One-year experiment with the guaranteed minimum income examined

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In 1996, legislation introduced a guaranteed minimum income (RMG) system in Portugal, aimed at the poorest members of society, which was introduced initially on an experimental basis. This feature examines the outcomes of the pilot phase and the views expressed by the trade unions.

A guaranteed minimum income (rendimento mínimo garantido, RMG) was created in Portugal by Law 19-A/96 of 26 June 1996 (PT9703107F). The RMG constitutes a minimum base-line income to cover essential needs (and is thus quite separate from the national minimum wage, which covers the minimum rates that employers must pay their employees). The RMG is essentially a contract, providing an income in exchange for a commitment to participate in a social integration programme. The RMG consists of a monthly payment that is conceived as the "minimum" to which all citizens having reached the age of majority and being resident in Portugal have a legally-established and recognised right. In return, the beneficiary is required to participate in a re-entry programme (involving employment, training etc) to be negotiated with "social action" workers. The amount of the RMG is based on a formula that takes into account the size of the household and the age of the members, but it is well below what is considered to be the poverty line. Following the enactment of Law 19-A/96, the RMG scheme was introduced on a one-year experimental, pilot basis from 1 July 1996 before being recognised as a universal right on 1 July 1997.

According to a recent study from the National Commission on the Minimum Income (Comissão Nacional do Rendimento Mínimo) and Department of Studies and Long and Short-range Planning (Departamento de Estudos e Prospectiva e Planeamento), during the experimental stage the RMG was implemented by the Portugal's social action institutions in partnership with other local institutions, public entities and private non-profit bodies. It was through these that individuals and families in a serious financial position were able to access this form of social protection. The organisations then promoted integration programs for each case, not only for the recipient but for other family members as well.

Demographic information about the beneficiaries that was collected during the first phase of the study showed that, in general, the RMG overwhelmingly affects women (about 72% of cases) and those with quite low levels of education (about 40% have less than a fourth grade education). Half can be considered functionally illiterate. This population can be characterised as having irregular, interrupted and/or intermittent employment histories, marked by long-term unemployment and limited access to job training. Most beneficiaries had not been covered by any social protection scheme and their ability to enter the labour market was uncertain. At the end of the pilot period studied, approximately 19% had arranged jobs and 12% were participating in training courses or placements. According to the study, in terms of social integration, the RMG helps initiate the process of change in the family and professional lives of beneficiaries.

Trade union views

The General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), in a document on social security, has identified perceived difficulties that emerged from the experiment with the RMG, classifying them into the following four main problem areas.

1. Difficulties in accurately determining the income of the individuals needing assistance. This points to the need for policies to combat clandestine and unstable jobs.
2. An urgent need for a more integrated social policy. Combined with the need for prevention measures, this is seen as the most logical approach for attacking poverty and social exclusion. The CGTP believes that there is a tendency to take a "deterministic" view of unemployment and exclusion as natural consequences of economic change, as something that can be remedied only by income assistance and social action. The confederation is concerned that for the past several years the government has been focusing on social action; at the same time social security has been criticised. This allegedly leads to an assistance mentality that actually reduces fundamental rights. The state, it is claimed, has taken a privatisation approach that weakens direct intervention in the social security system in favour of institutions of social solidarity. By doing this, the state relinquishes much needed control over the institutions that mediate social policy financed by workers. Social action has an important role to play as long as it is part of an overall framework of coordinated policies to combat poverty and exclusion, and as long as it does not diminish the means and response capacity of the social security system. Thus, the relationship between social security and institutions of social solidarity must be better defined and assessed.
3. Difficulties in responding to needs in complex cases. It is possible, however, that now the start-up phase is over, there will be significant improvements in service to beneficiaries, especially in delivery of services by institutions of social solidarity, as well as in the record-keeping system. The RMG should be taken advantage of because it is a right, but also because it is more than a simple form of assistance. It is articulated, whenever possible, with social and professional integration.
4. A need for financial reform. Social security covers paid workers and - as an income replacement - anyone with insufficient resources. The main financing issue that needs to be clarified is what should come from social security contributions and what should come out of the state budget, in order to address questions of national solidarity that demand greater expenditure. There is no reason to finance social action through contributions without establishing a work connection just because the recipients are needy individuals. Financial input on the part of the state and compliance with the basic law on financing the non-contributory system, including the RMG and social action programmes, are what is needed. In recent years there has been an effort to comply with the law, although not completely.

According to the General Workers' Union (União Geral de Trabalhadores, UGT) the definition of the RMG is referred to in the 1996-9 tripartite Strategic Concertation Pact (Acordo de Concertação Estratégica, ACE). It states that social security reform begins with discussion of fundamental principles, but also of concrete measures outlined in the Strategic Concertation Pact, namely the universal application of the guaranteed minimum income. Nevertheless, the national debate on social security reform (PT9805178F) has not really addressed the above questions adequately but rather has centred around issues relating to privatisation of a significant part of the system. The UGT, which is in favour of mechanisms that would supplement social security, rejects the introduction of base-line minima that would drain funds from the system, while at the same time taking away its public and universal base and threatening its redistributive character. To the UGT, the current discussion seems directed towards importing models that have nothing to do with national or European realities, nor, for that matter, with defending and strengthening social Europe. These models accentuate the rift between those with larger and smaller incomes, affecting the most vulnerable groups - the poor and the excluded.

Commentary

Although the RMG has unquestionably been accepted by the social partners as a form of social protection, social protection as a whole has been one of the most hotly debated issues under the current government. This has been especially true of the subject of social integration, notwithstanding less than hoped for success in this area. The RMG experiment shows that management of social security involves very complex problems due to the diversity of the various systems, the use of different techniques with different partners, the interrelations among social policies and the need for greater financial resources. (Maria Luisa Cristovam, UAL)