Guaranteed Social Minimum: A New Approach to Social Protection in Europe

doc. RNDr. Miloslav Hetteš, CSc., nominated President of ICSW Europe In the French city of Rennes on 25 March 2014, European representatives of the International Council on Social Welfare (ICSW Europe) gathered to assess the possibilities of civil society and key actors in the European Union in the area of the guaranteed social minimum (the so-called Social Protection Floor). Recommendation No. 202 (R 202) adopted by the International Labour Organization (ILO) in 2012 tasks states with providing their citizens with a guaranteed social minimum. However, it is necessary to agree together on what this means in the conditions of EU member states, where diverse social protection systems already exist.

The International Council on Social Welfare (ICSW) globally brings together organizations and citizens striving for social development and social peace. ICSW is a non-governmental organization representing international, national and local organizations devoted to social development, social security and social justice. UCSW was founded in 1928 in Paris. Its headquarters are in Kampala, Uganda. Its European organization will have its seat in Bratislava from June 2014. ICSW helps its member organizations with information, consultations, lobbies local and national governments, organizes and participates in international meetings and coordinates its activities with other international organizations. It publishes numerous publications, including the Global Social Policy Journal and International Social Work. ICSW has consultative status at the UN. ICSW is governed by a committee composed of representatives of nine regions: Central and West Africa, East and Southern Africa, South Asia, Southeast Asia and the Pacific, Northeast Asia, Europe, the Middle East and North Africa, North America and Latin America and the Caribbean. The president and executive apparatus are elected from among the members of the board. ICSW is financed through membership fees and grants. Among the largest current contributors are Finland, Norway and Sweden.

To define what ensuring a minimum of social protection means in Europe, we need to better understand the given recommendation (R 202 (2012)), its development and essence. Subsequently, it is good to review the situation of social protection in Europe. Then we will focus on the gaps between ILO standards and reality before we can provide conclusions and recommendations for eliminating shortcomings in this area.

1. The ILO initiative and the international importance of establishing a social minimum

In June 2012 in Geneva, during the International Labour Conference, Recommendation No. 202 on social protection floors was adopted (also with the support of Slovakia). This new international instrument is the result of many years of discussions and proposals between governments and social partners within the ILO. The moment of change toward a willingness to agree was the global recession that began in 2008 as a consequence of the financial crisis and its impact on the worsening social situation everywhere.

Social security is a fundamental human right and an economic value.

Earlier, the report on the social dimension of globalization (ILO Commission report, 2004) had pointed to inequalities, injustices in incomes and wealth in the world, and the need to improve social security for all.

Among the goals of social security are providing income security, ensuring health care and reducing poverty. Social security is also an economic necessity because it supports productivity, consumption and economic development.

Despite the existence of systems, legislation and structures, the ILO estimates that approximately 80% of the world's population lives without adequate income security or access to health care. Moreover, only 49 states (mostly European) have ratified ILO Convention No. 102 on minimum social standards.

Most developing countries were unwilling, due to their economic capabilities, to accept the commitments of Convention 102. At the same time, social partners and non-governmental organizations were unwilling to propose reduced standards that would be easier for most countries to fulfill. The outbreak of the crisis in 2008 reshuffled opinions and attitudes of the international community regarding social security.

Changed attitude of the international community toward a guaranteed social minimum and toward the recommendation due to the crisis after 2008.

In April 2009, the executive heads of international agencies agreed on a series of initiatives, which included the need for a social minimum.

Among the conclusions of the International Labour Conference in June 2011 was the need to extend social security not only through ratification of the Convention on Minimum Social Standards No. 102, but also through the creation of a new recommendation that would give member countries guidance on establishing a social protection floor system in order to provide basic income security and access to social care for all. It proposed a way to bridge coverage gaps through national strategies that respect national priorities and capabilities. These national strategies are to achieve universal personal coverage of the population with a minimum level of protection (horizontal dimension) and progressively ensure higher levels of protection through ILO social standards (vertical dimension). This two-dimensional expansion of coverage is consistent with the need for gradual alignment of conditions with the requirements of Convention No. 102 on minimum social standards.

In October 2011, the Social Protection Floor Advisory Group, created by the International Labour Office and the World Health Organization to improve international support for these initiatives and chaired by Ms. Bachelet, former head of the UN Entity for Gender Equality and the Empowerment of Women and President of Chile, presented its report: "Social Protection Floor for a Fair and Inclusive Globalization." The report called for the implementation of a social protection floor system to stimulate economic growth and increase social cohesion in the context of the economic crisis and to accelerate progress toward achieving the UN Millennium Development Goals.

In Cannes in November 2011, the G20 leaders accepted the importance of a certain social protection floor in each of their countries, in accordance with national capabilities, and supported the conclusions of their employment ministers from September 2011. The ministers then committed to undertaking progressive change toward the implementation of national social protection floors. To this end, they agreed to allocate the necessary administrative capacity and resources for this purpose. They committed to extending social protection to the entire population, particularly to marginalized groups.

International efforts led to the adoption of the recommendation in 2012 with the aim of creating a social protection floor system.

This concept of a social protection floor means a strategy for extending social security, containing basic social guarantees for all and the progressive implementation of higher standards. It is up to each government to determine the nature of the social protection floor system and the pace of its implementation in accordance with national priorities and within broader social, economic and employment strategies. It is particularly important to find the means for this in developing countries. National social protection floor systems must include at least the following social guarantees defined according to national capabilities:

• Access to essential health care, including maternity care.
• Basic income security for children, access to nutrition, education, care and other necessary goods and services.
• Basic income security for persons of working age who are unable to earn sufficient income, particularly in cases of sickness, unemployment, maternity and work incapacity.
• Income security for older persons.

The Recommendation recognizes the primary responsibility of states for making the social protection floor system functional and sets out several basic principles that must be fulfilled: universality of protection based on solidarity, legal entitlement to benefits, adequacy and predictability, non-discrimination, coverage of persons in the informal sector, recognition of already acquired rights under other guarantees, progressivity of implementation, solidarity in financing, transparency of administration, financial sustainability, coherence with other social policies, quality of services provided, accessibility and possibility of appeal and complaint, regular monitoring, respect for collective bargaining, participation and consultation in tripartite settings and with relevant organizations.

The concept of a guaranteed social protection floor needs to be assessed in relation to the current situation in the EU in order to understand the problems of its implementation not merely as a simple minimum, but rather as a means to strengthen and enrich existing systems.

2. Current trends in social Europe

To describe current social changes in Europe, we can point to long-term trends according to the findings of the European Commission in relation to social investment (Evidence on Demographic and Social Trends, 2013):

• The proportion of non-working persons per economically active person is increasing.
• There is a need for a more economically active society with higher labor force participation of women and, above all, a need for higher labor activity of older people.
• Regional disparities are growing (compounded by the emigration of young and educated people from Eastern and Southern Europe to wealthier countries).
• Differences in population, workforce and lifestyle are increasing (over the last 5 years, two-thirds of population growth was due only to the arrival of citizens from third countries (from outside the EU)).
• Changes in family structure (more single-parent families and families formed by members from broken previous unions).
• Development of information and communication technologies, which bring new work opportunities but also new risks and dangers of exclusion.

Transformation of the welfare state

We know of numerous extensive comparative studies of the European social security system (e.g., we can mention the classic work of Gøsta Esping-Andersen). Previous assessments from the 1990s spoke of strengthening the social system. Conversely, ten years later, however, an increase in hybridization and fundamental changes in institutionalization (e.g., privatization, reduction of solidarity, etc.) were already reported.

Average social spending in Europe remained at a high level compared to other OECD member countries: it rose from 26.5% of GDP in 2000 to approximately 30% in 2009 (the two main components were old-age pensions - 11% and health care - 8%). But there are very large differences between European countries. As regards social security expenditure, government spending has been more significant over the last 15 years than spending from other sources.

Different European systems have a high probability of converging due to financial constraints and procedures recommended by international organizations such as the European Union in connection with the stability pact. Among the common trends for all member states we can mention the commercialization of major parts of social protection. In former socialist countries, the shift of the health and social system into private hands was very evident. In many countries, even the wealthiest, access to health care has become much more complicated (this is particularly problematic in regions with poor transport accessibility).

It is problematic to assess the European Union in the area of social protection without evaluating its recommendations and legislation, which are often contradictory. It can be acknowledged that the effort for a social Europe is often stated in basic documents and strategies, but the instruments of liberal policy have acquired and continue to acquire decisive force in EU law.

Social impact of the economic crisis

The impact of the crisis on the social situation causes large differences within society and between states. According to the European Commission's own statements, we can cite some facts.

Between 2008 and 2011, the share of the employed population fell by 2%; the average unemployment rate is now over 10%. At the end of 2012, 25 million Europeans were without paid work. But this unemployment rate differs significantly across major European regions (in 2011 from 7% to 14.5%).

Great social inequality can be demonstrated in most countries by some basic facts. Because unemployment is much higher than before the crisis for certain specific groups: for young people it is 20% in the 15-24 age group, foreigners, less qualified workers and others. The recession strengthened wage polarization, which had been identified earlier (new jobs were predominantly low-paid, or conversely highly remunerated, between 1998 and 2007).

The increase in poverty is another impact of the current crisis. Various indicators can be used to determine the poverty rate. According to the attached table based on the so-called at-risk-of-poverty or exclusion rate (AROPE), the poverty rate decreased before 2009 and is now increasing, apparently due to the economic downturn:

The share of the population at risk of poverty (AROPE), with less than 60% of the median equivalized disposable income (after social transfers), was stabilized before 2009 and subsequently began to increase:

The share of the population experiencing severe material deprivation rose from 9% in 2008 to 10% in 2011.

Between 2007 and 2009, automatic stabilizers and stimulus measures contributed to balanced household budgets in most countries. Between 2009 and 2011, however, household incomes fell in many countries, especially in countries where the recession lasted longer; this can only be explained by the fact that assistance programs ended and people lost entitlement to them (tightened or even precluding conditions of eligibility).

Making benefits more effective and increasing contributions

Reforms carried out over the last two decades have significantly separated, particularly in France, Germany and Italy, occupational solidarity systems from national solidarity systems. In Western Europe, occupational schemes belong to the so-called second pillar of security and are significant; in Eastern Europe they are practically unknown and were replaced by private risk-based systems, which however have nothing to do with social security). Changes occurred in occupational schemes, e.g., old-age pensions in Sweden and unemployment benefits in France. Their purpose was supposedly to introduce more actuarially neutral systems (without demographic impact) and to establish benefit entitlements based purely on what was in the account and only what could be paid out. This generally led to the elimination or reduction of "non-contributory" periods and entitlements, which had nevertheless been one of the main instruments of social policy until then. This approach also worsened, for example, gender inequality. For instance, replacement periods of insurance for caregiving, childcare, and vocational training came to be considered socially unnecessary and thus unrecognized for social insurance purposes. At the same time, these restrictions in social protection were accompanied by privatization of the system and strengthening of individual savings schemes.

These "new" approaches threaten the solidarity of national social systems in the case of subjects who are not market "interesting" (low-income individuals, working poor, pensioners on minimum pensions, chronically ill, disabled). Wherever possible, these individuals are subjected to eligibility assessment procedures (often inhumane), additional obligations are imposed on them (often of a forced labor character), or even humiliating endless checks on whether the funds were used appropriately. "Work must pay" is often one of the main mantras of social policy in many countries, meant to prevent poverty traps and dependence on social benefits. However, this does not address the issue of rising in-work poverty in Europe (this was also addressed by an ICSW seminar in Copenhagen in October 2012): 8.6% of employed people receive less than 60% of the median income. The share of poor employed persons has been rising significantly in recent years in Europe, including in the wealthiest countries such as Germany or the Netherlands. This is due to labor market reforms and the economic recession and unemployment.

The single market in Europe causes increased competition, which is desirable, but it also affects health and social services. This causes widespread social dumping. The European Commission Directive on the posting of workers 96/71 aimed to provide foreign workers with the same working conditions as domestic workers. Due to the lack of collective agreements and the increase in illegal situations, the reality became unsustainable. The EU Council recently decided to support control, inspections and increase transparency.

It is common to speak of three roles of social protection: protecting people from hardship when risk occurs, being a stabilizing element of economic cycles, and being important for social investment. Currently, EU leaders have begun to promote especially social investment. According to the European Commission, of around 29% of GDP of the 27 EU countries (without Croatia) allocated to social expenditure, only 7.5% is investment-oriented. Investment in children is a key factor in improving the situation: there is a strong link and clear evidence of the importance of preschool care. Fighting child poverty is the best way to eliminate many social inequalities, current but especially future ones, therefore it is an investment. I recommend becoming more familiar with the results of the joint ICSW conference on social investment in Bratislava this year (http://prohuman.sk/socialna-praca/konferencia-socialne-investovanie-2014).

3. How the shortcomings can be addressed

Based on knowledge of the current situation in Europe and in view of what should be achieved in line with Slovakia's commitment contained in ILO Recommendation No. 202/2012, we should focus on some basic problems and shortcomings.

Differences in the level of accessibility of basic services intended for all, and the specific situation, affect certain social groups in particular. The at-risk-of-poverty rate is higher for women than for men (25.5% versus 23%), or in some countries. The most severe forms of social exclusion affect three groups: the homeless, Roma (indicator up to 80%) and migrants (indicator 37.8% for foreign-born residents).

Migrant workers are the main group in this category. Around 35.4 million foreigners were in the EU in 2010; more than a third (12.3 million) are European citizens living in another EU member state and 20.1 million are third-country nationals. The number of migrants from EU member states is increasing due to the free movement of persons and now also due to the crisis. However, their rights are violated due to instability and discriminatory rules are also applied, particularly against Roma. Access to rights for immigrants from non-member countries is sometimes limited due to cultural barriers. Illegal immigration creates humanitarian and legal problems. This is completely contrary to the fact that according to ILO Recommendation 202/2012, all residents must have access to basic social protection.

Attention must be paid to a special group called "NEET" (Not in Education, Employment, or Training): these are young people who are stuck in the "grey" zone between school and work. They represent around 13% of the population aged between 15 and 24, and moreover their share continues to grow (in Slovakia about 14%). Youth unemployment is particularly high (more than 50% of the labor force in this age group in Spain and Greece, in Slovakia "only" 37.8%) and is the main reason for the existence of the "NEET" group. The term is very similar to the Russian answer as to whether we will give them a future ("net"). There is also a serious problem with early school leaving in Europe (addressed by ICSW in September 2013), which is particularly serious for some groups, e.g., Roma. Despite some progress observed, in southern countries such as Spain and Portugal it is over 20%; in 12 countries (Northern and Central Europe) this rate is below 10%. Understandably, these people are generally without social minimum coverage.

Let us now consider another category that lives in transition between work and retirement. They are at the end of their working career; instead of sharing their knowledge, they are too old to be employed if laid off, but too young to receive an old-age pension. They are generally victims of ageism. Their inactivity only makes the situation worse for young people as well, because they receive whatever small social support based on tax solidarity.

The aging population in Europe brings a new source of impoverishment, particularly due to budgetary difficulties. Without the existence of minimum pension schemes and in the absence of an adequate system of social care services for dependent persons, it may happen that achieving a minimum social security is beyond the reach of many people. The income replacement rate is constantly decreasing and the needs of older dependent persons are not being met. Paid pensions are diverging significantly downward from original income, to the point of undermining the rationality of pension security as an institutionalized system.

While in most EU countries the level of social rights remains high (despite a recent recorded decline), we can nevertheless observe a warning phenomenon: these rights are not being used. The gap between theory, the legal state and the actual situation is growing; some people know nothing about their rights and therefore cannot claim them; others know about them but are afraid, do not dare to ask due to stigmatization, or because the financial requirements are too burdensome; others apply but still do not receive them due to poor administration, or simply for lack of resources. Knowledge could be improved by citizens' advice bureaus, which we do not have in Slovakia. Being unemployed is unfortunately a standard situation and being poor is becoming a majority situation. The share of those who "do not act, do not claim" (the so-called non-take-up (NTU) group) can sometimes reach over 50% (Hamel, Warin, 2010). Equal access to social rights therefore remains only on paper. This situation reflects a situation where legislation is very complex – which reflects our complicated life – a reality that strives to take individual situations and needs into account, and it is often a consequence of increased targeting in social schemes, which worsens the substantive and personal scope of universality.

4. Based on the findings, we present the following proposals

1. Three dimensions condition long-term social development policy. Emphasis is usually placed on economic growth, but it is necessary to also take into account social cohesion and income distribution, as well as environmental protection. These three dimensions: economic, social and ecological must be considered together if we want to achieve socially sustainable development.

2. The adoption of Recommendation 202/2012 by all delegations (governments and social partners) from among the EU during the International Labour Conference is fully understandable due to the social situation in Europe, especially because there is a crisis and not all Europeans have the opportunity to enjoy the defined social minimum.

3. EU bodies must also be led to remind member states that they have an obligation to maintain a guaranteed social minimum, with content, scope and level defined by each country. Although social protection is a shared competence under the Lisbon Treaty, the influence of the single market and the stability pact has caused the European Council and the European Commission to acquire much greater rights in this area than before. However, EU bodies consider the guaranteed social minimum to be more of a safety net that corrects marginal inequalities of the predominantly market-oriented mainstream social protection. To understand it merely as the lowest common denominator is unacceptable. We should realize that the Lisbon Treaty determines that national, regional and local authorities have the right to organize and manage social services in accordance with their social policy. This social policy must be based on the foundations of solidarity and non-profit of the providing institutions rather than on market principles. Such an approach fully rejects the privatization of old age (not private pension systems), the privatization of illness (not the privatization of hospitals) and poverty as a business.

4. The establishment of national guaranteed social minimum systems must not be viewed narrowly in the EU as a financial instrument, since it is necessary to think in categories of the main objectives of the Europe 2020 Agenda in the areas of employment and fighting poverty. Guaranteed social minima must be based on inclusive growth policy (growth for all). The goal can be achieved by changing existing systems so that financial effort does not disrupt global economic balance. Some states may need assistance from European funds for this purpose.

5. Despite the crisis, Europe remains a territory where social rights have generally been supported at a high level for many decades. However, a serious problem is growing: people are not aware of their rights and therefore do not claim their entitlements. Of course, abuse of the social system must also be strictly punished, as well as fraud on the part of service providers and loss of tax revenue due to illegal work, through a better managed system. But very little attention is paid to the fact that services do not reach those in need and entitled persons, despite the large amount of funds spent (e.g., in cases where poverty is a business for someone). Through fear of stigmatization, intimidation by providers and system administrators, or simple ignorance, more and more Europeans do not have access to their rights. We must act! The primacy of targeting, too much investigation, too many conditions, unnecessary evidence, non-functioning entitlements, etc. results in the dysfunction of even the most sophisticated systems. Authorities must be closer to citizens and social workers must remain in permanent contact with them.

6. Universal social coverage is a fundamental element of the guaranteed social minimum. Not all EU citizens have access to it and some have been without it for a long time; even partial financial participation often delays the resolution of many difficult situations or even makes them impossible to resolve, or prevents people from seeking professional help. Moreover, there may be cultural and language barriers. Some regions within the EU do not have reasonably accessible health care. The provision of health care must be the basis for regional development policies. With regard to inequalities in the provision of health care, we must maintain and strengthen the solidarity mechanism, both through services that are truly available to everyone and through legal coverage of all persons.

7. Other components of the guaranteed social minimum relate to guaranteed income mechanisms. 7.1. Income from employment no longer allows many Europeans, even in the wealthiest countries, to live a dignified life. The phenomenon of the "working poor" is well known and documented. With regard to this, we have no other option than to demand the introduction of a professional minimum wage in every EU country, taking into account local economic factors. 7.2. For persons of working age who cannot work due to disability or because they are unemployed, a system guaranteeing a minimum income is also needed. Restrictive conditions in unemployment benefits sometimes cause loss of entitlement. These benefits are often provided more as an income loss insurance system than as benefits intended to ensure a minimum standard of living. 7.3. If for older citizens the pension system is no longer adequate to guarantee dignified living conditions, every country must establish and maintain an adequate pension system. The increasing life expectancy requires the establishment of new services for the long-lived. 7.4. Every EU member state should introduce a guaranteed minimum income at the level of half the median income of that country.

8. The basis for the idea of a guaranteed social minimum is the existence of universally accessible services. However, the essence of social cohesion must be proactive (positive discrimination), with the aim of giving priority to at-risk groups in need of help and support. 8.1. One such example is "NEET", young people who have left school, who have not found work and who are not in training. These people must receive help when entering the labor market through means that are not yet fully utilized nor fully created. 8.2. Preschool education and child health care must also be considered a major social investment. 8.3. Migrants are another group. 8.3.1. They include EU citizens exercising freedom of movement. Attention must be paid to ensure they do not become victims of social dumping, which is a frequent occurrence. As for Roma, their situation requires more attention than just financial support. 8.3.2. As for migrants who are not EU citizens, the guaranteed social minimum must also apply to them equally as to residents. However, many times they encounter obstacles before they can benefit from the social systems to which they are entitled, and such barriers need to be removed. As for illegal immigrants, who a priori have no rights in national social systems, their access to social protection must be based on humanitarian grounds.

Conclusion

This contribution reflects the current knowledge and efforts of the International Council on Social Welfare to introduce a guaranteed social minimum for all in the conditions of Europe. It was not intended to analyze exclusively the situation in Slovakia and aspired to provide a European perspective.

Author: doc. RNDr. Miloslav Hetteš, CSc. nominated President of ICSW Europe www.icsw.org

References:

Evidence on Demographic and Social Trends. Social Policies' Contribution to Inclusion, Employment and the Economy, European Commission, Brussels, 20.2.2013 SWD(2013) 38 final I/II, 49 p. Evidence on Demographic and Social Trends Social Policies' Contribution to Inclusion, Employment and the Economy, European Commission, Brussels, 20.2.2013 SWD(2013) 38 final II/II, 45 p. HETTEŠ, M. (2014): Sociálne investovanie (na Slovensku?), p. 23 – 47, in: Hetteš, M., Krémer, B., Steck, P.: Sociálne investovanie, SKTS, Bratislava, 114 p., ISBN 978-80971606-0-9 WARIN, P, HAMEL, M.-P. (2010): Access to social rights: criteria for evaluating public sector reforms, Event: New and growing inequalities: a challenge for the social, economic and democratic development of the European Union? Insights from Socio-Economics Sciences and Humanities for the EU 2020 strategy for inclusive growth., 11 November 2010, 23 p.