The challenges of adequate minimum income in Europe

www.emin-eu.net

“The current approach is leading to a dismantling of agreed social rights, undermining well-developed social models in the European Union, and is pushing people further away from the European project”.

This is how the recent report ‘Toward accessible and adequate minimum income schemes in Europe’[1] of the European Minimum Income Network (EMIN) describes the current state of affairs in the EU, in which the number of people living in poverty and social exclusion has increased by 10 million since 2009. To redress the situation, safeguard and promote the right to an adequate and accessible minimum income as a fundamental right, the EMIN project tries to raise public awareness and strengthen cooperation at EU level. This article presents the core findings of the report, an alternative to traditional minimum income schemes and the prospects for progress at the European level.

Definition and benefits

Minimum Income Schemes (MIS) are defined as “income support schemes which provide a safety net for those who cannot work or access a decent job and are not eligible for social insurance payments or those whose entitlements to these have expired”. They should therefore not be confused with the concept of minimum wage.

According to the EMIN report, MIS serve social goals, as well as economic goals. If well-conceived, a firm social floor allows its beneficiaries to live in dignity, remain active in society and return to the labour market. MIS also support the purchasing power of its beneficiaries, who spend their money in the real economy, and act as economic stabilizers in times of crisis. Furthermore, without the government’s social spending on adequate minimum income protection, the immediate impacts for individuals would result in long-term costs for the whole society.

The issue of adequacy

For these benefits to materialize a guaranteed minimum income needs to be well designed and pitched at the adequate level. Therefore, the greatest challenge concerns the meaning of ‘adequacy’. While the eligibility criterion of MIS is generally based on the idea of a lack of sufficient resources to cover needs, the report stresses the absence, in most countries, of a clear definition of what an ‘adequate’ income means. Often based on concepts such as the subsistence level or the absolute poverty line, what is considered as a sufficient, a decent or a minimum standard of living also differs greatly from one country to the other.

As a result, the EMIN project emphasizes the need for a systematic way to define an adequate minimum income. But the debate remains intense. For some, MIS should be systematically distributed to people whose income is below the 60% poverty threshold (the 60% median income threshold); for others it should be based on a percentage (e.g. 50%) of the minimum wage; for others still, the use of a reference budget designed to cover all expenses necessary to participate in society and updated regularly, using baskets of goods and services adapted to age groups and taking non-monetary aspects into account (i.e. access to healthcare services, housing, transport and civic participation), would be the most appropriate solution.

Whichever method is finally chosen, the EMIN report stresses that any MIS should be rights-based and set “at a level sufficient to live in a manner compatible with human dignity as a part of a comprehensive and consistent drive to combat social exclusion and to fulfill the basic needs of people to physical health and autonomy, necessary to be able to participate in society”.

The problems of accessibility

Another challenge concerns accessibility. MIS are often subject to problems of (lack of) coverage and non-take-up (i.e. the proportion of people eligible that don’t receive a benefit they are entitled to) because of excessive means-testing, disproportionately strict eligibility criteria, lack of communication, unknown rights, administrative obstacles or voluntary choice out of fear of stigmatization…

According to the report, non-take-up, which raises inequalities, poverty and social exclusion, is a major and underestimated issue. Still, this concern seems to have been overshadowed by the attention given by political discourses, policy makers and the media on the much lower figures of over-take-up and fraud.

Moreover, when badly designed, an inadequate minimum income scheme might create disincentives to work, lock people in a cycle of dependency on welfare benefits and trap them in poverty, resulting in important social, health and economic costs.

Unconditionality: the solution?

Often proposed as a solution to these issues, another perspective (not considered by the EMIN project) finds growing support in the European civil society and will soon be tested through pilot projects (e.g. in the Netherlands). At its core, a very simple idea: replace the conditionality of existing MIS with the unconditionality of a basic income (BI).

Simply put: grant everyone (all legal residents) an income in cash, on an individual basis (rather than based on household composition), without means-test and without work requirement, and let them add any kind of income on top of it. The universality and the unconditionality of this form of guaranteed income would, according to its advocates, suppress social stigma and allow the individual to adapt to changing life circumstances (engage in an education program, help a family member, launch an entrepreneurial project or contribute to community work…) thanks to a firm guaranteed floor.

Nevertheless, if it is true that a basic income implemented at the European level could avoid the difficult task of harmonizing very diverse social models, the BI still has a long way to go to become the new paradigm of European welfare. At the national level, its efficiency and success would depend on which social benefits it would replace (most advocates propose it as a partial substitute that can be topped up by any other conditional supplements) and at which level it should be set.

A level playing field across Europe

Whether it should be based on conditional or unconditional schemes, any progress with respect to the right to a minimum income in European countries would have to address the need for a common definition of adequacy.

The EMIN report proposes a European roadmap to recognize and safeguard the right to an adequate (conditional) minimum income in all EU Member States, stimulate upward social convergence and social progress, and ensure a level playing field in the single market.

First, the report aims to raise awareness, foster the public debate on the fundamental question of adequacy and trigger further improvements in the definition of common standards. Second, besides the Social Open Method of Coordination, which stimulates the exchange of best-practices between Member States, the EMIN project calls for binding European legislation in the form of a Framework Directive. Such a directive would set out the minimum requirements for an adequate MIS and establish common procedures to set the common standards. This would leave room for the Member States to transpose and implement the requirements and avoid a “one-size-fits-all” approach (in respect to the principles of subsidiarity and proportionality under EU law). Finally, the follow-up of establishing adequate MIS would be integrated within key EU processes in order to contribute to the objectives of the Europe 2020 strategy.

While there is hope for the emergence of a guaranteed minimum income in all European countries, the proposal for a binding directive seems to be failing to find political support. According to EMIN Project Coordinator Fintan Farell, “there is no consensus within the European Parliament and it is not foreseen on the European Commission’s agenda because of a lack of support from the Member States”. National governments are, once again, the stumbling blocks. However, nothing is written in stone, political will is a renewable resource provided that public opinion supports progress toward an adequate minimum income in Europe.

[1] The report was sponsored by the European Parliament (EP), funded by the European Commission (EC) and coordinated by the European Anti-Poverty Network (EAPN). The EMIN project has 30 participating countries: all EU Member States, except Slovenia and Croatia, plus Serbia, Iceland, FYROM and Norway. The report can be found here: http://emin-eu.net/emin-publications/.

A special thanks to Fintan Farell, Project Manager at the European Anti-Poverty Network (EAPN) and EMIN Project Coordinator, who took the time to answer my questions.

P1020238François Denuit is a PhD fellow in political theory and political economy at the University of Warwick and the Université Libre de Bruxelles (ULB). He is currently working on the idea of an Unconditional Basic Income (UBI) at the European level. Interested in social justice, alternative economic theories and politics as well as in culture, music and traveling, this young Belgian wishes to share with Katoikos his desire for a democratic, cosmopolitan and altruistic perspective in Europe and beyond its borders.


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