Adequate minimum income – a viable road out of poverty

Amid a projected rise in the number of people at risk of poverty, adequate minimum income is a necessary condition to ensure a dignified life for many Europeans. To make sure it is available to all those who need it, Member States should put in place transparent and non-discriminatory criteria for people to obtain it.

The European Economic and Social Committee (EESC) has lent its support to the European Commission's proposal for a Council recommendation on adequate minimum income, hailing it as a necessary part of efforts to combat poverty and to achieve the EU target of reducing the number of people at risk by at least 15 million by the end of the decade.

In the opinion adopted at its plenary session in March, the EESC said it particularly welcomed the implementation of realistic and not-overly-restrictive criteria for making minimum income available to all, at a level that guarantees people a life of dignity, not leaving anyone behind.

Making sure that minimum income schemes provide sufficient resources also requires keeping them in line with inflation, which is set to rise a further 6.5% in 2023 (in the context of the rise in the costs of living sparked by recent food and energy price hikes). To this end, the EESC proposes that Member States assess minimum income levels on a yearly basis, depending on the level of inflation.

This should be monitored by civil society organisations, social partners and welfare organisations.

Effective minimum income schemes can help to guarantee that human rights are respected, ensure that people live in dignity, help them remain active and included in society and help integrate them into good quality employment, said the rapporteur of the opinion, Jason Deguara, adding that self-employed people should also be fully entitled to the minimum income and other benefits.

The target is to reduce the number of people at risk of poverty by at least 15 million by 2030. At first glance, this target does not seem very ambitious, but the guidance provided to Member States and the basis for a solid methodology certainly make it an important step forward, said rapporteur Paul Soete. Quality and sustainable employment is the best way out of poverty and social exclusion. We call for special attention to be given to specific groups such as single-parent families, migrant families, young people, people with disabilities and Roma.

Minimum income levels and composition differ considerably across welfare states in general, and this is also the case in the EU. The labour market situation of minimum income beneficiaries varies significantly across Member States.

None of the EU countries currently ensure adequate income support for jobless families to avoid poverty risks. Due to eligibility conditions, such as minimum age, residence status, homelessness or family composition issues, some 20% of jobless people are not eligible to receive any support at all.

There is also a problem of non-take-up of minimum income estimated at between 30% and 50%, to a large extent due to administrative burdens.

In many Member States, the setting and levels of minimum income are not based on a robust methodology and are not linked to statistically underpinned indicators reflecting dignified life.

In the opinion, the EESC therefore called on Member States to develop such a methodology to take into account the different income sources and the specific situations of households. It said Member States should put in place transparent and non-discriminatory criteria for people to obtain minimum income, and that minimum income schemes should be part of national strategies to combat poverty.

However, despite the existing scope for EU-level action, Member States should retain the right to define the principle of their social systems, and the existing minimum income schemes should be analysed in relation to their comprehensive social protection arrangements.

To ensure the adequacy of minimum income schemes, Member States – with coordination at EU level – must develop reference budgets of baskets of goods and services. These baskets must include housing, water, energy, telecommunications, food, health, transport, culture and leisure, among other needs.

In the EESC's view, minimum income schemes should include both cash and in-kind services for those who cannot work or for those for whom working is almost impossible.

The EESC also noted the overall stabilising effect of minimum income systems for the economy, as they play a key role in providing support and incentive to integrate or reintegrate people into the labour market.

Following the COVID-19 crisis, the number of people living at risk of poverty and social exclusion rose, amounting to over 95.4 million Europeans in 2021. Repercussions of Russia's invasion of Ukraine will increase this number even further. Those especially at risk include vulnerable groups such as single-parent or migrant families, people with disabilities, young people and Roma.

Even a full-time job will not safeguard single parents from the risk of poverty. Dual-income households in full-time employment that are normally not at risk of poverty become at risk if they have more than two children.