labour hoarding 

due to skill shortages as well as strong demand, especially for services, are expected to cushion the 

impact  of  the  economic  slowdown  on  the  labour  market.  Employment  growth  is  still  forecast  at 

0.5% in the EU this year. In 2024, employment is set to keep growing moderately (0.4%), implying 

a  less  job-rich  growth  than  in  2022.  The  unemployment  rate  is  expected  to  remain  close  to  its 

historical low, at 6.2%, in the EU in 2023, before edging down to 6.1% in 2024. 

After growing by 5.0% in 2022, the annual growth rate of compensation per employee is projected 

to increase to 5.9% in 2023 before falling to 4.6% in 2024. This means that real wages are still set 

to  decrease  this  year,  though  a  slight  pick-up  in  real wages  is  expected  towards  the  end  of  the 

year. 

(30) European Economic Forecast. Spring 2023 (europa.eu) 

46 

 
 
 
(c)  Trends  in  the  take-up  of  selected  standard  social 
benefit schemes 

Since the financial crisis of 2008, the SPC has been collecting data on the number of social benefit 
recipients for different social schemes (31) (generally unemployment, social assistance and disability 
benefits). From this data, it is possible to get an idea  of how  recent crises have  put pressure on 

social security systems across the EU, and whether this has reduced over time. 

The latest figures available, generally covering up to spring or early summer 2023 for around two-

thirds  of  Member  States,  suggest  the  following  main  recent  developments  identified  from  the 

administrative data: 

•  The  labour  market  has  demonstrated  strong  resilience  following  the  start  of  the  war  of 

aggression launched by Russia against Ukraine in February 2022, with the unemployment 

rate in the EU remaining very stable at around 6.1% over 2022 and then edging down to 

5.9% by May 2023. For around two-thirds of Member States the unemployment rate  also 

declined over this period, most notably in EL, CY and LV. Rates only rose markedly (more 

than 0.5 pp) in DK, EE, LT and PT (Figure 17). 

Figure 17: Unemployment rates in the EU and Member States in February 2022 and 
May 2023 

Source: Eurostat, LFS - monthly data (UNE_RT_M) 

• 

In  line  with  the  general  trend  of  no  marked  increases  in  unemployment,  the  number  of 

unemployment benefit recipients in Member States has mainly declined, and particularly so 

(in relative terms) in AT, CZ, IE, EL, HR, LV, NL, PT, RO and SI, with only a few exceptions 

(DE, EE, LT and LU) where the number rose (Table 6). 

(31) Although this information needs to be assessed with due caution (as it does not offer cross-country comparability 
due to the diversity of concepts and underlying definitions used) the numbers of beneficiaries are available every month 
in most Member States, and help to observe trends and the timing of the impact of crises.) 

47 

 
 
 
•  For the number of recipients of social assistance benefits the picture is more mixed. There 

were marked rises in recipient levels in CZ, EE, ES, IE, LV and SK following the start of the 

Russian war of aggression  (Table 7). For some (e.g. EE, LV and SK) this was linked 

to  the  inclusion  of  refugees  from  Ukraine  under  the  regular  social  assistance 

schemes.  In contrast, notable reductions in the number of social assistance benefit 

recipients were recorded in BG, EL, HR, HU, SI and SE. 

Table 6: Change in unemployment benefit recipient numbers from February 2022 
to latest month of data available 

Source: SPC data collection on social benefits recipients 
Note: No recent data for DK, IT, CY and MT. 

48 

Absolute change (1000s)Relative change (%)Latest month of dataBE-27-8.5Dec 2022BG-3-5.0Mar 2023CZ-11-12.6Aug 2023DKnana-DE2946.8May 2023EE213.8June 2023IE-20-13.2May 2023EL-158-74.2April 2023ES-145-7.9April 2023FR-11-0.4Dec 2022HR-10-35.1May 2023ITnana-CYnana-LV-8-21.6June 2023LT1015.0May 2023LU18.4May 2023HU-3-4.4June 2022MTnana-NL-30-18.9April 2023AT-39-14.6Mar 2023PL-7-5.8June 2023PT-45-21.5June 2023RO-12-23.1April 2023SI-5-26.9May 2023SK-3-7.1May 2023FI-43-12.5Dec 2022SE-17-6.3Dec 2022Change in unemployment benefit recipient numbers from February 2022 to latest month of data available 
 
 
Table 7: Change in social assistance benefit recipient numbers from February 2022 
to latest month of data available 

Source: SPC data collection on social benefits recipients 
Note: * For ES the data refers only to the monthly data for the IMV (Minimum Vital Income) national scheme, but there 
exist  also  regional  minimum income  schemes  (RMI)  that are included  in  social  assistance  but  for  which  the  data is only 
available annually. No recent or monthly data for DK, DE, IT, CY, MT and PL.. 

Trends in individual Member States regarding the number of recipients  of standard benefits  can 

be found in the related chart in the country profiles produced as a separate annex (Annex 1) to this 

SPC annual report.  

Of  course  the  main  impact  of  the  war  in  Ukraine  has  been  on  the  cost  of  living,  and  special 

measures  were  put  in  place  in  most  EU  countries  to  address  increasing  energy  poverty  and  to 

cushion the impact of rising prices in general and these are discussed in detail in section V.ii of the 

report, while the data on recipients and financing of such measures is summarised in annex 3. In 

this context, while the numbers of recipients under standard schemes may not have risen in many 

Member States, the level of benefits paid out may have increased in several, or the situation may 

have been addressed instead via the special measures. 

49 

Absolute change (1000s)Relative change (%)Latest month of dataBE0.10.1Dec 2022BG-2.0-10.0May 2023CZ4.06.7May 2023DKnana-DEnana-EE3.259.4June 2023IE2.020.0May 2023EL-78.5-20.2June 2023ES*537.873.0May 2023FR0.20.0Dec 2022HR-5.0-9.8May 2023ITnana-CYnana-LV3.023.1May 2023LT-0.2-0.2Mar 2023LU-0.3-2.6May 2023HU-26.0-26.5June 2023MTnana-NL-10.0-2.5April 2023AT-3.9-2.0(Apr 22 - Nov 22)PLnana-PT-8.0-4.0June 2023RO3.01.9May 2023SI-10.3-11.9June 2023SK7.713.3May 2023FI-2.9-2.0May 2023SE-12.1-13.9Dec 2022Change in social assistance benefit recipient numbers from February 2022 to latest month of data available 
 
 
IV.  Overview  of  key  social  challenges  and  good 
social outcomes in EU Member States 

This  section  presents  the  findings  concerning  the  main  social  challenges  and  good  social 
outcomes in the EU Member States (32) as highlighted in the SPPM Country Profiles annexed to the 

report. Due to the time constraints in producing the assessment (33), it is mainly based on 2021 EU-

SILC  data.  The  assessment  is  built  on  a  qualitative  and  quantitative  analysis  of  the  levels  for  the 

selected  indicators,  together  with  the  changes  over  a  three-year  reference  period  (2018-2021), 
according  to  the  methodology  of  the  Joint  Assessment  Framework (34).  Further  analysis  is 

conducted  to  complement  these  results  with  other  relevant  findings,  emerging  from  national 

sources, policy documents, reports or studies (referred to as “non-JAF analysis”).  

Regarding breaks in series in some indicators for certain Member States, it has been clarified with 

the relevant Member States for which indicators time comparisons can be made in the context of 

this exercise in spite of the break and those indicators for which it cannot take place. In the former 

case, appropriate caveats/footnotes were added. In the latter case, where time comparisons may 

not be appropriate, the exercise was focused on an assessment of levels only. 

The  SPPM  analysis  of  Member  States'  key  social  challenges  and  good  social  outcomes,  which 

considers  2021  levels  and  trends  from  2018  to  2021,  continues  to  point  to  a  heterogeneous 

performance of social protection systems across the European Union, along with a positive  broad 

stability in the social situation that was ensured also during the most difficult year of the pandemic 

crisis (as shown by SILC 2021 data mainly reflecting the income situation in 2020).  

The SPC-ISG is currently reviewing the social monitoring frameworks, including the analytical tools 

used in this report. It will reflect, jointly with EMCO-IG, on the scope to simplify and consolidate the 

existing tools in line with the findings from the assessment report of the EMCO and SPC on the 

Europe  2020  Strategy.  In  this context  the  SPC-ISG  is  also  following  developments related  to  the 

Belgian-Spanish proposal for a Social Imbalances Procedure (now renamed as Social Convergence 

Framework), in particular with regard to the technical aspects, and will reflect as necessary on the 

related possible implications for the existing monitoring tools and reports. 

Poverty, social exclusion and inequality  

While all member States, but Finland, have at least one challenge in the area of poverty or social 

exclusion,  in  24  Member  States  a  JAF  key  challenge  has  been  observed,  considering  all  age 

groups, with good outcomes registered in 20 Member States. This set of challenges encompasses 

various specific challenges, ranging from the share of people living in (quasi)-jobless households, 

the  at-risk-of-poverty  rate,  the  severe  material  deprivation  rate,  the  persistent  at-risk-of-poverty 

(32)  For further details on the assessment methodology see section 2 of Annex 3 (technical annex) "SPPM methodology 

used for the identification of Member States' key social challenges and good social outcomes”  

(33) Despite the improvement in timeliness of the EU-SILC data, publication of EU-SILC 2022 figures in early June 2023 

did not allow to elaborate the Country Profiles of this exercise by using the very latest SILC data. 

(34)  https://ec.europa.eu/social/main.jsp?catId=1538&langId=en 

50 

 
 
rate, and the relative median poverty risk gap. Inequality appears as a key challenge in 8 Member 

States,  while  5  Member  States  have  good  social  outcomes  in  the  area.  The  housing  situation, 

notably  issues  related  to  housing  deprivation  and  housing  cost  overburden,  for  various  age 

groups,  is  a  key  challenge  in  13  Member  States,  with  5  Member  State  registering  good  social 

outcomes in this area. Regarding non-JAF analyses, challenges concerning the social situation of 

persons  with  disabilities  were  identified  in  9  Member  States,  notably  in  relation  to  their  risk  of 

poverty and social exclusion and their employment gap relative to people without disability. Roma 

inclusion features as a challenge in 9 Member States. The social situation of migrants and refugees 

is  a  key  concern  in  9  Member  States,  including  sometimes  their  labour  market  situation.  The 

territorial  dimension  of  poverty  and  social  exclusion,  in  relation  to  its  regional  dimension  or  the 

divide between urban and rural areas, is flagged as a key social challenge for 7 Member States. 

The analysis on energy poverty highlighted key social challenges in 6 Member States.  

Effectiveness of social protection  

Under  this  area,  the  social  inclusion  of  children  has  been  analysed  from  the  perspective  of  the 

effectiveness  of  social  protection  for  children  and  that  of  equal  opportunities  for  children, 

especially for those from a disadvantaged socio-economic background. Overall, in these areas, 15 

Member States registered key challenges, with 8 showing good outcomes. Challenges in the area 

of active inclusion are related to the effectiveness of social benefits for the working age population, 

the effectiveness of social services, and inclusive labour markets. The adequacy, coverage and take 

up of social assistance were found to remain limited, while the access to social services and links to 

social  services  left  room  for  improvement.  Overall,  in  these  non-JAF  areas,  8  Member  States 

registered  key  challenges.  From  the  perspective  of  gaps  in  access  to  social  protection  for  some 

categories  of  non-standard  workers  or  self-employed,  challenges  were  observed  in  9  Member 

States regarding effective access or linked to adequacy.  

Pensions  

The  analysis  in  the  area  of  pensions  encompassed  issues  related  to  the  effectiveness  of  social 
protection in old age, as well as pensions adequacy issues. As concerns the  effectiveness of social 
protection  in  old  age,  in  terms  of  poverty  prevention  or  income  replacement,  9  Member  States 
registered  key  challenges,  and  8  showed  good  outcomes.  Key  challenges  were  observed  for  6 
Member States concerning pension adequacy issues, in particular related to high gender pension 
gaps.  

Long-term care  

The  insufficient  access  to  long-term  care  services,  their  affordability,  quality,  or  the  sub-optimal 

design of long-term care systems has been identified as a key challenge in 9 Member States.  

Healthcare 

The health status analysed by life expectancy of the population proves to be a key challenge in 16 

Member  States,  while  7  Member  States  display  good results.  As  concerns  access  to  health care, 

challenges have been identified for 9 Member States.  

51 

 
 
V.  Main  recent  social  policy  developments  in  EU 
Member States 

V.i Overview of social policy developments 

Multilateral reviews of the implementation of Country Specific Recommendations (CSRs) 

under the European Semester 

As  part  of  its  treaty-based  mandate,  the  Social  Protection  Committee  systematically  monitors 

Member States’ reform activities.  One of the key instruments used in this task are the Multilateral 

Implementation  Reviews  (MIR),  which  entail  reviewing  Member  States’  reform  implementation 

efforts in the context of the European Semester. Such reviews provide a shared understanding of 

interrelated  challenges  and  support  Member  States’  reform  efforts  through  exchanges  of  policy 

knowledge and best practices. 

During the 2023 Semester cycle, the SPC conducted 31 country-specific reviews, with challenges of 

common interest being reviewed jointly with the Employment Committee (EMCO). For all country-

specific  reviews,  the  evaluations  were  based  on  Member  States’  reporting  on  the  most  recent 

measures  taken,  followed  by  assessments  of  those  measures  by  other  Member  States  and  the 

Commission.  In addition,  the  Committee  held  in-depth  thematic  discussions on  each  policy  area 

under its competence, focusing on issues with relevance to the current socio-economic context. 

The horizontal findings from the  country-specific reviews and thematic discussions are presented 

in the sections below. 

In addition, peer reviews, dedicated to exploring specific aspects of the policy areas covered by the 

Committee can be held upon initiative of a host country and supported by the Commission. The 

results of peer reviews conducted in 2022/2023 are highlighted in boxes where relevant. 

BOX 2 – Distributional impact of Member States’ policies: Mutual learning events 
and national developments 

In  September  2022,  the  European  Commission  published  a  Communication  on  Better  assessing 

the  distributional  impact  of  Member  States'  policies  and  a  related  Staff  Working  Document  that 

stress the importance of Distributional Impact Assessment (DIA) analyses to assess and maximise 

the  impact  of  reforms  and  investment  on  poverty  and  inequality  reduction  across  the  EU.  The 

Communication  presents  a  few  elements  to  guide  Member  States  to  undertake,  strengthen  and 

enhance the quality of DIA, while the Staff Working Document also takes stock of the state of play 

of DIA across Member States. While reliance on DIA varies across countries, about half Member 

States apply DIA quite extensively, making moderate or more frequent use of such analysis. 

52 

 
 
 
Last year, the Thematic Social Reporting of the SPC was dedicated to DIA, as reported in the SPC 

Annual Report 2022. In addition, to support Member States and promote the  exchange of good 

practices in DIA, the Commission has initiated a series of Mutual Learning Events (MLE), involving 

mainly  representatives  from  Member  States’  Ministries  of  economy  and  Finance  and  of 

employment  and  social  affairs,  as  well  as  national  budgetary  institutions,  independent  fiscal 

institutions, and related national bodies. Six MLEs have taken place, between December 2021 and 

June 2023 (in 2023, two MLE have taken place so far, in March and June, and one more is planned 

for  October).  The  topics  covered  in  2023  where  both  methodological  (e.g.  accounting  for 

behavioural  responses,  non-take  up,  second-round  effects  in  DIA  analysis)  and  thematic  (e.g. 

application of DIA to child benefits or to the extraordinary measures taken to face the energy and 

cost  of  living crisis),  based  on  inputs  from  Commission  (e.g.  DG  EMPL,  JRC)  and  Member  States 

(BE,  FI,  IT,  SE,  ES  in  2023).  The  events  have  registered  very  good  participation  and  high-quality 

expertise, also at technical level, which have resulted in lively in-depth discussions and continuous 

interest, including for identifying topics to be explored in forthcoming events. 

In the context of the MLE programme, a questionnaire allowed to take stock of DIA developments 

in  Member  States  in  2023.  It  appears  that  four  Member  States  (BE,  FI,  IT,  NL)  experienced 

developments in DIA methods (e.g. enrichment of the models with new policy measures options 

or outcome indicators, new models on climate policies or energy poverty measures, behavioural 

modules,  new  data  sources),  while  one  Member  State  (LV)  reported  developments  in  the 

integration of DIA in the policy making process (e.g. inclusion of DIA in the draft budgetary plan), 

and another one (IE) in both DIA methods and its integration in policy making (e.g. sharing DIA 

across government offices). 

Reforms in the areas of social protection and social inclusion  

Social  protection  and  social  inclusion  policies  support  individual  development,  enhance  social 

cohesion,  foster  positive  labour  market  outcomes  and  stimulate  economic  growth.  Well-

functioning  social  protection  systems  can  cushion  the  impact  on  the  individual  and  the  society 

from  various  crisis  and  shocks,  as  evidenced  during  the  COVID-19  pandemic,  or  in  the  current 

context of high inflation and spiking energy cost.  

Past  SPC  work (35)  has  identified  certain  weaknesses  in  the  social  protection  and  social  inclusion 
systems of the Member States, including in terms of adequacy and coverage of various benefits, in 

particular 

for  non-standard  workers  and 

the  self-employed.  Changing 

labour  markets, 

technological  developments  and  demographic  change  require  continuous  adaptation  and 

improvement of the European social protection systems. 

(35) 2021 Annual Report of the Social Protection Committee 

53 

 
 
 
 
 
 
 
Box 3: Peer review on active inclusion measures targeted at young adults receiving 
social assistance benefits 

In 2022, a Peer Review was hosted by the Norwegian Ministry of Labour and Social Inclusion on 

the  active  inclusion  measures  targeted  at  young adults  receiving  social  assistance  benefits(36).    It 

was held in Oslo on 23 and 24 November and brought together government representatives and 

local-level  social  services  representatives  of  the  host  country  (Norway),  five  peer  countries 

(Belgium,  Bulgaria,  Cyprus,  Malta,  and  the  Netherlands),  representatives  of  the  European 

Commission  and  independent  thematic  experts  with  representatives  of  the  European  Social 

Network  facilitating  the  exchanges.  Participants  discussed  barriers  to  activation  of  young  people 

and their needs beyond employment, as well as measures and programmes to facilitate entry into 

education  or  labour  market,  methods  of  coordination  among  service  providers,  and  balancing 

conditionalities with incentives in the design of inclusive activation policies.  

The European Pillar of Social Rights and its action plan provides a policy framework at EU level to 

stimulate  policy  reforms.  Among  the  numerous  initiatives  of  the  action  plan,  the  2019  Council 

Recommendation  on  access  to  social  protection  for  workers  and  the  self-employed,  and  the  2023 

Council Recommendation on adequate minimum income, ensuring active inclusion, guide Member 

States to improve their social protection and inclusion systems. 

Additionally, support to the national reform efforts is available from the  Recovery and Resilience 

Facility (RRF), with 13.4  billion Euros allocated to grants and loans linked to social protection and 
inclusion  measures  in  eighteen  Member  States (37).  The  national  Recovery  and  Resilience  Plans 
(RRP) of these Member States cover a broad range of reforms and investments to strengthen their 

national  social  protection  systems  in  relation  to  their  effectiveness,  quality  and  resilience, 

depending on the country-specific needs.  

Horizontal findings from the country- specific reviews on social protection and social 
inclusion 

As  part  of  its  annual  Multilateral  Implementation  Reviews,  in  April  2023  the  SPC  reviewed  the 

performance of nine Member States with country-specific recommendation (CSRs) in the area of 

social protection and social inclusion. Five additional CSRs of common interest were reviewed at a 

joint  session  with  EMCO  in  May.  Eight  of  the  reviewed  CSRs  contain  references  related  to  the 

effectiveness  of  the  national  social  protection  systems  in  terms  of  adequacy,  targeting  and 

coverage of income support benefits, in combination with access to services. Five Member States 

were  recommended 

to  strengthen 

the  provision  of  social  and/or  affordable  housing. 

Recommendations  related  to  the  provision  of  affordable  and  quality  long-term  care  and  early 

childhood  education  and  care  in  the  context  of  supporting  the  labour  market  participation  of 

women were issued to two Member States. 

(36)  https://ec.europa.eu/social/main.jsp?langId=en&catId=1024&furtherNews=yes&newsId=10662 
(37)  Austria,  Belgium,  Croatia,  Cyprus,  Czechia,  Denmark,  Finland,  France,  Germany,  Greece,  Italy,  Latvia,  Lithuania, 
Portugal , Romania, Slovakia, Spain, Sweden  

54 

 
 
 
 
 
The country-specific reviews of the SPC revealed the following: 

o  Some major efforts to reform the existing social protection and social inclusion systems are 

underway,  with  Member  States  applying  the  lessons  learned  during  the  COVID  crisis  to 

design  more  permanent  measures  that  can  improve  the  functioning  of  their  national 

systems.    This  entails  the  integrated  provision  of  various  cash  and  in-kind  benefits,  in 

combination  with  access  to  quality  social  services  and  measures  to  ensure  an  effective 

coordination  between  services  aiming  at  social  inclusion  and  labour  market  (re-) 

integration. As most of the presented reforms are in an initial phase, robust performance 

monitoring  and  evaluation  is  necessary  to  ensure  the  reform’s  continued  relevance  and 

success. 

o 

In addition, several of the reviewed Member States focus on addressing poverty challenges 

through improvements in the adequacy and coverage of benefits (e.g. Hungary, Portugal, 

Latvia), for instance by ensuring an adequate indexation of benefits in the context of the 

current high inflation rates (e.g. Latvia).  Improving the effectiveness of the national safety 

nets  through  simplification  and  streamlining  is  a  focus  area  for  Portugal,  Latvia  and 

Finland,  while  Poland  and  Hungary  report  targeted  measures  covering  particular  age 

groups or areas of benefit provision and access to services. 

o  The  housing-related  reviews  confirmed  that  housing  costs  may  represent  a  serious 

challenge for households, especially in bigger cities and for vulnerable households. In the 

reviewed countries, there is wide political recognition of these challenges and commitment 

for  policy  action,  through  plans,  reforms  and  investments.  Monitoring  frameworks  and 

coordination  of  housing  policies  with  complementary  policies  (e.g.  income  support)  and 

services (e.g. transportation) are recognized as necessary for the success of such action. 

o  The reviewed Member States report on various legislative and/or investment measures to 

increase the supply of housing, including of social and/or affordable rental housing.  These 

measures  however  require  substantial  financial  outlays  and  lead-in  times,  which  could 

delay the implementation of access to adequate housing even when plans and policies are 

drawn. The current period of high inflation can be an additional challenge to the strategies 

already in place. 

o  Efforts  are  also  being  made  to  reinforce  the  legislative  framework  and  administrative 

capacity of the various authorities involved in the provision of affordable housing (Spain, 

Lithuania). Specific attention is also paid to the provision of services for specific needs, such 

as  housing  for  persons  with  disabilities,  Housing  First  policies  for  homelessness, 

desegregation policies and prevention of evictions (Hungary, Denmark). 

o  The joint EMCO-SPC reviews on the provision of early childhood education and care in the 

context  of  women’s  labour  market  participation  demonstrated  that  additional  efforts  to 

expand capacity and improve affordability are needed. Addressing these concerns would 

enable  parents  to  access  full-time  jobs,  as  well  as  improve  the  well-being  of  children. 

Furthermore,  with  nearly  one  in  four children being  at  risk  of poverty or  social  exclusion, 

targeted efforts to support children at risk and their parents will continue to be required. 

55 

 
Outcome of the thematic discussion on Social Protection and Social Inclusion 

The  SPC  thematic  discussion  in  this  policy  area  focused  on  the  role  of  benefits  and  service 

provision  for  poverty  reduction  and  labour  market  (re)-integration.    It  was  supported  by  a 

presentation  of  an  Exploratory  study:  filling  in  the  knowledge  gaps  and  identifying  strengths  and 

challenges  in  the  effectiveness  of  Member  States'  minimum  income  schemes.  In  the  ensuing 

discussion, the delegates explored how various elements of policy design could interact and what 

are the success factors of the integrated delivery of cash benefits and activation policies.  

The exchange demonstrated that: 

o  Member  States  consider  social  policies  as  an  investment  and  a  productive  factor,  as 

reforms in the area of social protection and social inclusion can support economic growth 

and promote employment.   

o  The modernization of the social protection and social inclusion systems is ongoing in many 

Member  States  in  line  with  the  active  inclusion  principles,  including  an  emphasis  on 

adequate income support, support for social integration and labour market participation, 

alongside  with  the  provision  of  affordable  and  quality  services.  To  be  successful,  such 

reforms  should  take  into  account  the  whole  range  of  social  benefits  and  services  that 

support  individuals  throughout  their  lifecycle  and  consider  the  interaction  between  the 

various  income  support  elements.  This  integrated  approach  should  reduce  benefit 

dependency and vulnerability of beneficiaries, while providing adequate financial resources 

to tackle poverty and support low-income families and individuals in a vulnerable situation. 

o  Minimum Income schemes are an important component of the national social protection 

and social inclusion systems. In almost all European countries they are insufficient to keep 

people above the poverty threshold. While a wide range of complementary cash and in-

kind benefits can provide additional support, in most cases those are subject to additional 

means  testing  and  claim  procedures.  Simplification  and  streamlining  of  benefit  provision 

should  improve  the  adequacy  of  income  protection  schemes.  Regular  indexation  and 

automatic adjustment mechanisms of income support were emphasized in relation to the 

current high-inflation context.  

o  Finding the right balance between ensuring adequacy of the social benefits and creating 

incentives to work remains an important issue for the Member States.  In most countries, 

social  assistance  programmes  are  designed  to  link  the  provision  of  the  benefits  to 

activation measures. To facilitate taking up work or increase work intensity, some countries 

apply financial incentives by temporary phasing out of benefits (tapering mechanism) when 

individuals  enter  the  labour  market  or  participate  in  job  training  or  public  work 

programmes.    In  addition  to  financial  incentives,  active  labour  market  policy  measures, 

including  training  and  upskilling  programmes,  wage  subsidies  and  temporary  public  or 

community work  schemes  are  available  to  help  individuals  for  labour  market  integration. 

However,  the  participation  of  minimum  income  recipients  in  ALMP  measures  are  not 

always guaranteed and/or limited to public work participation. 

56 

o  The issue of non-take up of benefits and the need to explore the obstacles and regularly 

evaluate the existing schemes to design effective policies have been highlighted.  Further 

simplification  and  improved  transparency  of  the  social  protection  and  social  inclusion 

systems,  supported  by  digital  technologies  have  been  identified  as  venues  to  address 

obstacles and improve benefit and service delivery. 

o  Efforts  to  improve  the  coverage  and  adequacy  of  social  protection  and  social  inclusion 

systems  should  be  complemented  with  reflections  on  how  to  finance  those  systems,  as 

adequacy  and  sustainability  concerns  should  be  addressed  in  a  comprehensive  manner.  

While the balance between various sources of financing is specific for each Member State, 

reflections on new and alternative sources of financing should continue. 

o  Finally,  peer  learning  and  exchanges  of  best  practices  and  innovative  approaches  have 

been identified as highly effective tools, facilitating a shared understanding of interrelated 

challenges and supporting Member States’ reform efforts.   

Reforms in the area of pensions 

National pension systems have been a focus area for structural reforms since the very start of the 

European  Semester.    Faced  with  the  prospects  of  an  ageing  population,  shrinking  number  of 

working-age  Europeans,  and  evolving  labour  markets,  Member  States  have  been  working  on  a 

range  of  reforms,  aimed  to  contain  pension  expenditure,  while  maintaining  the  fairness  and 

intergenerational  equity  of  their  pension  systems.    Efforts  to  safeguard  pension  adequacy,  in 

particular,  have  been  gaining  prominence  in  recent  years,  as  observed  in  the  2021  Pension 

Adequacy Report of the SPC and the European Commission, and confirmed also in the 2022 Joint 

Employment Report. 

Support to national pension reform measures is available from the Recovery and Resilience Facility 

(RRF). The national Recovery and Resilience Plans (RRP) include reform measures on pensions or 
minimum old-age benefits for fourteen Member States (38) 

Horizontal findings from the country- specific reviews on pensions 

In this context, in February 2023, the SPC reviewed the progress made by 8 Member States in the 

area of pensions, in response to country-specific recommendations (CSR) issued to them in 2022. 

The majority of these recommendations were focused on fiscal sustainability issues, with elements 

related  to  adequacy,  fairness  and  equality  present  for  three  of  the  reviewed  countries,  and 

references  to  the  need  for  an  overarching  pension  system  reform,  present  in  two.    Most  of  the 

reviewed  Member  States  have  received  similarly  worded  CSRs  in  past  cycles  of  the  European 

Semester, which signifies the long-term and structural nature of the observed challenges.   

(38) Belgium, Germany, Spain, Croatia, Latvia, Lithuania, Malta, the Netherlands, Austria, Poland, Romania, Slovakia, 

Slovenia and Sweden. 

57 

 
 
 
 
The  discussions  in  SPC  have  demonstrated  that  the  reviewed  Member  States  acknowledge  the 

identified challenges and are taking steps to address them. A wide range of measures has been 

reported: 

o 

In most of the reviewed Member States, specific actions are taken to study the issue and to 

prepare  a  policy  response.    Such  actions  include  specific  periodic  reporting  on  the 

functioning of the pension system and the establishment of dedicated commissions to deal 

with pension reforms (e.g. Czechia, Germany, Ireland, Luxembourg and Hungary).  

o  Member  States  recognize  that  fostering  increased  participation  in  the  labour  market  in 

general  or  specifically  supporting  employment  of  older  workers  can  improve  the  fiscal 

sustainability  of  the pension  system.  While  in  most of the  reviewed  Member  States  (excl. 

France)  no  further  actions  are  planned  to  raise  the  statutory retirement  age,  measures  - 

such  as  for  example  the  reduction  of  social  contributions,  co-financing,  job  referrals, 

training  or  career  guidance  -  are  being  introduced  to  raise  the  effective  retirement  age 

and encourage deferred retirement (Czechia, Ireland, Poland).   

o 

In  an  effort  to  address  their  sustainability  challenges,  several  Member  States  are  taking 

steps  to  increase  the  revenue  of  the  pension  insurance  system  by  increasing  the 

contribution  rate  and/or  widening  the  financing  base (Germany,  Ireland).  In  some  of  the 

reviewed  Member  States,  dedicated  funds  have  been  established  to  help  address  the 

deficit of the pension insurance (e.g. Luxembourg).   

o  Efforts to maintain or improve the fairness of the pension systems have also been made in 

some  of  the  reviewed  Member  States.  Steps  are  being  taken  for  the  introduction  of  an 

ambitious and overarching reform in France and further development of the occupational 

and personal pensions is being explored in Germany and the Netherlands. 

The SPC welcomed the reported measures and views positively the efforts made by the Member 

States.  At the same time, the discussions in the Committee have shown that further action will be 

needed  to  fully  address  the  requirements  of  the  country  specific  recommendations,  as  in  many 

instances the reported measures are still to be implemented, while in others the legislative process 

is at an early stage. 

Outcome of the thematic discussion in the area of pensions 

In  addition  to  the  country-  specific  reviews,  the  SPC  also  engaged  in  a  horizontal  discussion, 

focused on the measures taken by all Members States to protect the living standards of the retired 

population in the context of high inflation and spiking energy cost.  The outcome of this discussion 

is reported below. 

In  2022,  the  annual  inflation  rate  in  Europe  has  reached  a  record  high  level  of  9.2%,  or 

approximately 3 times higher compared with 2021.  Energy prices, which increased sharply in the 

aftermath  of  the  Russian  invasion  of  Ukraine,  are  among  the  main  drivers  behind  the  soaring 

58 

 
inflation, with consumer prices for housing, water, gas, and electricity, increasing by 18% in a single 
year (39). 

Even though the increasing price levels affect all (vulnerable) households, they may entail specific 

challenges  for  the  retired  population.    Compared  to  the  working  age  population,  pensioners’ 

health in general is more fragile. They also have less control and flexibility in adjusting in response 

to  changing circumstances,  as  they  cannot  easily change  their consumption  patterns, or assume 

additional  work  to  supplement  their  income.  The  indexation  of  pensions  –  a  major  source  of 

income adjustment - usually takes places with some delay (typically once a year) and in most cases 

at a level below wage growth.  What is more, the extent to which the inflation correction affects 

pensions can also depend on the general design of the pension system.  Single older people and 

older people at risk of poverty are also particularly affected by the spike in energy prices and face 

a comparatively higher risk of energy poverty. 

In  this  context,  the  thematic  discussion  in  the  SPC  focused  on  measures,  taken  by  the  Member 

States  to  protect  the  living  standards  of  the  retired  population.  The  exchange  confirmed  the 

following: 

o  Governments throughout the EU have started intervening with policy measures to cushion 

the  impact  of  rising  commodity  and  energy  prices  already  in  2021,  but  the  situation 

following  the  Russian  invasion  of  Ukraine  demanded  further  strengthening  of  their 

response. 

o  Driven  by  the  need  to provide  a  timely  response,  most  countries  have  initially  opted  for 

actions that provide support to the general population, but some means-tested measures, 

or measures targeting specific groups in vulnerable situations have also been put in place. 

The latter is considered as a positive development, as untargeted support raises significant 

fiscal concerns; it risks providing insufficient assistance to those who need it the most; and 

might fuel further inflationary pressures. 

o  The  non-targeted  measures,  reported  by  the  Member  States  are  mostly  of  temporary 

nature,  but  some  have  taken  steps  to  increase  incomes  through  increasing  the  level  of 

benefits  (including  non-contributory  pension,  e.g.  Spain)  or  expanding  their  eligibility.  A 

large  number  of  countries  have  introduced  payments  either  to  increase  incomes  in 

general, or to cover energy bills directly. Many have introduced subsidies, depending on 

consumption levels for electricity, gas or heating in general for the winter season.  Some 

Member States have introduced price caps or reduced VAT for energy.  

o  Concerning  the  retired  population  in  particular,  adjusting  the  existing pension  indexation 

mechanisms  has  been  a  major  part  of  the  policy  response  of  the  Member  States.  Such 

mechanisms exist across the EU; they allow pensions to grow in line with the increase of 

prices,  wages,  or  a  combination  of  the  two.  In  the  large  majority  of  cases,  pensions  are 

(39) Eurostat, source data set  prc_hicp_aind, retrieved 22.05.2023 

59 

 
 
 
indexed  once  a  year.  In  some  countries,  an  extraordinary  update  or  a  more  favourable 

indexation  mechanism  is  triggered  in  case  inflation  or  wage  growth  exceeds  a  certain 

threshold (e.g. Czechia, Luxembourg), or a supplement is added if GDP growth exceeds a 

certain  level  (Hungary).    The  severity  and  fast  development  of  the  current  cost-of-living 

crisis  led  in  a  number  of  Member  States  to  reinforcing  or  advancing  the  indexation 

measures, sometimes with a retroactive effect (e.g. Finland, Hungary, Italy, Lithuania, Latvia, 

Malta, Romania, Slovakia, Slovenia). In the current period of extraordinary inflation growth, 

also  characterised  by  falling  real  wages,  price  indexation  may  be  more  favourable  to 

pensioners,  compared  to  wage  indexation,  however  it  comes  with  a  significant  financial 

cost, so the extent to which this may be sustained will depend on the existing fiscal space 

and national preferences.  

o  A  number  of  Member  States  introduced  additional  measures  or  targeted  some  of  their 

general  measures  to  low-income  pensioners.  Such  actions  include  means-  or  income-

tested payments (in Croatia, Poland, Denmark); supplements to lowest pensions (Cyprus); 
the  (re)  introduction  of  a  13th  monthly  pension  (in  Poland  and  Hungary)  and  a  means-
tested  14th  pension  (Poland);  the  introduction  or  increase  of  existing  housing  allowances 
and/or heating supplement (in Czechia, Finland, Sweden, Ireland and Slovenia).  

Finally, the discussion confirmed that given the severity and  anticipated continuation of the cost-

of-living crisis, there is scope for further exchanges on the range of support measures, planned or 

implemented by the Member States in the context of the mutual learning activities of the SPC. 

Reforms in the area of healthcare 

Good health improves people’s wellbeing and is a necessary prerequisite for sustainable long-term 

economic  and  social growth. The  COVID-19  pandemic  highlighted  the  existing  limitations  of  the 

European health systems and reinforced the need to improve their functioning and preparedness 

for possible future crisis events.  In response, a number of Member States embarked on reforms to 

foster more resilient health systems, even as the pandemic was still unfolding in 2021 and 2022.  

The Member States’ ongoing reform efforts include measures to address challenges related to the 

pandemic  (such  as  upgrading  health  facilities  and  improving  public  health  capacities),  but  also 

measures  to  address  more  structural  challenges  related  to  access  to  health  care  and  workforce 

shortages. A very significant increase of spending on preventive care (26%) was recorded in 2020, 

albeit from a low baseline budget share (below 3% of the total healthcare spending in 2019) and to 

a large extent driven by the response measures to the COVID-19 crisis. 

Significant  support  for  the  national  reform  efforts  is  available  from  the  Recovery  and  Resilience 

Facility (RRF). To that end, the National Reform and Resilience Plans (RRPs) of all 27 Member States 

include  dedicated  investments  for healthcare  reforms,  reaching  a  total  amount  of  more  than  43 

billion Euros. 

60 

 
Horizontal findings from the country- specific reviews on healthcare 

In  2022,  healthcare-related  Country  Specific  Recommendation  were  issued  to  eight  Member 

States.  The  recommendations  are  multidimensional  and  cover  a  range  of  issues:    four  CSRs 

address  reform  challenges  in  primary  care  (Greece,  Poland,  Hungary,  Lithuania),  as  well  as  in 

preventive care (Hungary, Lithuania) and the uptake of eHealth (Poland). Two highlight adequacy 

and equality concerns (Greece, Latvia), one CSR focuses on workforce shortages (the Netherlands), 

one on integrating health and social services (Estonia), and one on fiscal sustainability (Slovenia).  

As three of the recommendations contain references to other related policy areas (long-term care 

for Estonia and Slovenia, and social protection for Latvia), they were reviewed by the Committee as 

part of the dedicated sessions on long-term care and on social protection and social inclusion.   

The country-specific reviews on healthcare have demonstrated that: 

o  Member  States  recognize  the  multi-dimensional  nature  of  the  challenges  to  their 

healthcare system and acknowledge the need for a holistic approach. The importance of 

strong  safety  nets  for  providing  healthcare  access  to  those  in  the  most  vulnerable 

situations,  as  well  as  the  strategic  need  for  efficient  coordination  between  social  and 

healthcare systems, and among national, regional and local levels was acknowledged. 

o  The  reviewed  countries  are  focusing  much  of  their  efforts  on  prevention  and  health 

promotion  (Hungary,  Lithuania,  Poland),  as  well  as  on  improving  the  governance  of  the 

healthcare  system  and  the  provision  of  primary  care  (Hungary,  Greece,  Lithuania).    The 

roll-out  of  telemedicine  and  other  digital  solutions  is  also  ongoing  (Lithuania,  Poland). 

Such  efforts  could  not  only  improve  the  accessibility  of  care  and  promote  better  health 

outcomes for the population, but also alleviate the need for specialized medical personnel 

and costly hospital care.  In the case of telemedicine, continued attention is needed on the 

digital  divide related  to  limited  digital  skills  and  IT access  issues,  in  particular among  the 

older users, or those from vulnerable background. The mixed digital and physical provision 

of health services may need to be maintained to promote access to quality healthcare for 

all. 

o  Population  ageing  and  increasing  demand  for  quality  healthcare  services  are  exercising 

additional pressure on already existing shortages and regional disparities in the availability 

of the health workforce. Most of the reviewed Member States (Hungary, Greece, Lithuania) 

are  taking  steps  to  improve  the  attractiveness  of  the  medical  profession  by  improving 

working conditions, increasing remuneration, or providing non-financial incentives, such as 

training  opportunities  to  attract  additional  medical  personnel  and  better  retain  present 

personnel. The Netherlands acknowledges that a further substantial increase in the number 

of medical workers may not be fiscally sustainable in the long-run and are focusing their 

attention  on  increasing  the  productivity  of  the  workforce,  including  by  seeking 

organisational  efficiencies  and  leveraging  technology.  Reorienting  service  delivery  away 

from  hospitals  to  primary  care,  as  well  as  more  effective  health  promotion  and  disease 

61 

 
 
prevention  strategies  were  further  recognized  as  of  key  importance  in  addressing  the 

workforce issue in a sustainable manner. 

o  A  large  set  of  the  reported  reforms  and  investments,  with  potential  to  address  the 

outstanding  challenges,  are  at  early  stages  of  implementation.    The  impact  of  those 

reforms  is  expected  to  materialize  in  the  coming  periods,  so  continued  monitoring  and 

evaluation will be required, also with a view of introducing further adjustments, as needed. 

Outcome of the thematic discussion in the area of healthcare 

As part of its Semester-related work, the SPC also engaged in a horizontal discussion, focused on 

the main features of recent and current reforms in access to mental healthcare, notably with regard 

to  prevention  and  provision  of  community  mental  healthcare  services,  availability  of  trained  staff 

and  funding.  The  discussions  were  framed  by  horizontal  scene  setters  by  the  European 

Commission  and  the  European  Health  Observatory,  as  well  as  case  a  study  presentation  by 

Portugal. 

The exchange clearly demonstrated that: 

o  Member States recognize that mental health issues have a significant social impact. Poor 

mental  health  impacts  negatively  the  overall  well-being  and  quality  of  life  of  the 

individuals.  It  can  lead  to  physical  health  problems  and  can  have  a  negative  impact  on 

social interactions, educational and job performance. Furthermore, mental illness can have 

a significant economic cost, associated with lost productivity, increased reliance on social 

welfare programs, as well as costly healthcare interventions.  

o  Mental health problems or disorders are considered to be often preventable.  Many of the 

risk factors leading to it - such as poverty, indebtedness, unemployment, unhealthy lifestyle 

or access to housing - are outside of the scope of the health system, implying the need for 

an integrated, cross-sectorial approach to mental health issues.  

o  The  COVID-19  pandemic  has  led  to  an  unprecedented  worsening  of  the  population’s 

mental  health.  The  social  distancing  and  other  restrictions,  introduced  by  the  Member 

States  to  prevent  the  spread  of  the  virus,  have  led  to  reduced  opportunities  for  social 
interaction, which increased the feeling of loneliness and isolation among many (40).  The 
overall  unpredictability  of  the  pandemic  and  the  increased  economic  instability  and 

financial  insecurity  driven  by  it,  led  to  an  increased  number  of  individuals  reporting 
psychological distress and symptoms of depression and anxiety (41). At the same time, the 
pandemic  disrupted  the  accessibility  of  mental  health  support  and  exacerbated  existing 

workforce  shortages,  leading  to  long  waiting  times,  backlogs  and  increase  in  the  unmet 

(40) Eurofound, Nivakoski, S., Ahrendt, D., Mascherini, M., et al., Living, working and COVID-19 (Update April 2021): mental 

health and trust decline across EU as pandemic enters another year, Publications Office, 2021, 

(41) Eurofound (2022), Fifth round of the Living, working and COVID-19 e-survey: Living in a new era of uncertainty, 

Publications Office of the European Union, Luxembourg. 

62 

 
 
 
need for healthcare across all Europe. In part, the accelerated uptake of telemedicine tools 

as a direct mitigation strategy in response to the pandemic helped alleviate some of the 

burden, including as regards access to mental healthcare. 

o  The  EU  Member  States  have  been  taking  steps  to  improve  access  to  care  and  support 

even  before  the  start  of  the  COVID-19  pandemic,  although  many  measures  currently 

deployed or planned are taken as part of national Recovery and Resilience Plans.  Several 

Member  States  have  initiated  long-term  cross-sectorial  reforms  and  are  taking  steps  to 

integrate mental health services into primary care, in an effort to improve accessibility and 

efficiency.  Ongoing  efforts  are  also  being  made  to  shift  mental  health  care  from 

institutional  settings  to  community-based  care,  including  through  development  of 

community mental health teams and crisis intervention services.   

o  A  number  of  additional  steps  were  taken  during  the  pandemic.  Many  Member  States 

focused  on  self-care  and  on  improving  mental  health  literacy  by  developing  new 

information portals and/or setting up phone support lines advice on coping measures or 

aimed at suicide prevention. Additional efforts to extend coverage were made by changing 

reimbursement rules and also increasing entitlement to mental health services. The training 

of additional medical personnel was stepped up with some countries offering training for 

basic  psychological  skills  for  health  workers.  Outside  of  the  medical  system,  the  actions 

taken  at  EU  and  national  levels  to  protect  jobs  and  incomes  and  aid  the  transition  to 

working from home helped to support both the incomes and the mental health of working 

population. 

o  Going  forward,  Member  States  acknowledge  the  need  for  further  efforts  to  address  the 

mental health issues, as well as the need for better data and enhanced monitoring on the 

impact  of  the  policy  measures  introduced.  The  relevance  of  prevention  and  early 

intervention  in  addressing  mental  health  issues  is  widely  recognized,  with  a  number  of 

Member  States  implementing  public  awareness  campaigns  and  early  intervention 

programs  to  identify  and  treat  mental  health  conditions  early.  In  an  effort  to  improve 

children’s emotional and social competencies and foster an overall sense of psychological 

wellbeing  at  an  early  age,  some  Member  States  are  introducing  measures  for  mental 

health  promotion  at  schools.  The  importance  of  involving  various  stakeholders,  such  as 

Civil  Society  Organizations,  but  also  patients  and  their  families,  in  the  development  of 

mental  health  policies  and  services  is  also  acknowledged.  Such  involvement  may  help 

ensure  that  those  policies  and  services  meet  the  needs  of  individuals  with  mental health 

conditions.   

o  Workforce shortages have been identified as one of the key impediments in providing high 

quality  and  effective  mental  care  and  support  to  those  who  need  it.  Addressing  these 

shortages  will  require  a  comprehensive  approach,  including  efforts  to  increase  the 

attractiveness of the profession, further training opportunities, and efforts to increase the 

skills mix, including through basic psychological training of social and health workers. The 

development of telehealth and other innovative models of care may also help addressing 

workforce shortages.   

63 

 
Reforms in the area of long-term care 

As emphasized in the 2021 Long-term care report of the SPC and the European Commission (42) 
and the European Care Strategy, the ageing of the European populations is expected to lead to a 
strong  increase  in  the  demand  for  affordable  health and  long-term  care  (LTC)  services  of  good 

quality,  in  a  time  when  less  people  of  working  age  will  be  available  to  provide  or  finance  such 

services.  

The COVID-19 pandemic exposed existing systemic weaknesses in the national care systems. High 

mortality rates in long-term care facilities, difficulties in ensuring the continuity of care and overall 

adverse impact on the well-being of older people and carers highlighted the need to address the 

structural challenges and improve the resilience of long-term care systems. This requires a careful 

balancing  of  adequacy  and  sustainability  considerations,  considering  that  long-term  care  is 

projected to be one of the fastest rising social expenditure items. 

The  2022  Council  Recommendation  on  access  to  affordable  and  high-quality  long-term  care (43) 
sets  the  framework  for  future reforms  and  investments,  while  EU  funding, notably  the  ESF+  and 

the  Recovery  and  Resilience  Facility  (RRF),  provide  financing  opportunities.  Member  States  are 

making extensive use of these opportunities, with the national Recovery and Resilience Plans (RRP) 
of eighteen countries (44) reaching a total amount of 7.3 billion Euros, including reform measures 
on  long-term  care.  Progress  in  implementing  this  Recommendation  will  be  monitored  in  the 

context of the European Semester and the Social Open Method of Coordination.  

Horizontal findings from the country- specific reviews on long-term care 

As  part  of  its  work  under  the  European  Semester,  in  March  2022,  the  SPC  reviewed  the 

performance  of  four  countries  (Austria,  Belgium,  Estonia  and  Slovenia)  with  country-specific 

recommendations  in  the  area  of  long-term  care.  While  fiscal  sustainability  concerns  feature 

prominently  in  all  four  CSRs,  the  policy  scope  of  the  issued  recommendations  also  includes  the 

dimensions of adequacy, availability of the various care settings, affordability, quality, as well as the 

integration  of  healthcare  and  long-term  care.  A  fifth  CSR,  issued  to  Poland  focuses  on  the 

provision  of  long-term  care  in  the  context  of  women’s  labour  market  participation  and  was 

reviewed jointly with the Employment Committee. 

The country-specific reviews demonstrated that: 

o  All of the reviewed Member States are taking steps to improve the provision of adequate 

and fiscally sustainable long-term care of good quality, in a context of ageing population.  

As many of the reported measures are yet to be implemented, or have been in force for a 

(42)  2021 Long-term Care Report 
(43)  Council Recommendation on access to affordable and high-quality long-term care 
(44)  Austria,, Belgium, Bulgaria, Cyprus, Czechia, Estonia, Spain, France, Croatia, Italy, Lithuania, Latvia, Poland, Portugal, 

Romania, Sweden, Slovakia, Slovenia 

64 

 
 
very  short  time,  their  effectiveness  and  fiscal  impact  should  continue  to  be  assessed.  In 

addition,  many  of  the  reported  measures  are  aimed  at  addressing  specific  challenges  of 

long-term care systems rather than pursuing systemic changes. 

o  Efforts to improve the sustainability of the care systems include legislative changes aimed 

at  regulating  and  addressing  regional  differences  in  access  (in  Austria,  Estonia)  or  at 

reforming  the  health  and  long-term  care  insurance  system  (in  Slovenia).  Belgium 

established regulatory frameworks that include an expenditure growth standard or aim at 

addressing the mismatch between the supply of and needs for residential care. 

o  Greater focus on ensuring better quality and alternative forms of accommodation for older 

people are reported, including through proposed investments in enhancing the transition 

from institutional to community-based care (Austria, Belgium, Slovenia); the preparation of 

national quality standards (Slovenia), or the establishment of minimum standards for home 

care, as well as the elaboration of guidance and definition for the respective roles of the 

central and local governments (Estonia). Community nurses, designated as central contact 

persons  and  tasked  with  facilitating  the  interactions  between  people  and  care  providers, 

are an important part of Austria’s efforts.  

o  Workforce  challenges  were  emphasised  (Austria,  Belgium),  they  are  being  addressed 

through  support  measures  for  people  undergoing  initial  training  in  nursing  and  care, 

improving  attractiveness  of  the  work  in  the  LTC  sector  (Austria),  and  upskilling  and  re-

skilling  measures  (Estonia),  and  provision  of  various  forms  of  support  to  informal  carers.  

Special  attention  is  also  given  to  the  potential  of  digitalization  and  other  innovative 

solutions. 

Outcome of the thematic discussion in the area of long-term care 

The thematic discussion in this policy area was framed by a presentation of the study  Long-term 

care  social  protection  models  in  the  EU.  The  study  explores  the  prevalence  of  formal  services, 

compared  to  reliance  on  informal  care,  as  well  as  the  different  modalities  of  state  intervention 

(cash benefits and services). It found that the models that provide best coverage for LTC needs are 

those  that  rely  on  strong  public  provision,  with  a  key  role  played  by  in-kind  provision.  At  the 

opposite end of the spectrum, limited state intervention is associated with low coverage rates and 

increased risk of poverty and social exclusion for older people with long-term care needs. 

In this context, the thematic discussion in the SPC focused on ensuring access to affordable high-

quality  long-term  care  services,  while  taking  into  consideration  the  underlying  need  for 

sustainability, and the balance between the provisions of formal care services and informal care: 

o  Despite  the  heterogeneity  of  the  national  long-term  care  systems  in  Europe,  with 

significant differences in the organization, delivery and financing of long-term care across 

the  Member  States,  there  remain  common  challenges  as  concerns  access,  affordability, 

quality and workforce. 

65 

 
 
o  Addressing these challenges requires a range of different reforms. Given the strong links of 

long-term  care  to  social  protection,  healthcare  and  employment,  comprehensive  and 

cross-cutting  actions  are  necessary.  Preventative  approaches  and  early  intervention, 

integration  between  long-term  care  and  primary  healthcare,  better  targeting  of  LTC 

services  through  person-centred  approaches  were  indicated  as  necessary  ingredients  of 

the policy mix.  

o  Meeting the growing demand for long-term care is highly dependent on the availability of 

a  sufficient  number  of  trained  carers.  Changes  in  the  family  structure,  as  well  as  at  the 

increased participation of women in the workforce are likely to lead to a decrease in the 

availability  of  informal  caregiving.  Despite  its  significant  job  creation  potential,  long-term 

care  in  many  Member  States  is  currently  characterised  by  poor  working  conditions,  low 

wages, and high turnover. In this context, increasing the attractiveness of the care sector, 

including through better working conditions and higher pay and training, was identified as 

a  key  area  for  action.  Addressing  the  needs  of  the  informal  carers  may  require  further 

measures, such as the provision of care credits, mental health support and respite leave. As 

the  large  majority  of  the  workers,  as  well  as  informal  carers  are  women,  measures  to 

improve the working conditions of the sector also support gender equality. 

o  Actions  are  also  needed  to  ensure  that  those  in  need  can  access  care  without  undue 

financial  burden.  To  that  end,  several  countries  are  taking  steps  in  establishing  formal 

long-term care as part of their social protection system. Without this protection, the total 

costs of LTC are unaffordable for many Europeans. 

o  Member States are also making efforts to increase the cost-effectiveness of care services, 

including  through  the  use  of  new  technologies  and  focusing  on  early  intervention  and 

prevention  measures.  Ensuring  the  right  balance  between  a  residential  care  model  and 

ageing  in  place  strategies,  including  home  care  and  community-based  care,  is  a  major 

element in the national reform agendas. This has the potential to have a positive impact on 

individual  well-being,  while  increasing  the  cost-effectiveness  of  expenditure.  At  the  same 

time, the ageing of the European population is expected to lead to an increasing share of 

frail  older  people,  with  a  corresponding  need  for  care  in  a  residential  setting,  so  careful 

assessment  of  future  needs  is  required  in  order  to  guarantee  that  institutions  will  meet 

their obligations towards older persons. 

o  The exchange also confirmed the need to improve the quality and availability of data, to 

enable the design of effective policies and measures to address the long-term care needs 

of an ageing population. To that end, the SPC, through its indicator subgroup will continue 

to work with the Commission on developing common EU indicators on long-term care and 

in particular on establishing a framework of indicators for monitoring the implementation 

of the Council Recommendation on access to high-quality affordable long-term care.  

66 

V.ii Policy measures to tackle energy poverty and rising energy 
prices across the Member States. 

Every year, the members of the Social Protection Committee engage in thematic social reporting, 

which  involves  the  collection  of  information  on  a  topic  selected  according  to  the  current  policy 

priorities. In 2023, the SPC chose as the topic taking stock of the measures implemented to tackle 

energy  poverty  and  rising  energy  prices.  The  main  findings  stemming  from  the  collected 

information are summarised below. 

2023 SPC Thematic Social Reporting: synthesis  

Context and background 

The  rise  and  volatility  of  energy  prices  since  2021,  aggravated  by  Russia’s  war  of  aggression 

against  Ukraine,  has  put  pressure  on  household  incomes  and  highlighted  the  issue  of  energy 

poverty  in  the  EU,  especially  (but  not  only)  for  those  in  the  most  vulnerable  situations.  The 

prevalence of the inability to keep your home adequately warm (embedded in the “material and 
social  deprivation”  indicators) (45),  increased  from  6.9%  of  the  EU  population  in  2021  to  9.3%  in 
2022, and from 16.4% in 2021 to 20.2% of those at risk of poverty in 2022, though with significant 
differences  across countries. (46)  People  at  risk  of  poverty  are  also  more  frequently  in  arrears  on 
their utility bills (heating, electricity, gas, water, etc.) than the overall population (15.9% compared 

to  6.4%  in  2021).  The  increase  in  energy  prices  also  contributed  significantly  to  the  overall 

inflationary  pressures,  impacting  on  households’  purchasing  power.  Overall,  in  2022,  93%  of  EU 

citizens  considered  rising  energy  prices  to  be  a  serious  problem. Of  the  14.3%  increase  in  living 

costs  between  2021  and  2022,  more  than  a  third  was  due  to  energy  price  increases.  Lately,  the 

slowdown in energy prices contributes to an average slowdown of inflation which is however also 

driven by other factors, such as food prices, or other factors, described above.  

Principle  20  of  the  European  Pillar  of  Social  Rights  establishes  that  everyone  has  the  right  to 
essential  services,  including  energy  services.  As  such,  tackling  energy  poverty (47)  is  also  a 
component of the 2030 EU poverty reduction target of at least 15 million people at risk of poverty 

and  social  exclusion.  Addressing  energy  poverty  is  indeed  key  to  ensuring  fairness  in  the  green 

transition,  as  per  the  Council  Recommendation  on  ensuring  a  fair  transition  towards  climate 

neutrality, which encourages Member States to provide access to affordable essential services and 

housing  for  people  most  affected  by  the  green  transition,  in  particular  those  in  vulnerable 

situations. 

To  help  address  energy  poverty  and  mitigate  the  negative  social  impacts  of  rising  prices,  the 

Commission put forward the REPowerEU Plan and presented a toolbox for action and support in 

(45)  For more info, see the SPC-ISG Fiche on available energy poverty indicators at EU level. 
(46)  Surveys are generally conducted in the first half of the year, so data from 2022 do not yet reflect yet the situation of 

last winter (2022-23). 

(47)  Energy poverty can be defined as “a household’s lack of access to essential energy services that underpin a decent 
standard of living and health, including adequate warmth, cooling, lighting, and energy to power appliances, in the 
relevant national context, existing social policy and other relevant policies”. 

67 

 
 
 
the Communication on “Tackling rising energy prices”. In October 2022, the Council agreed on a 

regulation for an emergency intervention to address high energy prices, which includes a revenue 

cap and a solidarity contribution that should provide approximately EUR 140 billion for supporting 

households, in particular vulnerable consumers, and businesses. In addition to measures already in 

place, Member States have introduced exceptional measures to tackle energy price increases and 

protect people from energy poverty and purchasing power deterioration. Such measures should 

protect those groups in the most vulnerable situations, while avoiding misleading price signals on 

the  energy  market.  These  measures  interact  with  broader  social  protection  measures,  and  can 

contribute to reducing poverty and inequality, for which ensuring the availability of distributional 

impact assessment remains important.  

Against  this  background,  the purpose  of  the  2023 Thematic  Social  Reporting  (TSR)  of  the  Social 

Protection Committee (SPC) was to take stock of the measures in place and of the approach taken 

by Member States in facing the energy and cost of living crisis, also with a forward-looking view. 

As such, the information gathered for the TSR feeds into the EMCO and SPC progress review on 

fair transition.  

Overview of the process, replies and analytical framework  

Following  the  discussion  at  the  SPC  meeting  on  6-7  March  2023  and  the  approval  of  a 

questionnaire, the TSR on “Policy measures to tackle energy poverty and rising energy prices” was 

launched in April 2023. Practically all Member States have circulated their replies. In parallel, and in 

an effort to complement the information, collected through the SPC, the Commission launched an 

ad-hoc request to the Expert Network for Analytical Support in Social Policies (the Expert Network). 
The  measures  in  scope (48)  were  collected  for  the  period  between  July  2022  and  February  2023 
and  covered  both  temporary  and  permanent  measures  (with  or  without  amendments).  The  27 

country fiches produced by the Expert Network were shared with SPC delegates for review, and to 

inform their replies to the TSR questionnaire. The feedback provided by delegates was reflected in 

the country fiches. This note relies on the national replies to the TSR questionnaire as well as on 
the overview of measures in the country fiches prepared by the Expert Network (49). A first version 
of the TSR synthesis was circulated and discussed with SPC delegates on 29 June. Most of them 

provided feedback including additional information in oral or written form.  

In addition, in spring 2023 a data collection was carried out via the Indicators Sub-Group of the 

SPC to collect administrative data on the number of recipients of government measures to address 

energy poverty and high energy prices in Member States and the related expenditure (see Box 4).  

(48)  See  list  of  the  categories  in  Table  8.  For  the  scope  of  the  TSR,  “energy”  should  be  understood  as  “energy  for  the 
household”,  as  the  focus  is  on  measures  to  address  the  impact  on  households  of  rising  energy  prices.  However, 
some  measures  indirectly  impacting  households  are  also  considered  (e.g.  supporting  providers  of  public  services 
such as healthcare,  long-term care). Measures tackling the effects  of transport fuel prices (as part of the effects of 
rising  energy  prices  on  households)  are  also  included.  Moreover,  measures  to  tackle  general  price  increases  are 
covered,  including  when  related  to  standard  increase  (i.e.  indexation)  or  exceptional  changes  to  existing  social 
benefits. The focus is on measures adopted at national level, including when implemented at local/regional level. 
(49)  The counting and overview of measures in the following sections are based on a summary report prepared by the 

Core Team of the Expert Network as part of the ad-hoc request. 

68 

 
 
Box 4: ISG data collection on the number of recipients of government measures to 
address energy poverty and high energy prices in Member States and the related 
expenditure 

The  information  gathered  through  Expert  Network  and  the  SPC  thematic  reporting  was 

complemented by an ad hoc data collection in the ISG. This exercise focused on the collection of 

administrative  data  related  to  the  amount  spent  for  support  measures  and  the  number  of 

beneficiaries  receiving  support  during  the  energy  and  cost-of-living  crisis,  either  through  new 

temporary  emergency  measures  or  to  permanent  ones.  Information  was  also  collected  on  the 

indexation of various social benefits. 

19  Member  States  have  participated  in  the  data  collection  and  submitted  a  response  to  the 

questionnaire  circulated  by  the  Commission.  The  information  gathered  does  not  allow  for  a 

comprehensive analysis since data are still scattered and not comparable. It is summarized in the 

tables in annex 2. 

Although  not  allowing  for  a  systematic  analysis,  the  first  administrative  data  available  and  the 

information provided confirm and reinforce the findings of the  Expert Network mapping and the 

SPC thematic reporting discussions.  

Member  States  have  initially  dedicated  the  largest  amount  of  money  allocated  to  deal  with  the 

energy  crisis  to  universal  emergency  support  in  the  form  of  temporary  price  caps  and  tax 

reductions.  Targeted  support,  in  the  form  of  extraordinary  contributions  or  top-ups  of  existing 

support  schemes  targeting  vulnerable  groups  (energy  vouchers  and  subsidies,  social  tariffs, 

minimum provisions) represented a smaller share of the resources mobilized and were generally 

adopted in a second stage. 

14  countries have  also  submitted  information  on  the  indexation  of  social  benefits  in response  to 

the inflationary pressure and the cost-of-living crisis. Most of this Member States reported to have 

increased  benefits  such  as  minimum 

income, 

family  and  child  benefits,  pensions  and 

unemployment  benefits.  Only  Slovenia  reported  adjustments  in  the  housing  benefits.  Indexation 

usually  took  place  automatically,  at  predetermined  quarters,  thought  indexation  rates  varied 

significantly  across  countries  and  benefits.  France  also  reported  an  exceptional  indexation  which 

complemented the standard one (this took place in Q3 2022). Greece and Slovakia did not provide 

information about indexation but reported one-off extra payments and additional instalments for 

various  social  benefits  throughout  2022.  Finally,  Sweden  has  been  provided  an  extra  amount  to 

the housing benefits of families with children since the pandemic and has increased this amount 

further since June 2023 as a response to the cost-of-living crisis.  

In total, the mapping of policy measures identified 364 measures in place in the EU Member States 

between  July  2022  and  February  2023.  These  measures  are  meant  to  tackle  energy  poverty 

specifically, or to protect households’ incomes from price increases more generally, often through 

existing  broader  social  benefits  systems.  Among  the  design  features,  measures  were  of  a 

temporary  or  permanent  nature  and  rather  universal  or  targeted  to  specific  (vulnerable)  groups 

(including when means-tested).  

69 

 
 
These  three  dimensions  (energy  poverty  specific  or  more  geared  towards  households’  incomes, 

temporary/permanent,  targeted  or  not)  are  interlinked,  forming  the  cornerstones  of  the  policy 

approaches adopted to face the energy and cost of living crisis (see Figure 38). 

Figure 38: Features of the policy measures and policy approach in Member States 

Overall policy approach and types of measures 

All Member States reported a mix of policy measures to face the energy and cost of living crisis. In 

most cases, this includes a balanced proportion of measures specifically addressing energy poverty 

(which  are  often  emergency  measures  to  tackle  the  energy  price  shock),  and  existing  social 

benefits  that  were  modified  either  through  automatic (i.e.  indexation)  or  exceptional  (e.g.  lump-

sums payment) mechanisms, to protect household incomes from general price increases. In fact, 

all Member States have adopted both support measures to combat energy poverty and measures 

to cushion the impact of high inflation (including those linked to existing social benefits, see Table 

7). 

Some Member States (BE, CZ, DK, FI, SE, SK) reported a policy approach that more markedly relied 

on  existing  social  benefits  systems,  even  if  adjusted  to  face  the  crisis  and  without  excluding 

emergency measures. For example, BE reported on the role of the standard automatic indexation 

of wages and social benefits, while DK and SK reported mainly exceptional short-term increases in 

existing social benefits. Other Member States (e.g. DE and IT), instead, highlighted that the bulk of 

the measures of their policy approach to face the crisis were of an emergency nature, focused on 

addressing the energy price shock. Other countries (e.g. AT) highlighted that emergency measures 

were mainly one-off payments, but accompanied by permanent tax measures, or (e.g. EL) stressed 

that  temporary  measures  were  designed  to  smoothly  integrate  into  the  established  social 

protection system, ensuring no exclusion criteria among benefits (e.g. receiving one benefits does 

not exclude the beneficiary from receiving another).  

70 

 
 
Looking  at  the  objective  of  the  intervention,  measures  were  nearly  equally  split  between  those 

directly addressing energy poverty and those focusing on cushioning the impact of high inflation 

in  general  (Figure  19).  However,  the  proportion  between  the  two  varies  across  countries,  also 

linked to the policy approaches described above. 

To address energy poverty, Member States have put in place measures improving the affordability 

of  energy,  including  income  support  (e.g.  vouchers,  allowances,  deductions  from  energy  bills), 

caps  to  energy  prices  or  tariffs  and  VAT  or  other  tax  reduction  on  energy,  as  well  as  measures 

ensuring  access  to a  minimum  level  of residential  energy. The  former  was  much  more  common 

(45% of all measures, present in all Member States) than the latter (7%, in 16 Member States). In 

particular,  while  bans  to  disconnection  or  favourable  payment  schemes  are  in  place  in  most 

Member  States,  in-kind  energy  supply  is  a  much  rarer  measure,  present  only  in  two  Member 

States  (HU,  SI;  see  Table  8).  In  some  cases,  measures to  improve  energy affordability  applied  to 

specific energy sources. For example, energy allowances may have applied to e.g. fuel, oil, pellets, 

wood (e.g. BE, EL, FR, IE, LT, LU, LV, PT, SI). Price caps and reductions of energy tariffs applied to: 

a) only electricity (e.g. AT, BG, DK, FI, HR); b) only gas (e.g. IT); c) both (e.g. DE, EE, EL, ES, FR, HU, 

IT, LT, LU, LV, MT, NL, PL, PT, RO, SI); and, more rarely, d) other energy sources such as heating 

oil, diesel, oil derivatives, wood (e.g. EE, EL, ES, HR, HU [only in state-owned forests] LU, MT, SI). 

VAT or other tax reductions applied also to specific energy source in several countries (e.g. AT, BE, 

BG, DE, ES, HR, IE, IT, SE, SI). 

Among  the  measures  to  cushion  the  impact  of  high  inflation  in  general  (48%  of  all  measures 

mapped, in all Member States), a large part consisted  in ad-hoc income support measures.  This 

type  of  measures  was  quite  heterogeneous,  including  often  exceptional  cash  benefits,  but  also, 

though more rarely, specific vouchers or subsidies for specific items such as food (EL, HU) or public 

transport (e.g. DE, ES, IE, IT). However, the most common measures reported under this type were 

(automatic) indexation of wages (e.g. BE, LU, MT, SI), increase of (minimum) wages (e.g. CZ,  DE, 

EE,  ES,  FR,  IE,  LT,  LU,  LV,  NL,  PL,  SI),  as  well  as  other  wage-related  measures  such  as  bonuses, 

specific work-related allowances and social security exemptions (e.g. DE, IT, HR). Most measures to 

protect households from high inflation, however, consist in modifications to existing social benefits, 

and  this  shows  that  interventions  on  existing  social  benefits  are  an  important  part  of  the  policy 

response to the crisis.  

71 

 
 
 
Table 8: General overview of the categories of policy measures 

Cat.  A  Government  support  measures  to 
specifically  combat  energy  poverty  by 
the  affordability  of 
directly 
energy 

improving 

Cat.  B  Government  support 
measures  to  ensure  access  to  a 
level  of 
(minimum) 
certain 
residential energy 

Cat.  C  Government  support 
measures to cushion the impact 
of  high  inflation  in  general 
(and 
combat 
indirectly 
energy poverty) 

to 

All Member States 

BE  CY  DE  DK  EL  ES  FR  HR 
HU IE LT MT NL PL RO SI (16) 

All Member States 

Per subcategory 

A1  Specific 
income-
support 
measures  to 
help  people 
cope  with 
high  energy 
prices  

A2  Caps  on 
energy 
prices  or  a 
reduction  in 
energy 
tariffs 

A3  Reduction 
of  VAT 
or 
other tax(es) on 
energy 
consumption 

B1  Measures 
against 
energy 
disconnection  

In-kind 
of 

B2 
supply 
energy  

C1  Ad  hoc 
income-
support 
measures 
aimed 
at 
cushioning  the 
impact  of  high 
inflation 
in 
general 

C2  Measures 
increase 
that 
social benefits, 
whether or not 
these increases 
are  related  to 
indexation 
strictly 
speaking 

AT  BE  BG 
CY  CZ  DE 
DK  EL  ES 
FI  FR  HR 
HU*  IE  IT 
LT  LU  LV 
MT  NL  PL 
PT  RO  SE 
SI SK (26) 

AT  BE  BG 
CY  CZ  DE 
DK  EE  EL 
ES  FI  FR 
HR  HU  IE 
LT  LU  LV 
MT  NL  PL 
PT  RO  SI 
SK (25) 

BE  CY  DE  DK 
EL  ES  FR  HR 
HU  IE  LT  MT 
NL  PL  RO  SI 
(16) 

AT BE BG CY 
DE  DK  ES  FI 
HR  HU  IE  IT 
LT  MT  NL  PL 
PT SE SI (19) 

HU SI (2) 

AT BE CY CZ 
DE DK EE EL 
ES  FI  FR  HR 
HU  IE  IT  LT 
LU  LV  MT 
NL  PL  PT  RO 
SI (24) 

All  Member 
States 

Source: Expert Network for Analytical Support in Social Policies Ad-hoc request. * In Hungary the measure is not national, 
but only available in Budapest. 

Figure 19: Share of measures by category (*) 

45%

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

18%

16%

10%

7%

7%

A

A1

A2

A3

B

B1

48%

28%

20%

1%

B2

C

C1

C2

Source: Expert Network for Analytical Support in Social Policies Ad-hoc request.  * Rounded percentages. 

72 

 
 
Most Member States reported indexation mechanisms on  existing social benefits (AT, BE, CY, CZ, 

DE, DK, EE, EL, ES, FI, FR, HU, IT, LT, LU, LV, MT, NL, PL, PT, RO, SE, SI, SK). (Minimum) pensions 

tend to be the most common category indexed across Member States, and in some, pensions are 

the  only  one  subject  to  regular  indexation  (e.g.  IT,  EL).  A  wider  set  of  social  benefits  has  been 

reported as indexed in several Member States, however (e.g. AT, BE, FI, FR, LU, NL, PT, SE). The 

indexation rule replies most often either on an index based on consumer prices (e.g. EL, PT, SE), 

sometimes  excluding  certain  goods  like  alcohol  and  tobacco  (e.g.  BE,  FR),  or  on  wage-related 

indices,  based  for  example  on  statutory  minimum  wages  or  average  wages  (e.g.  LU,  NL).  In  the 

latter  case,  indexation  or  increases  of  wages  have  therefore  also  an  indirect  impact  on  social 

benefits. In Hungary, several social benefits are indexed following the increase in minimum wages, 

as well as following the indexation of pensions. 

In many Member States, the indexation rule or frequency were modified to face the exceptionally 

high inflation or complemented by on-top increases, at least for some of the existing benefits (e.g. 

CY,  DE,  EL,  FI,  FR,  IT,  LT,  LU,  NL,  SK).  The  additional  increases  tend  to  be  one-off and  therefore 

temporary in nature, while the modifications to the indexation mechanisms are introduced either 

temporarily or permanently. In some other cases, indexation was not modified explicitly in relation 

to the energy and cost of living crisis (e.g. BE, CZ, LV, SE, SI). Some Member States stated that the 

indexation  mechanism,  at  least  for  some  of  their  benefits,  allows  to  take  into  consideration 

exceptional  changes  in  cost of  living  (e.g.  DK,  DE,  FI, SE).  While  having  indexation  in  place  for  a 

core  set  of  benefits  (e.g.  pensions,  social  assistance),  Austria,  for  example,  introduced  annual 

indexation permanently since 2023 for a new set of social benefits (e.g. family allowance, childcare 

allowance and sickness allowance). Greece did the same, but introducing it only for pensions, while 

increasing the other benefits one-off (e.g. minimum income). Also, Romania, starting from 2022, 

introduced indexation of social assistance and unemployment benefits.  

Although originally outside of the scope of the mapping, a few Member States reported also on 

measures to support renovations, improving energy efficiency and reducing energy consumptions 

and needs – such as vouchers, tax credits and other lump-sum payments – as a way to structurally 

address energy poverty (ES, LU, PT). Austria reported a recently adopted (i.e. in June 2023) Federal 

Law  on  energy  efficiency,  including  energy  consumption  monitoring  aimed  at  reducing  energy 

consumption  in  the  long-term.  In  addition,  extensive  subsidies  to  support  the  switch  to  energy-

efficient heat supply systems are provided, with special support for low-income households. 

Timing: permanent versus temporary measures 

All Member States reported both temporary and permanent measures, but most of the measures 

mapped are temporary (60%), while 40% are permanent. Most temporary measures mapped have 

either already ended at the end of 2022 or in March/April 2023, or will be terminated at the end of 

2023.  Half  of  the  permanent  measures  have  been  modified,  either  temporarily  or  permanently. 

Such  modifications  entail  an  improvement  (e.g.  increasing  amounts  and  enlarging  the  eligibility 

criteria) to mitigate the negative effects of the crisis. The distribution of permanent and temporary 

measures  depends  largely  on  the  category  (Figure  20).  The  observed  temporary  or  permanent 

nature of the measures also changes according to the targeting of the measures (i.e. whether the 

73 

 
measure  is  universal  or,  on  the  contrary,  targeted  to  low-income  population  or  other  specific 

target  groups),  as  universal  measures  tend  to  be  more  temporary  and  targeted  ones  more 

permanent (see also next section). 

The  Government  support  measures  to  specifically  combat  energy  poverty  by  improving  energy 

affordability  (A)  are  mostly  temporary  (82%).  Those  that  are  mostly  temporary  are  measures 

reducing  energy  prices  and  tariffs  as  well  as  VAT  and  other  taxes  reduction,  although  the 

temporary measures are also very common among the income-support measures to help coping 

with  rising  energy  prices.  However,  there  are  some  exceptions.  In  some  cases  (e.g.  IE),  energy 

allowances  are  permanent  (i.e.  those  targeting  specific  population  groups  or  linked  to  social 

benefits).  Also,  the  so-called  “social  tariffs”,  mainly  targeting  low-income  or  other  groups  in 

vulnerable  situations  are  often  permanent  (e.g.  BE,  PT).  In  Belgium,  however,  this  permanent 

measure was modified temporarily (from February 2021 to June 2023) by broadening the eligibility 

conditions, therefore almost doubling the targeted population. A minority of permanent measures 

are found also among VAT and other taxes reductions as well as the abolition of surcharges in a 

few Member States (BE, DE, HR, MT). For instance, in Croatia, the reduction in the VAT rate for the 

supply of natural gas and heating from thermal cells, firewood, pellets, briquettes and wood chips 

is  a  permanent  measure  (started  April  2022),  and  in  Malta,  since  1998,  there  has  been  a 

permanently reduced 5% VAT rate on electricity. In Hungary, a reduced VAT rate of 5% applies to 

district heating from 15 January 2010. In Belgium, the VAT rate reduction on gas and electricity was 

introduced first temporarily and then permanently, but with a plan to offset it (if energy prices fall 

back to their 2021 level) by the introduction of a system of excise duties on gas and electricity, to 

better manage the impact of fluctuations in gas and electricity prices. To that purpose, new excise 

duties  apply  for  two  consumption  brackets:  one  for  basic  consumption  (up  to  a  certain  level  of 

kWh per year), a second one for additional consumption (beyond these levels). The response to 

future  price  fluctuations  will  be  differentiated:  excise  duties  on  basic  consumption  decrease  if 

prices  for  electricity  and  gas  rise  above  a  certain  ceiling,  while  excise  duties  on  additional 

consumption increase if the bottom price for gas falls below a certain threshold. 

Figure 20: Share of temporary/permanent measures by category (*) 

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

82%

18%

A

73%

27%

56%

44%

B

C

Temporary

Permanent

Source: Expert Network for Analytical Support in Social Policies Ad-hoc request. * Rounded percentages 

74 

 
The category of government support measures to ensure access to a certain (minimum) level of 

residential  energy  (B),  by  contrast,  are  mostly  permanent  (73%).  In  particular,  measures  against 

energy  disconnection  tend  to  be  largely  permanent  but  apply  mostly  during  the  heating  period 

each year. The two measures for in-kind energy supply in Hungary and Slovenia are permanent.  

There is a more mixed picture regarding measures taken to cushion inflation in general (C), 56% of 

the  measures  being  permanent  and  44%  temporary.  Among  the  ad  hoc  income-support 

measures  aimed  at  cushioning  the  impact  of  high  inflation,  those  related  to  wage  indexation  or 

minimum  and  public  sector  wage  increases  are  permanent  (e.g.  BE,  LU),  and  in  some  cases 

procedures have been modified by law or social partners’ agreements on the percentage of the 

increases or the frequency. Bonuses or allowances linked to wages or social security exemptions 

are  all  temporary  measures  (e.g.  IT),  while  changes  in  the  tax  system  are  new  but  intended  as 

permanent (e.g. AT), apart from Luxembourg, which introduced an energy tax credit lasting only 

until  April 2023. The  majority of  targeted  or universal cash allowances were  new  and  temporary 

measures, offering income support mainly in the winter months (CZ, DK, EL, ES, FI, FR, HR, IT, PT, 

SL),  while  in  a  few  cases  (CZ,  LU,  MT,  NL,  RO),  the  measures  identified  in  this  category  were 

permanent  and  dated  back  some  time.  Austria  is  the  only  country  where  the  regional  climate 

bonus is a new and permanent measure. In Ireland and Spain, public transport ticket reductions or 

subsidies  are  new  measures  but  with  a  limited  duration.  While  Germany  initially  introduced  a 

temporary public transport ticket subsidy scheme, it later transitioned to a permanent approach. 

The rare cases (e.g. EL, HU) of new measures helping directly with food prices (i.e. vouchers to buy 

food) were temporary. Luxembourg introduced a rent freeze in the second half of 2022. Student 

aid  measures  were  permanent  and  long-standing,  but  have  been  updated  (DK,  FI,  LU).  For 

instance, in Denmark, the increase of the ceiling for study grants is a new measure included in the 

agreement  on  compensating  students  for  higher  energy  prices,  applied  in  2022  and  2023.  The 

measures  modifying  existing  social  benefits  are  both  permanent  and  temporary,  but  mostly 

permanent. The indexation measures are most often permanent  at least for some social benefits 

(e.g. BE, DE, DK, EE, EL, FI, LT, LU, LV, MT, SI), while additional increases tend to be temporary (e.g. 

EE,  HR).  Changes  to  eligibility  rules,  like  for  example  means-tested  criteria,  (e.g.  DE)  or  other 

changes like increases in minimum income (CZ, EE, ES, RO) and in child benefits (DE, DK, EE, RO) 

or pensioner’s living allowance (EE) or non-contributory pensions (ES, IE) or other benefits (e.g. LT) 

are often introduced on a permanent basis. 

Eligibility: targeted versus universal measures 

All Member States reported a mix of both targeted and universal measures. Member States that 

relied  mainly  on  existing  social  benefits  system  tended  to  have  an  approach  more  targeted  to 

vulnerable households. In fact, all measures that entail changes to social benefits are by definition 

targeted to specific groups and in most cases means-tested. In particular, Denmark highlighted to 

have  adopted  a  strongly  targeted  approach  to  avoid  pushing  the  inflationary  pressures  and  to 

help  those  most  in  need.  Finland,  however,  considered  that,  despite  relying  on  indexation  and 

existing social benefit system which was well prepared to absorb the shock, some measures could 

not  target  vulnerable  households  adequately.  Especially  for  low-income  households,  energy  bills 

did  not  reach  the  threshold  for  tax  deduction  despite  being  a  large  share  of  the  household 

75 

 
disposable  income.  Some  other  countries  (DE,  EL,  LT,  LV,  PL)  stressed  that  the  response  was 

mainly universal through emergency and temporary measures, although some targeted measures 

were put in place for specific groups. Hungary reported to have applied universal measures, but 

only below a certain threshold of energy consumption.  

Several  Member  States  reported  to  be  further  considering  whether  and  how  to  best  target 

measures in the future. For example, Denmark highlighted the necessity to strike the right balance 

between  the  desired  level  of  targeting  and  the  administrative  feasibility  in  implementing  the 

measure, for which targeting those already identified by the social benefits system seems a viable 

solution for the future. Finland reckoned necessary to have models and background information 

on  household  characteristics,  such  as  income,  to  rapidly  deploy  emergency  support  measures 

when needed in the future. In fact, the Finnish government is working to adapt the social  security 

system so that it can be used promptly also in times of shocks.  Germany reported to be working 

on the development of a mechanism  for direct transfers to private households to allow for swift, 

targeted  and  differentiated  support  measures  in  the  future.  In  the  Netherlands  the  decisions  on 

targeting possible measures in the future is expected to be made later this year, but also depend 

on EU level decisions.  

Targeted  measures  represent  63%  of  all  measures  mapped,  with  the  remaining  37%  being 
universal. (50) It should be noted that other available exercises and studies (51) assessing the degree 
of  targeting  of  the  policy  response  may  have  a  different  scope,  for  example  not  accounting  for 

measures  related  on  existing  social  benefits,  or  for  example  including  also  measures  directed  to 

businesses. In addition, it is important to note that this methodology is different from the one used 

to account for policy measures to address the energy and cost of living crisis adopted by Member 

States in the context of the European Semester, whereby the shares of measures that are targeted 

or universal is based on their budgetary impact, measured as a share of GDP allocated to those 
policies (52). Indeed, when considering the share of measures that are targeted or universal based 
on  their  budgetary  impact,  the picture  is reversed,  with  most  of  the  budgetary  impact  being  for 

universal  measures.  This  is  not  inconsistent  with  the  findings  of  the  TSR,  as  it  indicates  that 

universal  measures,  although  not  prevalent  in  number,  have  had,  overall,  a  higher  budgetary 

(50)  These shares refer to the number of measures that qualify in one or the other group, not to their budgetary impact. 
(51)  Several  mapping  exercises  of  national  policy  measures  aimed  at  cushioning  increasing  energy  prices  have  been 
conducted  since  mid-2021,  usually  proceeding  to  a  classification  into  universal/targeted  measures.    References 
include: the EU inventory of energy emergency measures produced by the EU Agency for the Cooperation of Energy 
Regulators (ACER) (ACER’s inventory of 400+ energy emergency measures seeks to aid policy makers going forward 
| www.acer.europa.eu), the mapping by Bruegel (National fiscal policy responses to the energy crisis: National fiscal 
policy  responses  to  the  energy  crisis),  the  Eurofound’s  EU  PolicyWatch  (EU  PolicyWatch  |  Eurofound  (europa.eu)), 
OECD  policy  briefs  “Income  support  for  working-age  individuals  and  their  families”  (2022a)  and  “How  inflation 
challenges pensions” (2022b), the IMF Working Paper “Surging Energy Prices in Europe in the Aftermath of the War: 
How to Support the Vulnerable and Speed up the Transition away from Fossil Fuels” (2022) and related shorter and 
more updated article “Helping Europe’s households” (2022), and the thematic focus in the Employment and Social 
Developments in Europe Quarterly Review on “Impact of rising prices on households” (2022). 

(52) The Commission monitors fiscal policy measures to reduce the impact of energy price increases on households and 
firms and presents an updated estimate of their budgetary costs. The Commission assesses the budgetary impacts of 
‘energy  measures’  adopted  to  address  the  crisis,  which  primarily  focus  on  price  and  income  measures  targeting 
households  and  small  businesses,  whereby  targeting  is  defined  as  selective  application  of  the  measure,  based 
primarily on a means-test. 

76 

 
impact. This can be due in part to their broader coverage (e.g. universal energy allowances), but 

also to their nature that entails higher expenditure (e.g. VAT reductions). 

Measures  are  considered  targeted  when  only  certain  groups  of  the  population  with  specific 

characteristics  are  eligible.  The  criteria  to  consider  a  measure  targeted  are  eligibility  to  some 

income groups (e.g. low-income households), benefit recipients (e.g. pensioners, minimum income 
recipients) or other specific groups (e.g. students, single parents, households with children)  (53). 

The most frequently targeted group are benefit recipients. In some cases, benefit recipiency was 

used  as  eligibility  criteria  for  temporary  emergency  measures  (e.g.  AT,  IT,  PT).  Among  these, 

beneficiaries  of  old-age  pensions  are  the  most  frequently  targeted,  followed  by  recipients  of 

minimum income/social assistance benefits, recipients of family benefits and those receiving more 

than  one  benefit.  Another  common  target  of  the  measures  were  other  specific  groups,  which 

however is a quite heterogeneous group, including beneficiaries of the “social tariff/rate” or similar 

measure, people with disabilities/health conditions, students, households with children.  

The shares of targeted and universal measures vary considerably across different type of measures 

(Figure 21). Measures improving the affordability of energy (A) overall are mostly universal (67%). 

However, the income support measures (e.g. energy allowances) tend to be more targeted than 

the others within this category, and in particular means-tested (e.g. AT, BE, BG, CY, DK, EL, ES, FI, 

FR, HR, HU, IE, IT, LU, LV, MT, NL, PL, RO) or targeted to benefit recipients (e.g. BG, EL,  ES, HR, IE, 

LU, LV, PT, SI, SK). Targeting may also be at the discretion of the local entities providing the benefit 

(only in AT). Price caps and energy tariff reductions are almost all universal measures, applying to 

all  consumers.  These  make  the  largest  share  of  the  universal  measures  among  all  measures. 

However,  some  measures  such  as  the  so-called  “social  tariffs”  apply  only  to  specific  targeted, 

mostly low-income, individuals (e.g. BE, CY, EL, FR). Measures such as reductions in VAT or other 

taxes  are  exclusively  universal  (except  for  one  measure:  in  Cyprus,  where  VAT  on  electricity  bills 

was reduced from 19% to 5% for vulnerable consumers and to 9% for the rest of the population).  

Figure 21: Share of universal/targeted measures by category (*) 

100%

80%

60%

40%

20%

0%

67%

33%

88%

87%

12%

13%

A

B

Targeted

Universal

C

Source: Expert Network for Analytical Support in Social Policies Ad-hoc request. * Rounded percentages 

(53)  The energy source is not considered as a criterion for targeting. For instance, if a measure covers all consumers of a 

certain type of energy (e.g. electricity, gas, fuel), it is considered as a universal measure. 

77 

 
 
Government support measures to ensure access to a certain (minimum) level of residential energy 

(B)  are  mostly  targeted  (88%). The  two  measures  for  in-kind  supply  of  energy  (HU,  SI)  are  both 

targeted and means-tested. Measures to prevent energy disconnection are in general targeted at 

people on low incomes in vulnerable situations, through means-testing (e.g. BE, DE, EL, ES, FR, HR, 

IE, LT, MT, RO, SL). In some Member States, these measures are aimed at the so-called “protected 

energy consumer  category”,  mostly  recipients  of  minimum  income  or  other benefits  (BE, DK,  EL, 

HR,  HU,  IE,  LT,  PL,  RO),  or  people  who  hold  specific  certificates  issued  by  the  public  authorities 

attesting to their vulnerable situation, or who follow specific procedures (e.g. BE, ES, SL). In some 

MS,  dependence  on  medical  devices  (CY,  EL,  IE,  MT,  PL,  RO)  or  health  issues  (IE)  are  eligibility 

criteria  for  this  type  of  measure.  Universal  energy  disconnection  bans  are  in  place  in  only  three 

Member States (BE, HU, IE).  In addition, in Austria, the  Wohnschirm (“housing umbrella”) scheme 

was  expanded  since  January  2023  to  cover  energy  costs  through  income  support  to  targeted 

beneficiaries based on means-testing, with the key objective to prevent energy disconnections. 

Measures designed to cushion the effect of high inflation (C) in general are mostly targeted (87%) 

and  make  by  far  the  largest  share  of  all  targeted  measures.  However,  wage  indexation  in  same 

cases concern all wage earners (BE, LU, MT), but in other Member States it applies to people on 

minimum wage (CZ, ES, FR, IE, LT, LV, NL, PL, SI) or to public sector employees (FR, PL, SI). Cash 

allowances were targeted based on income, benefits recipiency or for other specific target groups 

such as self-employed, long-term unemployed, students, etc., while other residual measures in this 

category are universal, such as public transport reductions (DE, ES, IE), caps on food prices (e.g. 

HU) and rent freezes (e.g. LU). When looking at measures that modified existing social benefits, as 

said before, their targeted nature is intrinsic, often linked to income criteria specifically. In fact, all 

measures of this type are targeted. 

Funding  

The  state  budget  is  the  primary  source of  financing  for  policy  measures  tackling  energy poverty 

and rising energy prices. All Member States report using this source  – through a mix of general 

taxation,  new  debt  and  reduction  of  other  expenses  -  to  finance  existing  benefits  (and  their 

increase) as well as most of the temporary emergency measures. 

Central  government  funding  is  the  main  source  used,  with  some  Member  States  explicitly 

reporting also using regional and municipal budgets to fund specific benefits, depending on the 

administrative organisation and the distribution of competences in the various countries. In some 

cases  (ES,  LT),  regional  and  local  budgets  have  benefitted  from  transfers  and  top-ups  from  the 

state  budget  to  cope  with  the  increased  expenses.  Some  Member  States  also  report  using 

resources  regularly  collected  through  the  distribution  of  electricity  in  the  energy  market  (SE,  IT) 

and  by  the  imposition  of  new  temporary  solidarity  contributions  on  energy  companies  and  the 

taxation of their so-called extra profits (BE, ES, FR, IT). Finally, some Member States report using EU 

funding instruments to cover expenses at least partially. This is true for both temporary emergency 

measures,  using  cohesion  funds  and  other  resources  made  available  via  the  EU's  REACT-EU 

instrument (BG, HU, PL), and for longer-term structural measures to promote renovation and the 

green transition, using RRF funding (PT). 

78 

Assessment 

Measures tend to be granted both on the basis of active  take-up or automatically. The situation 

largely  varies  between  countries  and  measures.  As  general  trends,  indexation  is  attributed 

automatically to recipients of the respective benefits or wage earners. The increases in salaries and 

benefits are also automatic. Moreover, measures aimed at social benefit recipients (e.g. additional 

allowances)  are  also  in  general  granted  automatically.  Nevertheless,  some  of  the  additional 

benefits have a target population which is larger than the group already receiving the respective 

category of benefit; eligible beneficiaries can therefore apply for and receive the one-off payment 

as emergency measure. Automatic granting of allowances is found to lead to higher take-up (e.g. 

PT).  

Member States have usually not reported serious implementation issues. This reflects that most of 

the  measures  considered  are  either  top-up  increases  of  existing  benefits  –  with  the  pool  of 

beneficiaries already identified – or universal measures. For new benefits and for the extension of 

the  coverage of  existing  ones,  procedures have generally  been  simplified and/or digitalised  (BG, 

CZ,  EL)  and  outreach  campaigns  have  been  organised  (EL,  IE),  precisely  to  avoid  non-take-up 

issues.  In  some  cases,  new  or  extended  benefits  have  been  automatically  granted  or  the 

identification of the pool of beneficiaries was linked to that of existing measures (BE, IT). 

When difficulties have been reported, those are mostly related to administrative capacity and other 

constraints due to the sudden increase of the pool of beneficiaries and of the requests/payments 

to  be  processed  (LV,  PL,  SK)  or  the  tight  schedule  for  formulation  and  implementation  of  the 

measures  (FI).  Only  a  few  countries  report  issues  related  to  difficulties  in  the  identification  of 

beneficiaries  or  the  targeting  of  the  benefits  (DK,  FI).  In  addition,  some  Member  States  (e.g.  ES) 

raised concerns about identifying beneficiaries due to data protection policy and laws. 

Finally, some Member States stress that the evaluation of the measures implemented has still to be 

conducted  and  that  information  on  possible  difficulties  related  to  administrative  capacity, 

technical/digital constraints and targeting and outreach of beneficiaries will only be available in the 

future (AT, EE).  

More  than  one  third  (36%)  of  measures  were  subject  to  publicly  available  impact  assessments, 

although this share varies for different types of measures. Impact assessments were undertaken for 

59%  of  the  support  measures  to  specifically  combat  energy  poverty  by  directly  improving  the 

affordability of energy, for 19% of the measures to ensure access to a certain (minimum) level of 

residential energy and for 34% of the measures to cushion the impact of high inflation.  

Across Member States, impact assessments of at least one measure in place was undertaken and 

made publicly available by the large majority of Member States (AT, BE, BG, CY, CZ, DE, DK, EE, ES, 

FI, FR, HR, HU, IE, IT, LT, LU, LV, MT, NL, PT, RO, SE, SI, SK). In some Member States (e.g. BE, IE, IT, 

LU) impact assessments were undertaken and made available on a combination of different types 

of measures or a package of measures all together. In some Member States, impact assessments 

on the measures put in place will become available at a later stage. 

79 

 
In particular, Distributional Impact Assessments (DIA) were reflected upon in about half of Member 

States. In total, 16 Member States mentioned it in their replies (AT, BE, CZ, DE, FI, HU, ES, IE, IT, LT, 

LU, LV, PL, RO, SI, SK), but only 7 of them (BE, FI, ES,  IE, IT, LT, LU) reported to have carried out 

DIA on (at least some) of the measures in place. Also in Greece, the DIA of the measures put in 

place to mitigate the negative impacts of the energy  and cost of living crisis is integrated in the 

regular DIA in policy making. Some Member States stressed that (ex-ante) DIA was not undertaken 

because  of  time  constraints  and  the  need  to  implement  the  measures  promptly  to  react  to  the 

crisis.  The  available  DIA  studies  are  produced  either  by  public  authorities  (e.g.  IT)  or  by 

(independent) research bodies (e.g. FI). The models used include EUROMOD (e.g. BE, LT), but also 

other  types  (e.g.  FI,  IE,  IT).  Data are  also  heterogenous  ranging  from  survey  (e.g.  EU-SILC  in  LT, 

national  HBS  in  IT)  to  administrative  data,  in  some  cases  complemented  by  data  on  energy 

consumption  from  the  electricity  market  (e.g.  FI).  In  all  Member  States,  DIA  studies  assess  the 

impact of a group of measures, in some cases explicitly discussing their interaction (IT, BE).  

Belgium carried out an ex-ante impact assessment after the introduction of the measures, to study 

the  interaction  of  the automatic  indexation of  social  benefits  and  wages  and  the  energy-specific 

measures (e.g. social tariff, premiums and the VAT reduction). It shows that automatic indexation 

has  a  higher  mitigation  effect  than  energy-specific  measures,  although  benefiting  more  the 

middle- and high- income groups, however, the latter, interacting with the former, erodes these 
larger benefits for the higher income groups (54). The results of the study show that measures such 
as the extension of the eligibility conditions of the social tariff made a real difference for the lower-

income  groups.  The  results  of  the  study  led  the  government  to  consider  turning  temporary 

provisions  into  permanent  and  to  use  it  in  integrated  manner  also  in  the  context  of  the  green 

transition. In particular, making the VAT reduction on gas and electricity permanent, compensating 

through the introduction of an excise duty (see more details above), can fulfil twin objectives:  the 

social  objective  (decreasing  excise  duties  on  basic  consumption  levels  when  energy  prices 

increase) and the green objective (increasing excise duties on additional consumption levels when 

energy  prices  are  low).  Spain  conducted  an  ex-post  DIA comparing  how  government  measures 

contribute  to  reducing  energy  prices  to  the  same  situation  without  any  action  taken.  The 

assessment  showed  a  reduction  of  34 %  in  energy  invoices  regarding  the  rise  in  energy  prices 

compared  to  no  action  being  taken,  while  the  reduction  for  vulnerable  and  severely  vulnerable 

consumers reached 64 % and 91 % respectively. In Finland, an independent unit of VATT Institute 

for  Economic  Research  produced  a  report  on  electricity  price  increase  and  electricity  subsidies’ 

estimated effects on households. It combined electricity consumption data from a centralized data 

exchange system for the electricity retail market with microdata from Statistics Finland. The report 

calculates how the effects of the temporary VAT reduction, tax credit, assistance and lump sums 

for electricity are distributed by income deciles. In Italy, the latest DIA available was produced by 

the Parliamentary Budget Office considering all the temporary measures in place to face the crisis 

(e.g.  VAT  and  other  tax  reduction,  allowances,  social  security  exemptions,  pensions  indexation, 

social bonuses). It allows to estimate the effective and counterfactual increases (i.e. without policy 

(54)  Full results available in Capéau, B., Decoster, A., Vanderkelen, J. & Van Houtven S. (December 2022), “Distributional 
impact assessment of the energy crisis: the interaction between indexation and compensation”, BE-PARADIS working 
paper, 22.4, 33 p. (see weblink) 

80 

 
measures) of total household expenditure between June 2021 and December 2022, showing how 
different  measures  have  a  progressive  effect  while  others  have  no  redistributive  effects (55). 
Lithuania carried out DIA on the inflation negative effects mitigation package in 2022, comparing 

to  the  counterfactual  scenario.  The  assessment  shows  that  measures  have  positive  impact  on 

poverty  and  inequality  reduction.  The  biggest  positive  impact  is  on  persons  with  disabilities  and 

children.  Income  change  across  quintiles  shows  that  the  package  benefits  the  lower  income 

groups. In Luxembourg assessments focus, on the one hand, on energy poverty and specify how 

government  measures  contribute  to  reduce  the  energy  poverty  rate  against  the  counterfactual 

without emergency/temporary measures taken in September 2022.  Moreover, there is an ex-ante 

study  available  on  the  combined  effects  of  some  of  the  measures.  According  to  the  report,  the 

average  purchasing  power  is  higher  in  2022  and  2023  than  2019,  with  or  without  measures. 

Nevertheless,  for  those  on  low-income,  the  measures  have  a  favourable  impact  on  purchasing 

power.  In  Ireland,  the  ESRI  used  microsimulation  and  taxes  satellite  models  to  assess  the 

distributional  impact  of  tax  and  welfare  measures  implemented  as  part  of  Budgets  2022  and 
2023 (56). The ESRI argues that targeted measures are more beneficial, resulting in gains that are 
larger for lower households, rather than for higher-income, while avoiding blunting the incentive 

to  invest  in  energy-saving  technologies.  This  DIA  analysis  shows  that  one-off  measures  would 

protect households from rising prices. The social benefits increase in 2022 and 2023, together with 

these one-off measures, were large enough to leave the lowest income households better off on 

average than they would have been, had the welfare payment rates risen in line with inflation both 

this  year  and  next.  It  concludes  that  the  Irish  Government’s  approach  has  been  effective,  in 

combining  targeted  welfare  measures  with  universal  household  energy  credits  and  that  by 

providing support for household incomes and for businesses, the budgetary package can mitigate 

the impact of impending energy costs on domestic economic activity.  According to the Minimum 

Essential  Standard  of  Living,  these  supports  are  welcome  and  will  ease  pressure  on  many 

households.  In  several  Member  States  (e.g.  BE,  CZ,  DE,  EE,  ES,  FR,  IE,  IT,  LT,  LU,  LV,  NL,  SI) 

measures to protect wages are assessed to have provided systematic protection to a wide range 

of wage-earners.  

Looking ahead: social protection in the green transition  

About  half  of  the  reporting  Member  States  refer  to  long-term  national  strategies  as  the  main 

framework for reflections on how to adapt social protection systems. This is the case for Portugal 

(National  Long-Term  Strategy  for  Combating  Energy  Poverty  2022-2050),  Romania  (National 

Strategy on Social Inclusion and Poverty Reduction and the Action Plan for the period 2022-2027 

and  National  Strategy  for  the  Sustainable  Development  of  Romania  2030),  Estonia  (Welfare 

Development Plan 2023-2030) and Slovenia (Resolution on the National Social Security Program 

for the period 2022  - 2030). In some cases, reference is also made to the 2030 National Energy 

and  Climate  Plans  (IE,  PT,  RO)  or  to  other  national  frameworks  in  the  energy  sector  (Estonian 

Energy  Sector  Development  Plan  until  2030).  Poland  has  a  Strategy  to  combat  energy  poverty 

towards 2040 mostly through building renovations, energy efficiency and access to clean energy. 

(55)  The results are available in the audition of the President of the Italian Parliamentary Budget Office (PBO) of 5 

December 2022, which is based, in turn, on Flash Report No 2/2022 of 18 October 2022 by PBO. 

(56) Study available at this link. 

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Three  Member  States  also  report  having  set  up  dedicated  structures  to  assess,  monitor  and 

address energy poverty, such as an interdepartmental working groups (BG, SI) or a steering group 

(IE),  and  one  launched  a  comprehensive  consultation  process  for  a  fair  green  transition,  with 

academics  and  technical  experts  as  well  as  with  citizens  and  stakeholders  (BE).  Austria  plans  to 

establish a coordination office to address energy poverty within the framework of an office by the 

Climate  and  Energy  Fund.  For  this, an  amount of  1  million  per calendar  year  until  2030  shall  be 

allocated  from  the  Federal  Ministry  for  Climate  Protection,  Environment,  Energy,  Mobility, 

Innovation and  Technology.  The  tasks  of  the  office  will  include  networking with  local  authorities, 

social organisations and actors in the energy market, issuing of recommendations to policy makers 

and  advisory/information  material  to  households  and  other  stakeholders,  publication  of  reports 

including definition and monitoring of energy poverty indicators. In Poland the Ministry of climate, 

in cooperation with experts and stakeholders, has created a “repository” of good practices against 

energy poverty, as tool to support activities of local authorities in this field. The Netherlands has 

adopted a cross-ministerial approach to tackle energy poverty, which involves cooperation in goal 

settings and includes also research programmes. 

Many  Member  States  refer  to  social  assistance,  especially  safety  nets,  as  a  key  social  protection 

tool to adapt to climate change (CZ, DK, FI, IT, RO, SI), in some cases with explicit mention of care 

services and infrastructures (EE) and more generally social services (IT), while others (AT) have put 

forward specific measures, such as a permanent climate bonus scheme. Another priority reported 

for  long-term  structural  social  protection  adaptation  is  support  to  renovation  and  improving 

energy efficiency (BE, EE, EL, ES, SE), in some cases with explicit reference to earmarked/targeted 

support to the most vulnerable households (LU, NL, PT). Upskilling and reskilling to adapt to the 
new labour market is mentioned by some (EE, IT), including through EU funding (EL). 

Conclusions 

The  number  of  measures  mapped  show  that  a  lot  was  in  place  to  tackle  energy  poverty  and 

mitigate  possible  negative  effects  of  the  rise  of  energy  prices  and  inflation  in  general.  A  lot  has 

been done to increase the affordability of energy and directly address energy poverty. At the same 

time,  the  policy  response  to  high  inflation  has  been  substantial,  and  in  particular  through  the 

modifications  to  existing  social  benefits  (i.e.  improvements  in  terms  of  adequacy  or  coverage). 

These latter represent an important part of the picture in the policy response to the energy and 

cost of living crisis, including in the approach taken by Member States in relying on existing social 

protection and inclusion systems to absorb the shock.  

Most of the measures mapped are temporary and most of the temporary measures will be over by 

the end of 2023. Especially those that more directly relate to energy poverty and energy prices are 

temporary,  that  points  to  a  potential  need  to  further strengthen  policies  tacking  energy  poverty 

more structurally, beyond the crisis period. The prevalence of permanent measures among those 

to  mitigate  the  effects  of  high  inflation,  and  especially  indexation  mechanisms,  also  relates  the 

general  policy  response  towards  higher  inflation,  rather  than  only  to  the  specific  energy  price 

shock. As such, these measures can provide some protection also when inflation is driven by other 

factors, like food prices. 

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The  number  of  targeted  measures  is  higher  than  those  of  the  universal  measures  among  those 

mapped.  However,  the  measures  to  increase  affordability  of  energy  tend  to  be  most  often 

universal – especially because of caps to energy prices, tariff reductions, and energy-related VAT 

and taxes reductions are by large mostly universal. By contrast, measures to address high inflation 

tend  to  be  more  often  targeted  (such  as  in  particular  those  linked  to  social  benefits).  When 

considering the share of measures that are targeted or universal based on their budgetary impact, 

as done in the context of the European Semester, the picture is reversed, with the majority of the 

budgetary  impact  being  related  to  universal  measures.  This  indicates  that  universal  measures, 

although not necessarily prevalent in number, have had, overall, a higher budgetary impact. This 

can be due in part to their broader coverage (e.g. universal energy allowances), but also to their 

nature that entails higher expenditure (e.g. VAT reductions). It also appears that measures that are 

permanent  tend  to  be  more  often  targeted  (such  as  indexation  of  social  benefits,  energy 

allowances for benefits recipients) and that measures that are temporary and in particular short-

term  ones  tend  to  be  more  universal,  which  points  to  possible  difficulties  reported  by  some 

Member States in identifying and targeting those groups in the most vulnerable situations in need 

of support in an emergency that requires swift policy action. Several Member States have indicated 

to  be  further  reflecting  on  how  to  better  target  emergency  policy  measures,  when  needed  in 

future, including through relying more on the social benefit system, improving models and data to 

identify  the  population  to  target  and  smoothening  the  benefit  transfers  through  automatic 

procedures. 

State budget is the primary source of financing for policy measures tackling energy poverty and 

rising energy prices. All Member States report using a mix of general taxation, debt and reduction 

of other expenses to finance existing benefits (and their increase) as well as most of the temporary 

emergency measures. Some Member States, also report using EU funds. 

Looking  ahead  at  the  adaptation  of  the  social  protection  systems  to  the  green  transition,  many 

Member  States  refer  to  long  term  strategies  that  take  into  account  the  green  transition,  while 

some  have  set  up  dedicated  bodies  or  working  groups  to  reflect  on  this.  The  policy  responses 

mentioned tend to refer broadly to the social protection and social inclusions systems, but also to 

energy efficiency measures to address energy poverty in the long run. 

On a final note, while almost all Member State implemented impact assessment studies to at least 

some of the measures in place, only about one-third of the overall measures in place across all the 

Member  States  have  been  subject  to  impact  assessment  and  less  so  to  more  systematic 

assessments,  which  also  points  to  room  for  further  strengthening  Impact  assessment  in  general 

and distributional impact assessment (DIA) in particular. 

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