EU strategy on social protection and social inclusion

In March 2009, the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) and the European Commission adopted the Joint Report on Social Protection and Social Inclusion 2009. With the aim of driving policy efforts in the areas of social protection and social inclusion in the 27 EU Member States, this report has a special relevance in the context of the current economic crisis.

On 9 March 2009, the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) and the European Commission adopted the Joint Report on Social Protection and Social Inclusion 2009.

Background

The joint report is part of the open method of coordination in the fields of social inclusion and social protection – in relation to pensions, health and long-term care – in the framework of the Social Policy Agenda 2006–2010. It is based on National Strategy Reports (NSRs) presented at the end of September 2008, before the effects of the financial crisis took hold on the real economy.

Although the report reflects the situation at the end of a period of economic growth, with an average growth rate of 2.1% a year in the 27 EU Member States (EU27) between 2001 and 2007, the issues addressed have become even more urgent in the context of the current economic crisis. In this regard, the joint report underlines the significance of social policies and structural reforms in order ‘to cushion the impact of the economic crisis and help recovery’.

Current situation and future strategies

The joint report is accompanied by a supporting document, prepared by the European Commission. In its first part, the accompanying document outlines the current situation with regard to the three areas of social inclusion – adequate and sustainable pensions, health and long-term care – supported by detailed statistical tables in the annex. The remaining parts of the supporting document, as well as the NSRs, focus on political strategies of Member States regarding social protection and the fight against social exclusion. The supporting document (COM(2009) 58 final (881Kb PDF), p. 20) underlines the interrelationship between the three areas:

Population ageing due to low birth rates and increased life expectancy means, if not accompanied by extra years in good health, a larger share of old and very old people with multiple and reinforcing degenerative and chronic conditions. This can threaten the sustainability of social protection because it increases pensions, healthcare and long-term care costs.

Risk of poverty and social inclusion

Despite a favourable economic environment and a rise in the EU27 employment rate to 65.4%, none of the Lisbon Strategy objectives regarding social inclusion has been met to date. For instance, 16% of Europeans, or 79 million people, were still at risk of poverty in 2007. Children face an even higher risk of poverty, at 19% in the EU27. The report emphasises that this statistic has not improved since 2000. While, on average, older people also face a higher risk of poverty (19% compared with the average 16%), substantial differences exist across countries. The proportion of people aged 65 years or more at risk of poverty ranges from 5% in the Czech Republic to 51% in Cyprus. Furthermore, single older women face a much higher risk of poverty (28%) than single men (20%).

The report states that the general improvement in the labour market between 2000 and 2008 has had a limited impact on social inclusion. Firstly, the number of people living in jobless households remains high. In 2007, almost 9.3% of EU27 adults of working age – those aged 18–59 years, who are not students – were living in households where no household member was in paid employment. Secondly, having a job does not always protect people from the risk of poverty. In 2007, 8% of EU27 citizens aged 18 years and over who were in employment lived below the poverty threshold.

Regarding the fight against discrimination of ethnic minorities, immigrants and people with disabilities, the joint report particularly addresses the situation of Roma people, who belong to the most excluded ethnic group in European societies. While some Member States with a sizeable Roma minority have upgraded their policy coverage regarding this discrimination, in most countries a comprehensive policy framework is still lacking.

Adequate and sustainable pensions

With regard to the sustainability of pension systems, the report focuses on two aspects: progress regarding the EU target of reaching a 50% employment rate for older workers by 2010, and the ability of current pensions systems to reduce the risk of poverty for elderly people. Regarding the first point, the employment rate for older workers in the EU27 in 2007 was 45% compared with 37% in 2001. Overall, 12 countries now exceed the 50% target, while in other countries the rate is still about 30%–35%.

In relation to the effectiveness of current pension schemes, the report refers to the impact that the economic crisis is having on private pension funds:

As pension funds invest part of the savings they hold in shares, they have been affected by the dramatic decline in financial markets. … Scheme designs will, nonetheless, have to be reviewed to ensure future adequacy and sustainability of funded schemes.

Healthcare and long-term care

While life expectancy in the EU has generally increased over the past two decades up to 82 years for women and 76 years for men in 2006, there is no clear reduction in the gap between life expectancy and healthy life years. For the 15 EU Member States before EU enlargement in 2004 (EU15), the number of healthy life years increased from 64.5 years in 1999 to 66 years in 2003 for women and from 62.8 years in 1999 to 64.5 years in 2003 for men.

Furthermore, significant gaps in health status across social groups persist in the EU. On average, less advantaged groups in society not only have shorter lives and suffer more illness but also consider their health to be worse than more advantaged groups. Finally, significant gaps in health insurance coverage remain in the EU, with a non-negligible number of individuals having no or very limited insurance cover. Even where universal healthcare is offered, this does not necessarily mean equal access for all. On average, 3.1% of the EU population report an unmet need for medical care. This proportion varies between Member States, ranging from 0.2% in Slovenia and Denmark to 15% in Latvia, and across income groups in each country, with the poorest people facing the greatest unmet need.

Commentary

In addition to the statistical data about the social situation in the EU at the onset of the economic crisis, the NSRs and their analysis in the European Commission’s supporting document give an overview of priorities and strategies of the EU Member States with regard to social protection and social inclusion.

Stefan Lücking, Technical University Munich