Commission issues Communication on the modernisation of social protection systems

The European Commission has launched a new Communication on the modernisation and improvement of social protection systems in the European Union. The document, issued in March 1997, presents the Commission's analysis of the need for reform, and presents its agenda for future action and analysis.

In a Communication published in March 1997, the European Commission calls for the modernisation, adaptation and improvement of social protection systems in the member states. It argues that these systems, most of which were established decades ago, no longer conform with the changing economic and social conditions of today's society. The Commission sees a particular need for social protection systems, which currently account for 28% of total EU GDP, to be adapted to:

• the changing nature of work, where there is a new interplay between policies designed to improve flexibility and those designed to provide security;
• change in the gender balance in working life, where equal opportunities bring new issues and requirements in terms of social protection;
• the ageing of the population in Europe, where the rapid growth of the dependent population is creating new needs as well as forcing the pace of pension reform; and
• the need to reform the coordination of national social security schemes for people moving within the EU.

The document builds on the findings of a consultation process which followed the publication, in 1995, of the Framework for a European debate on the future of social protection, and seeks to indicate routes along which modernisation can be pursued, and to present some specific proposals for European-level support.

As Community competence in relation to social protection systems is limited to those areas affected by the free movement of citizens between EU countries, the Commission is keen to point out that the Communication is built on the understanding that:

• each member state is responsible for the organisation and financing of its own social protection system;
• the EU is responsible for the coordination of national social security schemes in cases where citizens exercise their rights to free movement within the Union; and
• the EU also serves as a forum for promoting better mutual understanding of long-term perspectives, and for identifying common challenges facing member states.

The Commission therefore proposes the following agenda of issues for further analysis, debate and action:

Social protection as a productive factor: The Commission proposes to address during 1997 the age-old question of the overall costs and benefits of social protection systems - in particular their impact on social cohesion, political stability and economic progress.

More employment-friendly social protection systems: In its contribution to the 1997 joint employment report, the Commission will focus on how social protection reforms and taxation can be developed as an integral part of an active employment policy. This assessment will be based on an examination of best practice in the area of active employment policies. Of particular concern here are disincentives to taking up employment such as the so-called unemployment trap, and the reduction of non-wage labour costs to assist employment creation. The Commission aims to deepen the analysis of measures take in this area as a contribution to the interim report to be presented to the Amsterdam European Council meeting in June 1997 and to the joint employment report to be prepared for the Luxembourg European Council in December 1997.

The coordination of social protection and taxation systems is also a crucial consideration in policies aimed at promoting a gradual transition into retirement. This has been a policy focus in many member states, and forms an attempt, not only to reduce expenditure on public pension schemes, but also help fight youth unemployment. The Commission aims to present its findings on the potential and problems of this approach in this year's Employment in Europe report, due to be published in September 1997.

In addition, the Commission aims to present a Communication on the promotion of social inclusion in the first half of 1997; and in the second half of the year a report assessing the mechanisms of guaranteed minimum income schemes in the social protection systems of the member states.

Adapting social protection to the demographic ageing of European societies: In view of the increasing expenditure associated with public pension schemes in the light of demographic trends, the Commission aims to develop models for forecasting pension expenditure and assess elements of reform which seem most suitable to ensure the sustainability of public pension schemes while preserving their core aspects of social solidarity.

In the light of the problems associated with the supply of supplementary pension in a number of member states, the Commission aims to identify the main elements of a European-level framework for a secure environment for such pension schemes.

Other aspects under this heading are the study of policies to address the long term needs of dependent older people, and the assessment of the impact of prevention on the cost of healthcare systems.

Adapting social protection to the new gender balance: The increasing numbers of working women and mothers requires improved arrangements for reconciling work and family life. In this area, the Commission envisages the presentation of initiatives aimed at setting higher standards for the care of children and other dependants. The 1997Annual Report on Equal Opportunities will assess steps taken by the member states towards the individualisation of social protection systems.

Improving social protection of people moving within the Union: The Commission proposes to issue a Directive in 1997 aimed at tackling existing problems of coordination of social protection for migrant workers.

The Commission encourages all member states and European institutions as well as the social partners and non-governmental organisation to take part in this dialogue and states its intention to place the reform of social protection systems at the top of the agenda of the 1998 European Social Policy Forum.