1. CURRENT EXPERIENCES AND TRENDS
IN THE REFORM OF MINIMUM INCOME
SCHEMES IN THE EU
Anne Van Lancker
Workshop 6-7 October 2016 Madrid

2. 1. COMPARING PERFORMANCES OF EU
MEMBER STATES WITH REGARDS TO
EFFECTIVENESS AND EFFICIENCY OF MISS

3. CAPACITY TO LIFT PEOPLE OUT OF POVERTY
OR TO REDUCE POVERTY

4. CAPACITY TO LIFT PEOPLE OUT OF POVERTY
OR TO REDUCE POVERTY

5. CAPACITY TO LIFT PEOPLE OUT OF POVERTY
OR TO REDUCE POVERTY
• Only a few countries provide minimum income and related benefits
above 60% AROP threshold, and only for some household types (IE, DK,
NL, UK)
• In most countries with low rates of poverty risk for jobless households,
the effectiveness of social transfers is high (IE, NL, DK, AT, UK, LU); but
not always (BE, SE, MT high poverty reduction impact but high poverty
risk for jobless hh)
• In only few countries MI has strong impact on reducing poverty: AT, DK,
IE, NL, FI, UK – 50% or more
• ESPN - 5 types of MIS: simple and comprehensive, open to all; idem but
restricted eligibility and coverage; general schemes with additional
categorial benefits; complex networks of categorial schemes; partial,
restricted to narrow categories
• But not always relation with impact on AROP rate or reduction of
poverty, although simple and comprehensive schemes tend to score
better

6. ADEQUACY OF MINIMUM INCOME IN-
AND OUT-WORK
• Cantillon: comparing performances adequacy MI jobless and working
(raise MI and fight unemployment traps)
• 3 types of countries: high (where minimum wage as well as minimum
income are above AROP: IE, DK), middle (where only minimum wage is
above AROP: UK, CZ, PL, NL, DE, FI) and low road (where no minimum
income guarantee is above AROP: all rest)
• Different trajectories:
 Decent minimum wages, high gross-net efforts, substancial financial
incentives to take up work (IE)
 Decent minimum wages, moderate gross-net efforts, low work
incentives (DK)

8. ASSESSING EFFICIENCY AND EFFECTIVENESS
IN MULTI-DIMENSIONAL PROCESSES
• Joint report SPC-EC 2015: use of radar charts to identify best practices
on double outcome standard: poverty reduction and employment
friendliness.
• Combination of several social indicators: AROP rate, severe material
deprivation, social expenditure, expenditure family, childcare use,
employment rate, work intensity…
• Comparison of country performance with EU average and with 3 best
performing countries
• ESDE 2015: country clusters on poverty risk and employment
friendliness: SE, DK, NL and SI do well; AT, LU, CY, FR, BE, DE and FI OK
but lower labour market attachment of mothers

10. COMPARING PERFORMANCES OF EU
MEMBER STATES: EFFECTIVENESS AND
EFFICIENCY OF MISS
• Conclusions:
• Different choices in reference lead to different outcomes in terms of best
performing countries
• A few countries score well in all categories: IE, DK, NL, UK
• Best performing countries can not be characterised by design of MIS,
although simple and comprehensive schemes mostly do well
• To have successful social policies, adequate MIS must be combined with
decent minimum wages, inclusive labour market practices as well as
generous child and family policies

11. 2. AUSTRIA: EXAMPLE OF A COUNTRY WITH
DECENTRALISED LEVEL OF GOVERNANCE
• Competence to regulate MI at regional level; national level concluded
agreement with federal provinces to coordinate and streamline regional
MIS
• No harmonisation of MIS, but definition of minimum standards:
minimum benefits levels based on monthly equalisation supplement
reference rate, eligibility conditions
• Federal provinces may set higher standards, especially with regards to
child benefits

12. 3. SIMPLIFICATION OF BENEFIT SYSTEMS
AND INTEGRATED SERVICE DELIVERY
• Study Budapest Institute on one-stop-shops: political constellations that
can successfully carry through reform: centralised governance with few veto
players (ex.UK) or federal system with wide consensus over goals and policy
solutions (ex.AT). Changes should be gradual, limited to selected areas. Need
for administrative and financial incentives, quality of planning, capacity
building for main actors, monitoring of process and outcomes in all phases.
• Best practices from AT (transformation of public employment services into
one-stop-shop offices), FI (establishment of labour force services as
integrated services), NO (integration of employment and social services as
‘whole system working’), IE (social welfare and public employment services
merged), NL (simplification of different schemes of social assistance for
people with some employability)

13. 4. CURRENT DEBATES ON MIS IN THE EU
1) Adequacy of minimum income: which references?
2) Use of reference budgets
3) Complementing benefits and the role of family benefits
4) Coverage and take-up

14. REFERENCES FOR ADEQUACY OF MI
• Most MS have no clear definition of adequacy of MIS in sense of 1992
Council Recommendation on decent income; some countries use
concept of subsistence level or absolute poverty lines
• Most MS have mechanism for level of payments based on set of
indicators and that takes account of household composition; common
approach is through minimum living standards (priced basket of goods
and services, reference budgets)
• Setting benefit levels often based on political decision
• Most benefit adjustment systems are insufficient to keep benefit levels
in line with general living standard.

15. USE OF REFERENCE BUDGETS
• Some countries use reference budgets as basis to determine level of
minimum income; but baskets often don’t cover all regular expenses
• In many countries reference budgets were developed to assess
adequacy of standards of living and social benefits
• Study: Storms et al, Pilot project on common reference budgets
methodology EU
• In poorer countries, MI often hardly allow families to live on healthy diet;
if other essential needs are taken into account, MIS would not be
adequate in other countries. Using complete reference budgets as
benchmark would sometimes be too ambitious in short term
• But reference budgets can not only be used to increase the level of
benefits, but also to reduce the cost of essential goods and services,
define priorities, formulate intermediate targets, facilitate cross-national
learning

17. COMPLEMENTING BENEFITS AND THE
ROLE OF FAMILY BENEFITS
• In many countries beneficiaries of MI can receive additional benefits for
other needs: most common are benefits related to housing costs, energy
costs, costs to raise children, health care costs, long term care costs
• Extra allowances mostly depend on assessment of needs by social
workers; some benefits have been reduced as consequence of budgetary
constraints during crisis
• Child and family benefits play an important role in fighting povery and
form a considerable part of income at bottom part of income
distribution

19. COMPLEMENTING BENEFITS AND THE
ROLE OF FAMILY BENEFITS
• Size of poverty reduction effet is strongly correlated with volume of
family benefits; but also design is important: pro-poor distribution of
family benefits (NL) versus equal distribution (DK); same impact with less
budget
• Trade-off between fiscal cost and poverty reduction: more generous
universal child benefit systems have stronger impact on poverty
reduction at higher fiscal cost
• Best results are delivered by child benefit schemes that combine
universal benefits with targeting toward families most in need.

20. COVERAGE AND TAKE-UP
• In half of EU countries eligibility conditions ensure comprehensive
coverage; in other countries coverage is limited
• Most countries that have fair coverage have simple and comprehensive
schemes open to all with insufficient income
• Eurofound study: non-take-up is important problem in EU: estimates
between 10 and 40%, persistent in time, issue for various benefits.
• Reasons for non-take-up are related to different levels: the benefit
scheme, administration of benefits, the individual, the broader social and
legal context.
• Strong arguments to address the gap between take-up and entitlements

21. COVERAGE AND TAKE-UP
• Stigma of benefits
• Stigma of conditions
• Bad access to bank accounts
• Internet penetration
• Legal restrictions to connect databases
• Complex
• Instable
• Stigmatising
• Small benefits
• Lack of dissemination
• Unawareness of benefit
• Unawareness of entitlement
• Unawareness of application procedure
• Perceived stigma
• Lack of time to apply
• Lack of interest in applying (too low,
independence, principle)
• Inaccessible procedure
• Complex procedure
• Erroneous assessment or procedure
• Resource-intensive
• Slow assessment
• Lack of staff
Administration Individual
SocietyScheme

22. COVERAGE AND TAKE-UP
• Recommendations to improve coverage and take-up (ESPN, EMIN,
Eurofound):
• Review conditions of access, guaranteeing individual right, ensuring
simple and transparent entitlement criteria, elimination of requirements
related to residence period, ensure portability of right to inimum income
benefits
• Non-take-up can be reduced by automatic granting of benefits or pro-
active procedures, connection of databases, use of ICT and on-line
applications, outreaching to potential beneficiaries, clear information
and effective assessments of applications