Minimum income

Definition

The term ‘minimum income’ refers to a non-contributory and means-tested safety net operating within social protection systems. It provides a last-resort safety net for people who have insufficient means to ensure a decent standard of living. It is different from ‘minimum wage’, which refers to various regulatory restrictions on the lowest rate payable by employers to workers.

Background and status

Principle 14 of the European Pillar of Social Rights relates to the right to minimum income and stresses that:

Everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring a life in dignity at all stages of life, and effective access to enabling goods and services. For those who can work, minimum income benefits should be combined with incentives to (re)integrate into the labour market.

In 2020, the Council of the EU reflected on the importance of strengthening the protection of minimum income and acknowledged that a minimum income, along with activation services, which assist individuals in returning to employment, and social inclusion services, plays a vital role in mitigating the risks of poverty and social exclusion. The Council also invited the European Commission and the Social Protection Committee to:

prepare periodically a joint report to analyse and review progress achieved in the development of minimum income protection in the Member States, building on the benchmarking framework for minimum income protection established at EU level.

• Council of the EU: Strengthening minimum income protection to combat poverty and social exclusion in the COVID-19 pandemic and beyond – Council conclusions (9 October 2020)

Joint report 2022

The 2022 minimum income report highlights the following points.

• On average in the EU, the adequacy of minimum income benefits has remained almost unchanged in the last decade, in spite of some convergence due to new schemes introduced in some Member States and reforms implemented in others
• While the coverage of income support moderately increased, there are still existing challenges in accessing benefits, and estimates available in some Member States show that non-take-up of minimum income can be high
• In terms of facilitating labour market participation, the participation of minimum-income beneficiaries in active labour market policy measures often appears to be low and limited
• Coordination with bodies offering other complementary benefits and access to enabling services also seems to be a challenge in many instances

• European Commission and Social Protection Committee: The 2022 minimum income report – Volume I

Towards a recommendation on adequate minimum income

These findings have led the Commission to present an initiative under the European Pillar of Social Rights Action Plan, adopted on 4 March 2021. On 28 September 2022, the Commission called on Member States to modernise their minimum income schemes to help the EU achieve its target of reducing the number of people at risk of poverty or exclusion by at least 15 million people by 2030. In its proposal for a Council recommendation on adequate minimum income ensuring active inclusion, the Commission firstly calls for the minimum income to apply at an individual level, that is, per person and not per household, and secondly highlights the need for the application procedure to be accessible, simple and accompanied by information that is easy to understand, in order to reduce the amount of unclaimed benefits.

• European Commission: The European Pillar of Social Rights Action Plan
• European Commission: Proposal for a Council recommendation on adequate minimum income ensuring active inclusion, COM(2022)490 final

The Commission proposal will be discussed by Member States with a view to the Council adopting it. Once it is adopted, Member States should report to the Commission every three years on their progress on its implementation. The Commission will also monitor progress in implementing the recommendation as part of the European Semester.

Views of parties concerned

When the proposal was announced, the European Trade Union Confederation (ETUC) called for ‘ministers to adopt the European Commission’s Recommendation on minimum incomes as a matter of urgency’. Liina Carr, Confederal Secretary of ETUC, said, ‘Rising prices hit people in poverty the hardest’, adding that ‘the poor cannot wait until 2030 for the recommendations to be implemented’. In a joint statement, three non-governmental organisations (European Anti-Poverty Network, Caritas Europa and Eurodiaconia) considered that ‘simple soft-law and policy guidance mechanisms are not enough to guarantee adequate, accessible and enabling minimum income schemes that ensure a life of dignity for all’. The organisations reiterated their ‘urgent call for a binding EU Framework Directive on Adequate Minimum Income to assure effective contribution towards the implementation of Principle 14 of the European Pillar of Social Rights’.

• ETUC: EU needs adequate minimum incomes now!
• European Anti-Poverty Network, Caritas Europa and Eurodiaconia: Joint statement on the European Commission’s Proposal for a Council Recommendation on adequate minimum income schemes in the EU (PDF)

Related dictionary terms

ETUC ; European Semester ; living wage ; minimum wage ; European Pillar of Social Rights