Commission staff working document - Joint Report on Social Protection and Social Inclusion - Supporting document
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COMMISSION STAFF WORKING DOCUMENT
Joint Report on Social Protection and Social Inclusion SUPPORTING DOCUMENT
TABLE OF CONTENTS
1. Scope and Outline of the Report 5
2. Part One: Quantitative Analysis 6
2.1. The Economic and Demographic Context and Developments 6
2.2. The Social Situation in the EU and the Role and Effectiveness of Social Policy 10
2.2.1. Poverty and social exclusion: the income dimension 10
2.2.2. The impact of social protection expenditure in reducing the risk of poverty 15
2.2.3. Joblessness: a cause of income poverty and an aspect of social exclusion 18
2.2.4. Educational barriers to social inclusion: early school leaving 24
2.2.5. Regional cohesion 25
2.2.6. The labour market situation of immigrants 27
2.2.7. The labour market situation of older people 28
2.2.8. The role of pension systems in maintaining living standards 29
2.2.9. The health dimension 34
2.3. The Lisbon Strategy and its Impact on Social Cohesion 37
2.3.1. Employment and its impact on the poverty risk 37
2.3.2. Employment growth and jobless households 39
2.3.3. Working longer and its impact on the adequacy and sustainability ofpension systems 40
2.3.4. The impact of economic outcomes on health 42
3. Part two: Thematic Analysis 43
3.1. Strategies for Social Inclusion 43
3.1.1. Full participation in society requires access to resources, rights and services 44
3.1.2. Promoting active inclusion and fighting poverty 51
3.1.3. Strengthened governance of social inclusion policies 59
3.1.4. Annexes to section on social inclusion 67
3.2. Strategies in Health Care and Long-Term Care 78
3.2.1. Introduction 78
3.2.2. Global challenges in the area of access and policies to address them 79
220.127.116.11. Lack of insurance coverage of the population 80
18.104.22.168. Lack of coverage of certain types of care and high direct costs of care 81
22.214.171.124. Geographical inequity in access to care 83
126.96.36.199. Long waiting times and disparities in waiting times 84
188.8.131.52. Lack of information 85
3.2.3. Global challenges in the area of quality 85
184.108.40.206. Improving effectiveness 85
220.127.116.11. Applying evidence-based medicine 86
18.104.22.168. Developing better integration, choice and coordination of care 87
22.214.171.124. Summary of findings 88
3.2.4. Global challenges in the area of sustainability 89
126.96.36.199. Financial sustainability 89
188.8.131.52. Human resources for health 96
184.108.40.206. Health promotion and disease prevention 99
3.2.5. Long-term care 100
220.127.116.11. Access to adequate long-term care 101
18.104.22.168. Quality of long-term care 102
22.214.171.124. Sustainability of long-term care systems 103
126.96.36.199. Summary of findings 106
3.2.6. Conclusions on health care and long-term care 106
3.2.7. Annex to section on health and long term care: Best Practice Examples inhealth care and long-term care in the 2006 National Reports 109
3.3. Progress in the Field of Pensions since 2006 111
3.3.1. Introduction 111
3.3.2. Recent developments in pension reforms 112
3.3.3. Theoretical replacement rates and the long-term adequacy of pensions 113
3.3.4. Minimum income provision for older people 121
3.3.5. Flexibility of retirement age 124
3.3.6. Next steps within the Open Method of Coordination 125
3.3.7. Annex to section on pensions– Result tables on theoretical replacement rates 126
4. ANNEXES 131
4.1. Annex IA – Overarching Indicators 131
4.2. Annex IB - Data Sources – specific notes 136
4.3. Annex 1C: Statistical tables – Overarching indicators 140
SCOPE AND OUTLINE OF THE REPORT
This supporting document provides the analytical background for the 2007 Joint Report on Social Protection and Social Inclusion [COM(2007) 13 final]. It draws on the material provided by the Member States in their National Reports on Social Protection and Social Inclusion, as well as analysis provided by independent experts, and uses the common indicators agreed for this purpose by the Social Protection Committee and its Indicators Subgroup. Where appropriate, it also draws on studies and research carried out in the framework of the Open Method of Coordination (OMC) on Social Protection and Social Inclusion.
The document is divided into two parts. The first part relates to the common objectives for promoting social cohesion and ensuring effective interplay between the social OMC and the Lisbon and Sustainable Development strategies; it provides an analysis of the social situation across the fields of social inclusion, pensions and health and long-term care. The second part examines the policy strategies presented by the Member States and looks in turn at social inclusion, health and long-term care, and pensions.
Part One of the supporting document begins with an analysis of the economic and demographic context in which measures to combat poverty and exclusion and to ensure the adequacy, quality and sustainability of pensions, health care and long-term care are being implemented. The first chapter describes the more limited economic growth which has characterised in particular the first years of this millennium, while the second highlights the disparities that continue to be a feature of EU societies and in particular the extent of poverty and social exclusion affecting considerable groups of the population. It also looks at the labour market situation of older people and the interplay with the pension system, before looking at the role of pensions more widely in maintaining adequate living standards in retirement. Finally, it examines the health dimension, looking at the indicators of levels of health across the Union and at health care spending, health status and inequalities. The third chapter examines the complex issue of the interrelationship between, on the one hand, efforts to promote inclusion and the reform of social protection systems and, on the other, the Lisbon goals of growth and jobs.
Part Two has three sections. Section 1 assesses Member States' Strategies for Social Inclusion. It explores how Member States set out to address inequalities in access to the resources, rights and services needed for full participation in society, to achieve active social inclusion while fighting poverty and exclusion and to further improve governance of social inclusion policies. Reflecting the priorities set in Member States' Reports, it devotes particular attention to the strong commitment across the EU to tackling child poverty and to promoting active inclusion. Section 2 summarises the national strategies for health care and long-term care to ensure access for all to high quality care in a sustainable manner. This is the first report of its kind, given that the open method of coordination was extended to cover health care and long-term care only from 2006. Section 3 summarises the work carried out in 2006 on pensions. National strategies for pension reforms were reported in 2005 and work on pensions in 2006 within the OMC focused on: replacement rates, minimum income guarantees for older people and flexibility in retirement age.
PART ONE: QUANTITATIVE ANALYSIS
The Economic and Demographic Context and Developments
Between 2001 and 2005, average economic growth in the EU25 was 1.7% per year, but this hides the good performance of countries like Ireland, Greece and Spain (over 3% per year on average) and the new Member States (around 4.6%). The gap between the richest and the poorest countries in Europe continued to narrow during the period. While the average GDP per capita of the five richest countries in Europe remained at 125% of the EU25 average, the average GDP per capita of the five poorest moved up from 42% of the EU25 average in 2000 to 51.4% in 2005. For 2006, a projected 2.3% EU25 average growth rate reflects signs of recovery observed in most Member States.
Figure 1: GDP growth over 2001-2005 and 2006 forecast.
Source: Eurostat – National Accounts
In 2005, employment growth in the EU25 continued to recover gradually from the low in 2003. Employment growth averaged 0.8% for the year as a whole, slightly up on the previous year’s level of 0.6%. The employment rate in the EU25 increased to 63.8%, mainly driven by the growth in the employment rate for women (from 54.3% in 2001 to 56.3% in 2005) and for older workers (from 37.5% to 42.5%). The share of part-time employment (including involuntary part-time) have risen from 16.3% in 2001 to 18.4% in 2005, as well as the share of fixed-term employment (from 12.9% in 2001 to 14.5% in 2005).
Figure 2: employment rates in the EU; total, women and older workers; 2005 .
Source: Eurostat - Labour Force Survey
Unemployment remains a concern for most EU Member States, with 8.8% of the EU25 labour force unemployed in 2005 (against 8.6% in 2001), and long-term unemployment rising from 3.6% to 3.9%. Seven countries (IE, LU, NL, DK, UK, AT and CY) have unemployment rates around or below 5%, while two (SK and PL) have rates above 15%. The unemployment rate for women is higher than for men in most EU countries and on average in the EU it is 2.1 percentage points higher. Youth unemployment remains very high (18.5% in 2005). In most countries, youth unemployment is at least twice as high as the overall rate, and up to 3 times as high in IT and LU. While some Member States have managed to reduce youth unemployment significantly between 2000 and 2005 (the Baltic States, Slovakia and Bulgaria from higher levels), it has increased sharply in LU, HU, PT and BE.
Figure 3: Unemployment and youth unemployment; 2000 and 2005.
Source: Eurostat - Labour Force Survey
Average spending on social protection (excluding administrative costs) in the Union in 2004 represented 26.2% of GDP. In general, the relative levels of social protection expenditures are highest in the richest countries as measured by GDP per capita. Social protection expenditures range from 12% to 20% in the Baltic States, IE, MT, SK, CZ, PL and HU to around or even above 30% in DK, SE, DE and FR. In all EU countries, pensions and health care represent the bulk (three quarters) of social protection expenditure, reaching on average 46% and 28% respectively of social protection expenditure. The rest is spent, to varying degrees, on disability, family-related benefits, unemployment, housing and other social exclusion benefits.
Figure 4: social protection benefits, by function, in % of GDP – 2004.
Source: Eurostat - ESSPROS
In the coming decades, the size and age-structure of Europe’s population will undergo dramatic changes due to low fertility rates, increases in life expectancy and the retirement of the baby-boom generation. Member States have started to address the demographic challenge in a context of tight fiscal constraints. The situation in public finances in the EU has deteriorated in a number of countries since 2000. Debt ratios in 2006 remained above the 60% of GDP threshold in Belgium, Germany, Greece, France, Italy, Austria, Portugal, Cyprus and Malta. Reforms have had a significant impact in BE and EL (where however the debt ratio remains close to 90% or more), and in AT and CY where the debt ratio is expected to fall below the 60% thresholds in the coming two years.
Pensions and health care functions that mostly benefit elderly people are most likely to be affected by the expected ageing of the population. According to Eurostat projections, the age structure of the EU population will change dramatically. By 2050, the EU will have lost 48 million 15 to 64-year-olds and will have gained 58 million people 65 and over. The old-age dependency ratio, that is the number of people aged 65 years and above relative to those between 15 and 64, is projected to double, reaching 51% in 2050. This means that from four working-age people supporting each pensioner in 2004, this ratio will drop to two to one by 2050.
Nevertheless, ageing is a consequence of the positive fact that life expectancy has continued to increase. For the EU-25, from 1995 to 2005 life expectancy at birth has increased from 72.8 to 75.8 years of age for males and from 79.7 to 81.9 for females. Between 1993 and 2003, significant increases in life expectancy at the age of 45 (from 30.5 to 32.5 for males and from 36.3 to 37.8 for females) and at 65 (14.7 to 16.3 for males and from 18.9 to 19.9 for females) indicate that gains in life expectancy are more and more happening in older age. The challenge is now for social protection systems to ensure that people are living and working longer in good health, not only to improve the well-being of citizens but also to help maintain a healthy work-force and to limit increases in expenditure on health and long-term care in old age.
The Social Situation in the EU and the Role and Effectiveness of Social Policy
The first objective of the streamlined Open Method of Co-ordination in the field of social protection and social inclusion is the promotion of social cohesion, equality between men and women and equal opportunities for all through adequate, accessible, financially sustainable, adaptable and efficient social protection systems and social inclusion policies.
There are a number of aspects to social outcomes, including income and living standards, access to good quality health services, educational and work opportunities. This chapter aims to give a snapshot of the social situation in the European Union from this multidimensional perspective, based on the set of indicators agreed at EU level to monitor progress in this area. It will also highlight the role of social protection and employment policies in fighting against poverty and social exclusion.
Poverty and social exclusion: the income dimension
Poverty and social exclusion take complex and multi-dimensional forms and, among these, living on very low incomes probably resonates best with what is commonly referred to as "poverty". Being at risk of poverty is a relative concept: it refers to the capacity of the individual to participate fully in the society in which she or he lives. That is why the income measures of poverty are related to some extent to the overall income distribution nationally and are expressed as a percentage of the median income in any given country.
Income poverty still affects 16% of the EU population…
In 2004, the average at-risk-of-poverty rate in the EU was 16% while national figures ranged from 9% in Sweden and 10% in the Czech Republic to 21% in Lithuania and Poland and 20% in Ireland, Greece, Spain and Portugal. In most countries, the at-risk-of-poverty rate (for the population aged 16 or more) was higher for women, the difference reaching 4 percentage points in Bulgaria and Italy, while at EU level the gender gap was 2 percentage points. Only in Hungary and Poland was the at-risk-of-poverty rate marginally greater for men. However, when looking at the gender dimension, it is important to interpret figures with caution since they assume equal distribution of resources within the household, which might not necessarily be the case.
…and is even higher for children, young people and the elderly.
The young have the highest at-risk-of-poverty rate, at 19% for children aged 0-17, and 18% for the 18-24 age groups. The at-risk-of-poverty rate then decreases with age as individuals progress in the labour market, before it rises again after people retire and cannot rely anymore on income from work. The risk of poverty for children is particularly high in Poland (29%), Lithuania (27%) and Romania (25%). One person households and those with dependent children tend to have the highest poverty risk, with the highest poverty rate affecting single parents with one dependent child (33% in the EU as a whole).
The risk of poverty for people aged 65 and more is particularly high in Ireland (33%) and Cyprus (51%), while it is also significantly high in comparison to the population as a whole in a number of Member States. However, recent measures introduced in some Member States, including minimum income guarantee schemes and increases in the minimum income guarantee, are likely to have decreased the poverty risk in recent years. Older women, without exception, are at greater risk of poverty than older men, who are on the whole no more exposed to the risk of poverty than their younger counterparts. The oldest cohorts (aged 75 and over) tend to be more at risk of poverty than those over 65 and women represent a majority of these older people. Higher poverty risk amongst the oldest people is linked to several factors. Low incomes or interrupted careers, which particularly affect women, coupled with the indexation rules in some countries, generally result in a progressive worsening of retirement incomes as older cohorts grow older.
Comparing the poverty risk in the EU for the youngest and the oldest segments of the population, which are both higher at EU level than the poverty risk of the working age population, approximately half of Member States have a higher child poverty risk and the other half have higher elderly poverty risk. It should, however, be noted that in almost all Member States the poverty risk for children is higher than that for the working age population, while the poverty risk for elderly people varies to a greater extent (but in most Member States it is still significantly above average). Income poverty among children is generally recognised as affecting their development and future opportunities and so the life chances of future generations.
Figure 5: At-risk-of-poverty rate for children, elderly people and the overall population - 2004 – percentages
Notes: provisional data for HU and the UK; age brackets 0-15, 16-64 and 65+ for BG, RO and SI.
Source: EU-SILC, Eurostat; national sources for BG and RO. Survey year: 2005; Income year: 2004; except BG and RO (survey and income year 2004), and the UK (survey and income year 2005)
Being poor means having very different living standards in different Member States
At-risk-of-poverty thresholds are country-specific and the economic well-being of individuals at risk of poverty in Member States can therefore be quite different in absolute terms, so that, for example, individuals with similar real incomes may be classified as being at risk of poverty in one Member States but would not be in another. The following graph presents the illustrative values of the at-risk-of-poverty thresholds for a single adult household, expressed in purchasing power standards. Member States with the lowest at-risk-of-poverty threshold include all new Eastern European Member States and Portugal. At the other end of the distribution, the highest at-risk-of-poverty thresholds are those of Luxembourg and Austria, where they are respectively more than seven and four times higher than in Latvia, Lithuania and Bulgaria and more than twelve and eight times higher than in Romania. In euros, this means that the at-risk-of-poverty threshold for a single person household and for a household with two adults and two dependent children ranges from 558 euros and 1172 euros respectively a year in Romania to 17087 euros and 35883 euros respectively in Luxembourg. This means that in Romania single people at risk of poverty live on less than two euros a day, while in Bulgaria Latvia and Lithuania they live on less than four euros a day.
Figure 6: Illustrative value of the at-risk-of-poverty threshold for a single adult household, in PPS, 2004
Notes: provisional data for HU.
Source: EU-SILC, Eurostat; national sources for BG and RO. Survey year: 2005; Income year: 2004; except BG and RO (survey and income year 2004). Data for the UK not available.
In Member States where poverty affects a larger share of the population, it also tends to be more severe, but this is not always the case.
Headcount figures on poverty risk do not answer the question "how poor are the poor?". Information on the intensity of poverty can be obtained from the relative median at-risk-of-poverty gap indicator, which measures how far below the threshold the income of people at risk of poverty is. In 2004 the median at-risk-of-poverty gap for the EU was 23%. Member States with low headcount measures of poverty tend to have the lowest intensity of poverty as well. On the other hand, countries with a high at-risk-of-poverty headcount tend to have a relatively higher median at-risk-of-poverty gap as well. This is particularly high in Poland, where it reaches 30% of the at-risk-of-poverty threshold.
Figure 7: At-risk-of-poverty rate and median at-risk-of-poverty gap for the total population - 2004 – percentages
Notes: provisional data for HU and the UK.
Source: EU-SILC, Eurostat; national sources for BG and RO. Survey year: 2005; Income year: 2004; except BG and RO (survey and income year 2004), and the UK (survey and income year 2005)
Member States that succeed in achieving low rates of poverty risk are the ones with the most equal income distributions
The figures presented so far, focus on analysis of the lower end of the income distribution. To assess the degree of social cohesion within Member States, one must explicitly consider how the income situation of those at the bottom of the income distribution compares with that of individuals at the top, as measured, for example, by the income quintile ratio . The value for this indicator was 4.9 for the EU in 2004, which means that the ratio of total income received by the 20% of the EU population with the highest income (top quintile) was nearly 5 times that received by the 20% of the EU population with the lowest income (lowest quintile). Member States with the lowest income inequality are also among the countries with the lowest at-risk-of-poverty rate. Member States with the highest disparities between those at the top and those at the bottom of the income distribution are Portugal (with a ratio of more than 8 to 1), followed by Lithuania, Latvia and Poland.
Figure 8: Inequality of income: S80/S20 income quintile share ratio – 2004.
Notes: provisional data for HU and the UK.
Source: EU-SILC, Eurostat; national sources for BG and RO. Survey year: 2005; Income year: 2004; except BG and RO (survey and income year 2004), and the UK (survey and income year 2005)
The impact of social protection expenditure in reducing the risk of poverty
Social protection expenditure plays a decisive role in reducing the risk of poverty
A comparison between the standard at-risk-of-poverty rate and the hypothetical situation where social transfers are absent, other things being equal, shows that such transfers have an important redistributive effect that helps to reduce the number of people who are at risk of poverty. In the absence of all social transfers, the average poverty risk for EU Member States would be considerably higher than it is in reality, by the order of 10 percentage points (average pre-transfer risk rate of 26% compared with the post-transfer rate of 16%). Figure 9 shows the percentage drop (in absolute terms) of the at-risk-of-poverty rate allowed by social transfers.
The poverty-reducing effect of social transfers is particularly evident in France, the Netherlands, Austria, the Czech Republic, Hungary, Finland, Denmark and Sweden, where all social transfers reduce poverty by 50% or more. Conversely, in Lithuania, Spain, Bulgaria and Greece social transfers only reduce the risk of poverty by 20% or less.
Figure 9: The impact of social transfers (excluding pensions) on the at-risk-of-poverty rate, 2004
% reduction in the total poverty-risk rate allowed by social transfers
Notes: provisional data for HU.
Source: EU-SILC, Eurostat; national sources for BG, RO and the UK. Survey year: 2005; Income year: 2004; except BG and RO (survey and income year 2004) and the UK (survey and income year: 2003).
The impact of social cash transfers on the poverty risk rate differs across age groups. Figure 10 illustrates the percentage drop in the poverty risk rate for children aged 0-17 years allowed by social transfers (excluding pensions). In the Nordic countries, the drop in the poverty risk rate for children allowed by social transfers other than pensions was as high as 60% or more; on the other hand, in Bulgaria, Spain and Greece children benefit least from poverty relief allowed by social benefits (the percentage drop was less than 20%).
Figure 10: The impact of social transfers on the at-risk-of-poverty rate for children, 2004
% reduction in the total poverty-risk rate for children (aged 0-17) allowed by social transfers other than pensions
Notes: provisional data for HU and the UK; age bracket 0-15 BG, RO, SI and the UK.
Source: EU-SILC, Eurostat; national sources for BG, RO and the UK. Survey year: 2005; Income year: 2004; except BG and RO (survey and income year 2004) and the UK (survey and income year: 2003)
BOX 1: Social assistance and risk of poverty Countries differ substantially in terms of the minimum safety nets they provide to workless households, even when comparing them relative to the at-risk-of-poverty threshold that depends on living standards in each country. Only a few countries provide workless households with a minimum income and related (i.e. housing) benefits that are sufficient to lift them close to or above the 60% of median income threshold, and this only with respect to some family types. So, for example, lone parents can receive benefit income at or above the poverty threshold level only in Poland, the United Kingdom, Germany, Denmark and the Netherlands; whereas in all countries but Poland, couples with two children relying on social assistance benefits would have disposable income levels below 60% of the median. In Hungary and Spain, all three family types are likely to receive less than 40% of median income with out-of-work benefits. Some Member States argue that the main purpose of social assistance is to meet basic needs rather than compensate for income differences between low income households and the rest of the population. Furthermore, these basic needs can be met by cash transfers, benefits in kind or a mixture of both. Figure 11: Net income of social assistance recipients – 2003 As a % of the at-risk-of-poverty threshold for three jobless family types, including housing benefits. [pic] Only countries where non-categorical social assistance benefits are in place are considered. Source: Joint EC-OECD project using OECD tax-benefit models, and Eurostat |
Joblessness: a cause of income poverty and an aspect of social exclusion
Social protection can provide relief from poverty but does not in itself help individuals and families durably elude poverty. If they are to be effective in combating poverty and social exclusion, social transfers must be accompanied by adequate health care, education, housing, social services and measures facilitating integration into the labour market for those capable of working. This is why many Member States are increasingly focusing their policies on promoting individual self-sufficiency through an employment-friendly social protection system that fosters participation in the labour market.
Joblessness is not only one of the main causes of poor living standards but is also in itself a central dimension of social exclusion, since a job is a key determinant of people's ability to fully participate in society, build a social network and realise their potential. Among all the different types of joblessness, long-term unemployment is clearly associated with social distress. The term covers people who have been searching for a job, but who have been unable to find one for more than 12 months. Long-term unemployment represents an important loss of income for the individuals concerned, who also tend to lose their skills and the self-esteem necessary to regain a foothold in the labour market.
In 2005, long-term unemployment affected 3.8% of the active population in the EU-27 (3.9% in the EU-25), on average more men (3.9%) than women (3.7%). The differences between Member States are considerable. Long-term unemployment rates are equal or below 1.5% in Ireland, Austria, Sweden, Luxembourg, Cyprus, Denmark and the United Kingdom, where only 1% of the active population is affected, but is equal or more than 5% in Germany, Greece and Bulgaria and 10% in Poland and Slovakia. The gender gap is particularly large in Poland, Italy and Greece where the long-term unemployment rates for women are respectively 2.1, 2.3 and 6.3 percentage points higher than for men. In only seven Member States - the United Kingdom, Sweden, Ireland, Finland, Malta, Latvia and Romania - are long-term unemployment rates higher for men than for women. Long-term unemployment has remained broadly unchanged in the five-year period between 2000 and 2005 for the EU-25 and decreased by 0.3 percentage points in the EU-27. The long-term unemployment rate decreased by more than 2 percentage points in Bulgaria, Spain, Italy, Latvia and Lithuania, while it increased by 1.4 percentage points in Slovakia and 2.8 in Poland.
Figure 12: Long-term unemployment rate by country and gender – 2005.
Notes: provisional data for SE.
Source: Eurostat, Labour Force Survey, annual averages, based on 1990 census.
The term "at risk of poverty" refers to those individuals whose household income is below a certain threshold, since economic well-being depends on the sum of all the resources contributed by all members of the household. Therefore, joblessness is even more problematic when it concerns not only one individual, but all the members of the household. Furthermore, the potentially adverse impact of living in a jobless household goes beyond the lack of work income, as it extends to the lack of contact with the labour market.
In the EU25, the percentage of people aged 18-59 and living in households where no one works was 9.8% in 2006. This proportion ranged from below 6% in Cyprus and Portugal, to 13.5% in Poland and 14.3% in Belgium. It is interesting to note that even Member States with relatively high employment rates, such as Finland, Germany and the United Kingdom, also have above-average rates of people living in jobless households, pointing to a greater polarisation between "job-poor" and "job-rich" households in these countries.
In the EU, the proportion of women living in jobless households at 10.8% is two percentage points higher than for men, and this gap is equal to 3 percentage points or more in the Czech Republic, Malta, the United Kingdom, Greece and Belgium, where it reaches 4.1 percentage points.
Figure 13: People aged 18-59 living in jobless households by country and gender, 2006.
Notes: In CY, the reference population (denominator) excludes students abroad.. Data for SE not available. Provisional data for DK, LU and FI.
Source: Eurostat, Labour Force Survey - Quarter 2 results
Between 2001 and 2005, the proportion of prime-age adults living in jobless households remained essentially unchanged in the EU. Only in the Baltic States and Bulgaria has there been a marked decrease equal to more than 3 percentage points.
Particular concerns are raised when children grow up in a jobless household, as the absence of a working adult could be a factor affecting the educational and future labour market achievement of children. In 2006, the proportion of children living in jobless households was slightly lower than that of prime-age adults (9.5%), but variations across Member States are more marked, ranging from 2.7% in Luxembourg to 16.2% in the UK.
In the past five years, the proportion of children living in jobless households has not changed in the EU, but has decreased by over 3 percentage points in the Baltic States and Bulgaria and increased by the same amount in Austria and Romania.
Figure 14: Children living in jobless households, 2001 and 2006.
Notes: data for the EU estimated. In DK, LU, EE, LV, LT, CY, MT and SI, the degree of variation of results over time is partly influenced by a low sample size. In CY, the reference population (denominator) excludes students abroad.
Source: Eurostat, Labour Force Survey - Quarter 2 results; in the first column, 2002 data for DK and LT, 2003 data for FI; data for SE and for PL prior to 2006 not available.
BOX 2: Social protection and employment: making work pay In line with Integrated Guideline No 19, strengthening incentives and support for labour market participation continues to be the main driver of many welfare and tax reforms in the Member States. The concern is to reduce reliance on social protection and increase self-sufficiency by supporting labour market participation and "making work pay", that is, making work an economically attractive option relative to welfare. However, it should also be noted that non-monetary incentives are just as important as monetary ones, and a generous benefit level and incentives to work do not necessarily contradict each other. Balancing the two goals of increasing labour supply incentives and at the same time alleviating poverty is a challenge for policy-makers, who also have to take account of the budgetary costs that any tax and benefit reform may involve. The unemployment trap Unemployment benefit systems are intended to provide income security during unemployment and to allow a better and more efficient match between workers and jobs as they allow individuals to spend more time on job searching. At the same time, unemployment benefits can reduce the financial incentives to return to work and thus lower job search intensity. The term unemployment trap refers to the situation where net in-work earnings are low relative to out-of-work income of the unemployed and their families. Table 1 Unemployment traps for unemployed persons returning to full-time work at 67% of the APW1, 2004 and changes 2001-2004 [pic]1.Results refer to the situation of a person who has just become unemployed and receives unemployment benefits (following any waiting period) based on previous earnings equal to 67% of APW (full-time work). Social assistance top-ups and housing benefits are assumed to be available in either the in-work or out-of-work situation where applicable. 2. METR: marginal effective tax rate, due to the combination of tax to be paid on the wages and withdrawal of previously received benefits. Source: Joint EC-OECD project using OECD tax-benefit models. Table 1 shows that for an unemployed person previously employed at a wage of 67% of average national earnings (here measured as the average earnings of a full-time manual worker in the manufacturing industry – APW), taking up a new job at the same wage as before the unemployment spell would imply facing a marginal effective tax rate of over 70% in almost all countries and for all four household types shown in the Table. This means that taking up a new job would increase net income by just 30% or less of the increase in gross earnings: this is due to the fact that when people take up a job, they have to pay taxes on their salaries, but also lose the benefits to which they were previously entitled and so the increase in their final disposable income when taking up employment can be rather limited. There are notable exceptions to this pattern, and low METRs are found in countries where in-work benefits are in place (e.g. Ireland, the United Kingdom) or in countries with low net incomes during unemployment (e.g. Italy). Comparing across family types, the Table shows that unemployed people with a non-working spouse and dependent children are faced with the highest METRs in several countries. This is due not only to the withdrawal of unemployment benefits but also to the phasing out of the additional social assistance payments to which this household type may be entitled. Table 1 also shows percentage point changes in METRs faced by unemployed persons between 2001 and 2004: for most countries the figures are negative, which shows that policy efforts to review tax and benefit systems to enhance financial incentives to work are bearing fruit. In most cases, reductions in METRs have been achieved through mechanisms that allow in-work earnings to be topped up, rather than by reducing out-of-work incomes, notably by allowing beneficiaries to retain part of their benefits upon taking up work. In general, reforms of benefit systems aimed at getting beneficiaries into work tend to attach conditions with regard to active job search or participation in active labour market programmes, affecting benefit coverage rather than levels. However, in some countries, benefits have been increased by less than nominal wages, resulting in lower replacement rates and lower METRs. In the Slovak Republic, the "stronger incentives to work stem in large part from the relatively low level of social assistance that is now offered, together with the fact that social assistance is reduced less abruptly if the recipient begins to earn labour income" following the welfare reform that came into force on 1 January 2004. The inactivity trap METRs faced by inactive individuals considering taking up a job and who are not or no longer entitled to unemployment benefits are generally lower than those affecting unemployment-to-work transitions. This is to be expected given that out-of-work income support benefits on which these people can rely are lower than unemployment benefits. Still, in many cases, the entry into a low-paid job would result in an increase in net income of no more than 30-40% of the increase in gross terms. Greece, Italy and, to a lesser extent, Spain, Hungary and Portugal, are notable exceptions: in these countries, the absence or low level of minimum income schemes explains the very low level of METRs. In Ireland, METRs are also low, due to in-work benefits to raise incentives to work for lone parents, whereas the combination of low out-of-work benefits and income supplements for workers explains the low inactivity METRs in the Slovak Republic. Across family types, METRs are generally higher for members of workless households with a dependent spouse and children (i.e. the one-earner couple with two children). METRs are close to or higher than 90% in 10 out of the 19 countries for which data are available: in these cases there is no or little pay-off from taking up employment. This is mainly due to the withdrawal of social assistance benefits, in some cases in combination with the withdrawal of housing benefits. On the other hand, employment, even if low-paid (or, more realistically, a part-time job that pays the hourly APW), appears to bring significant income gains to spouses whose partner is already working, by at least 40% of the additional gross income. The case of the two-earner couple with children can be seen to illustrate the case of potential second earners, normally women, who have to choose between staying at home and looking after their children or working and using child care services. While the availability of quality child care services is essential to ensuring the participation of parents, especially mothers, in the labour market, child care costs can be a major expenditure item for working parents. Low-wage second earners in about half the countries for which estimates are available see more than 70% of their additional earnings consumed by child care fees, taxes and reduced benefits. For lone parents, the payoff from employment can be even lower. The best example is Ireland, where a METR of 54% for lone parents (with two children, but with no childcare costs) shoots up to 131% when childcare costs are included. |
Educational barriers to social inclusion: early school leaving
- The lack of basic competencies and qualifications is a major barrier to inclusion in society. This is even more the case in an increasingly knowledge-based society and economy and a skilled workforce is a key factor in supporting the Lisbon agenda for jobs and growth. This is why improving the adaptability of workers and increasing investment in education and skills are also key priorities of the European Employment Strategy. Those without adequate skills will find it more difficult to enter the labour market and find a quality job, are more likely to spend long periods out of work and if they do work they are more likely to be in low-paid jobs. Better educated people are also more likely to benefit from training opportunities over the course of their life and this is why a solid skill base is necessary for young cohorts.
However, in the EU almost 15% of young people aged 18-24 have at most lower secondary education and are not in further education or training (this group will be referred to as 'early school leavers'). This means that significant additional efforts are needed in order to reach the European benchmark set by Education Ministers of no more than 10% early school leavers by 2010.
This percentage reaches almost 30% in Spain, 39% in Portugal and almost 42% in Malta. On the other hand, countries with the lowest proportion of early school leavers include Poland, the Czech Republic and Slovenia, where the figures are below 6%. In all Member States, the percentage of early school leavers is higher for young men, except in Romania, Bulgaria, Germany, and the Czech Republic where they are broadly similar.
Figure 15: Early school leavers (% of the total population aged 18-24 who have at most lower secondary education and are not in further education or training) – 2006.
Source: Eurostat, Labour Force Survey – quarter 2 results.
All the indicators that have been examined so far are calculated at national level. Yet territorial differences matter not only between but within countries. A clear understanding of the nature and situation of poverty and social exclusion at sub-national level is important for the design and implementation of effective policies to combat them. However, considerations of statistical reliability hinder the breakdown by region of most of the commonly agreed EU indicators.
A proxy measure of social cohesion across regions is represented by the dispersion (coefficient of variation) of employment rates at NUTS2 level. Regional cohesion is lowest in Italy, with a coefficient of variation which is seven times greater than the best performing country. Although regional cohesion tends to be greater in smaller countries, such as the Netherlands, Austria and Portugal, as might be expected, the correlation between regional cohesion and country size is not a perfect one; some of the bigger Member States, such as the UK and Germany, perform relatively better than some smaller countries. Within the regional spread, differences between men and women are particularly marked in southern countries, including Greece, Spain and Italy, where it is 17 percentage points.
Since 1999, regional cohesion has increased slightly in the EU as a whole, with consistent and more substantial progress in Spain, and to a lesser extent in the UK, Sweden, Italy and Finland. On the other hand, dispersion of regional employment rates increased in Austria and Slovakia.
Figure 16: Dispersion of regional employment rates – 2005.
Notes : the dispersion of regional employment rates is measured by the Coefficient of variation of employment rates (of the age group 15-64) across regions (NUTS 2 level) within countries. Data for DK, IE, EE, CY, LV, LT, LU, MT and SL not applicable. EU average includes all countries.
Source : Eurostat - Labour Force Survey, Annual averages.
The labour market situation of immigrants
Concerning the employment situation of foreign born residents, the employment gap is positive in almost all old Member States, except Luxembourg, Greece, Spain, Portugal and Ireland, and in Slovakia, Bulgaria and Poland. If the foreign born population is divided as to whether they were born in another EU country or outside the EU, in the former case the employment gap with those born in the country is almost zero for the EU as a whole, but it reaches almost 7 percentage points in the latter. The employment gap depends on a number of factors, including the composition and size of the migrant population in terms of age structure, skill level and household composition. Member States also differ in relation to developments in migration flows over time and in legal requirements for entry into the country – in particular whether a job is a pre-condition.
Figure 17: Employment gap of foreign born residents, in percentage points
(Employment rate of born in country – employment rate of born abroad in the EU or outside the EU), 2005.
Notes: In case "born in another EU25 country" is not reliable due to small sample size, the cell "Born outside the EU25" refers to "Born outside the country". Country of birth is not available for BG, DE and RO. Nationality is used instead. Data for BG and MT should be interpreted with caution due to small sample size. Data for IT and RO not available or not reliable due to small sample size.
Source: Eurostat, LFS annual averages.
The labour market situation of older people
The Stockholm European Council has set a target of 50% by 2010 for employment rates of people aged 55-64 and, despite recent improvements, the EU has a significant way to go to reach this goal, as currently the employment rate is around 42.5% in 2005. A second target related to older workers was set by the Barcelona European Council in spring 2002. It focuses on the average labour market withdrawal age which is to rise by five years by 2010. The average labour market exit age is currently (2005) estimated at 60.9 years. In the long run, the adequacy and sustainability of pension systems will probably require an improvement in labour market participation of older workers even beyond these targets.
As highlighted in the 2006 synthesis report on adequate and sustainable pensions, Member States have generally increased the accrual of pension rights if people work longer and this should act as an incentive to work longer (see box 2), thus contributing to compensating for the projected decrease of replacement rates. Furthermore, some Member States have changed the eligibility rules for retirement.
BOX 3 – Strengthened incentives to work longer In most Member States, recent reforms have increased incentives to work longer, notably by strengthening the link between contributions and benefits. Working longer is generally encouraged by providing pension supplements, while leaving earlier is discouraged by actuarial reductions, but also by the introduction of more restrictive eligibility rules to early retirement schemes and also possibly by a review of access to disability and incapacity schemes. In defined-benefit schemes, the link can be strengthened by requiring a longer contribution period for a full pension, while applying actuarial reductions for early pensions and increases in pension rights for deferred retirement. This is the case for most Member States, such as recently BE, AT, FR, and FI, while the link was already strengthened under earlier reforms in a number of Member States. Nevertheless, in a number of Member States, the question remains whether the strength of incentives is now appropriate. Some Member States have introduced major reform packages that have substantially amended their statutory schemes (DE, DK, FR, AT, FI, IT). Notional defined contribution schemes (such as in SE and PL) also build on a strong link between contributions and benefits, which by their nature ensure better rewards for longer working. Furthermore, since the end of the 1990s, the Swedish introduced the premium pension, and a number of Member States have also introduced statutory funded pension schemes (for example PL, HU, EE, and LV), while Lithuania did so in 2004 and Slovakia in 2005. |
Employment rates of older workers have increased in recent years, reversing a long decline. The employment rate of older workers increased from 36% in 1995 to 44% in 2005 for the EU-15, while that for the EU-25 increased from 36.6% in 2000 to 43% in 2005. These figures mask significant disparities between Member States (see figure 18 below). It should also be noted that this increase is partly due to a demographic effect (the composition of the age bracket 55-64 currently changes towards more people aged 55-59, who have a higher employment rate), as well as the trend towards an increase in women's employment and of an increase in part-time work.
Figure 18 – Employment rates of older workers in 2005 and evolution since 2000
Source: Labour Force Survey, annual averages.
In spite of these recent improvements, in a number of Member States, the employment rate of older workers lies below or around 30% (Belgium, Italy, Luxemburg, Malta, Austria, Poland, Slovenia and Slovakia), or between 30% and 45% (Bulgaria, Hungary, the Czech Republic, Greece, Spain, France and Romania), while it lies between 45% and 55% in some others (Germany, Latvia, Lithuania, the Netherlands, Ireland, Cyprus, Portugal and Finland), and exceeds 55% in only a few (Estonia, Denmark, Sweden and the United Kingdom). It is worth noting that progress is slower in Member States where the employment rates of older people are already lower, which indicates a need for enhanced efforts.
The role of pension systems in maintaining living standards
Pension systems not only aim to ensure that older people do not have to live in poverty (see section 2.1), but more generally facilitate the maintenance to a reasonable degree of the living standard achieved during their working lives. Public pensions are essential in this respect and they will generally continue to be the main source of pensions for retired people in the future.
Older people report living standards that are relatively close to that of the general population, mostly ranging between 75% and 90% of that of the 0-64 population (see figure 19). In some Member States, the level is significantly below 75% (Ireland and Cyprus), reflecting relatively low pension entitlements as well as fast economic growth which mainly benefits people of active age, while in a number of Member States, the relative income of older people is close to 75% (Belgium, Denmark, Estonia, Spain, Portugal, Finland, Sweden and United Kingdom). By contrast, a number of Member States report levels higher than 90% (France, Germany, Luxembourg, Austria, Hungary and Poland).
Figure 19 – Indicators on current adequacy of pensions
N ote: Relative income of 65+: relative median equivalised disposable income of people aged 65 and more compared to those aged 0-64. Aggregate replacement rate: median individual pension income of retirees aged 65-74 in relation to median earnings of employed persons aged 50-59 excluding social benefits other than pensions, based on gross income, except for some Member States (EL, ES, IT, LV, PT), for which it was calculated with net income as only net income were available for the first wave of EU-SILC. This indicator is thus not (yet) completely comparable across countries. It should also be noted that these calculations are by nature different from those of theoretical replacement rates (which are presented in part II of the Supporting document in section on pensions) and that for a great majority of Member States, the respective levels are different (see for instance ISG report on replacement rates 2006).
Source: Eurostat, data (income year 2004).
Pension entitlements generally provide around 70 % of this retirement income (in particular statutory pension schemes and widely developed private ones, such as those based on binding collective agreements). Pension schemes currently manage on the whole to ensure adequate income in most Member States (see figure 19). However, in certain cases, current average pension levels turn out to be low compared to current earnings, reflecting low coverage or low income replacement from statutory schemes as well as maturing pension systems, incomplete careers and / or under-declaration of earnings.
Future adequacy and sustainability of pensions
As highlighted by the recent AWG expenditure projections , not all Member States are in the same situation as regards forecast pension expenditure and thus sustainability of public pensions. These projections have also shown that some of the pension reforms already put in place are likely to contain/slowdown the projected increase in the level of expenditure.
Between 2004 and 2050, public spending on all age-related provision (pensions, health care and long-term care, education and unemployment benefits) is projected to rise in most Member States, on the basis of current policies, although the degree varies greatly between countries (some Member States have introduced reforms since 2004 that will also affect future spending). The budgetary impact of ageing in most Member States starts becoming apparent as of 2010. However, the largest increases in spending are projected to take place between 2020 and 2040. For the euro area and the EU-15 as a whole, public spending is projected to increase by about 4 percentage points between 2004 and 2050 (including the funded tier of statutory pensions and occupational pension, the increase is about 4.5 percentage points). For the EU-10, the increase in overall age-related spending is projected to rise by about 2.9 percentage points (when including the funded tier of statutory pensions and occupational pension).
For EU-15 Member States, public pension spending is projected to increase in all countries, except Austria, on account of its reforms since 2000. Very small increases in spending on pensions are projected in Italy and Sweden due to their notional contribution-defined schemes where pension benefits are based on effective working-life contributions. Relatively moderate increases (between 1.5 and 3.5 percentage points of GDP) are projected in most other EU countries, with the largest increases projected for Ireland (6.4 p.p.), Spain (7.1 p.p.), Luxembourg (7.4 p.p.) and Portugal (9.7 p.p.).
Reforms introduced in several EU-15 countries, since the last age-related expenditure projection exercise of 2001, appear to have curtailed the projected increase in public spending on pensions significantly in half of all EU15 Member States. Also the projections assume an increase in the general employment rate of about 8 p.p. and of nearly 20 p.p. in the employment rate of older workers. The inclusion of the EU-10 Member States increases the variation in the results. Between 2004 and 2050, public pension expenditure is projected to remain nearly stable (increasing by 0.3 p.p. of GDP), while including the funded tier of statutory pensions, there is a projected increase (of 1.7 p.p.). However, the overall trends (including the funded tier of statutory pensions) differ greatly between countries, ranging from a decrease of 4.6 p.p. of GDP in Poland and to an increase of 8.3 p.p. in Slovenia, 9.9 p.p. in Hungary and 12.9 p.p. in Cyprus. The challenges faced by Cyprus, Slovenia, Hungary and the Czech Republic are among the biggest in the EU.
As reflected above, pension schemes generally manage to ensure adequate retirement income in most Member States at present, in particular statutory schemes and those private schemes that are spread widely in terms of coverage. Future adequacy and, in particular, future levels of pensions in relation to earnings (income replacement levels) will depend notably on the pace of accrual of pension entitlements (which is linked to developments in the labour market), the maturation of pension schemes, the indexation of benefits and the effect of reforms introduced.
The effects of reforms are partly reflected in the evolution of the benefit ratio (average pension in relation to the average wage) projected by the AWG . However, it is not clear how or to what extent this will affect future adequacy. Another useful indicator for future adequacy is theoretical replacement rates, notably as they allow us to see how changes in pension rules can affect pension entitlements and to disentangle the various contributions to future changes. They are calculated for a hypothetical worker (in the base case, retiring at 65 after 40 years of a career average wage) and take into account enacted reforms of pension systems. As underlined in the 2006 Indicators Sub-Group report on replacement rates, it is essential to consider theoretical replacement rates with the associated information on representativeness and assumptions used and to consider the links between theoretical replacement rates and other indicators, and in particular the evolution of pension expenditure.
Reforms of statutory schemes will for most Member States lead to a decrease of replacement rates at given retirement ages (at 65 in the case considered). This also reflects the need to adapt pension systems to the trend towards an increase in life expectancy at 60 or 65, for all types of pension provision (be they financed on a pay-as-you-go mechanism or through funded defined-contribution or defined-benefit schemes). Indeed, against a backdrop of rising longevity, unchanged levels of replacement rates at a given age inevitably mean greater pressure on pension expenditures for all types of pension provision.
Trends in theoretical replacement rates for the base case suggest that, for most Member States, overall replacement rates are set to decline over the coming decades. Net theoretical replacement rates are projected to decline in 12 Member States. Given that second pillar pensions generally do not provide full coverage of the population, it is significant that the decline in gross replacement rates of first pillar statutory schemes is even more marked: gross theoretical replacement rates for first pillar are projected to decline in 14 Member States (the situation does not change significantly in 8 other Member States).
BOX 4: Promoting adequate and sustainable pensions The 2006 Synthesis Report on Pensions and the 2003 Joint Report on Pensions underlined the interdependency between the financial sustainability and adequacy of pensions in ageing societies and the need for comprehensive reforms to secure adequate, accessible and financially sustainable pension systems. To monitor these developments the SPC and ISG agreed to use theoretical replacements rate trends as a context indicator for the overarching list of indicators, by also taking into account the projections for the sustainability of pension systems developed in the AWG, which are indeed mutually dependent. Replacement rates show the level of pensions as a percentage of previous individual earnings at the moment of take-up of pensions. Public pension schemes and (where appropriate) private pension arrangements are included, as are the impact of taxes, social contributions, and non-pension benefits that are generally available to pensioners. Current replacement ratios describe the situation of people who retire today while prospective replacement ratios describe the projected pension income of people retiring in the future. They should allow the adequacy of pensions to be assessed, taking into account changes that have been decided in many countries as a result of recent reforms. The base case describes the situation for a typical case including different types of schemes chosen depending on the national framework, while in practice situations are by nature diverse. The evolution of the overall (net) replacement rate indeed reflects different contributions, that of statutory schemes (pay-as-you-go and possibly including a funded tier) and, in some Member States, that of private pension schemes. In those Member States, the latter contribution will benefit only those who are actually covered by such schemes, so a significant share of pensioners will depend solely on the contribution provided by statutory schemes (for more information see the 2006 Report on replacement rates). The tendency towards a decline in prospective replacement rates at a given age is a result of various adjustments. In earnings-related pensions, the contribution period taken into account in calculating pensions, and the pace of revaluation of past wages (no revaluation, revaluation against prices, against wages, or a mix), the pace of indexation of current pensions, and the statutory retirement age are generally the target of adjustments during reforms. Pension levels can also be lowered by adjusting the formula used to calculate benefits, notably by introducing mechanisms to take into account future demographic trends. Two major policies have been developed by Member States to cater for this projected decline in replacement rates at a given age: on the one hand strengthening incentives to work longer and, on the other, the development of private pensions. A number of Member States (such as Belgium and Denmark) have embarked on a strategy of reducing public debt, which can provide leeway for adequate and sustainable pensions in the light of the ageing society. Longer working lives - and in some Member States higher retirement savings - are a key means to compensate for this projected development in theoretical replacement rates at a given age. Moreover, in a number of Member States, the development of privately managed pension provision is projected to account for a rising proportion of future replacement rates, whether through the funded tier of the statutory scheme (PL, EE, LV, LT, HU, SK, and SE), occupational pensions (such as BE and DK) or other private pensions (DE and, IT) that complement public pensions, while in some Member States (IE, NL and UK), this would remain roughly constant assuming that contribution rates are sustained. In these countries achieving good coverage rates and adequate contribution levels in order to reach expected benefit levels are particularly important goals for policy-makers. |
The health dimension
It was previously mentioned that an ageing population could pose a financial burden on health and long-term care systems. In this context, it is important to know how long people can expect to live in good health or without disability, i.e. whether ageing is accompanied by extended ill-health/disability or, rather, by its compression i.e. people are living longer but are spending less time in ill-health/ disability. The two alternatives have different implications in terms of future care costs. We therefore need to look at healthy life years (also called healthy life expectancy or disability-free life expectancy):  the number of remaining years that a person of a certain age is still likely to live without disability. The measure distinguishes between years of life free of any limitation of activity and years experienced with at least one limitation. The emphasis is not exclusively on the length of life, as is the case for life expectancy, but also on the quality of life. The indicator was developed to reflect the fact that not all years of a person's life are typically lived in perfect health. Chronic disease, frailty, and disability tend to become more prevalent at older ages, so that a population with a higher life expectancy may not be healthier. However, if healthy life years increase more rapidly than life expectancy then, not only are people living longer, they are also living a greater portion of their lives free of disability. Analysing this indicator together with life expectancy can help countries understand whether more effort is needed to promote health and prevent ill-health.
The figures suggest that for the EU-15 the general increase in life expectancy has also meant a general increase in healthy life years. For the EU15 the number of healthy life years for males and females has increased respectively from 63.2 in 1999 to 64.5 years in 2003 and from 63.9 in 1999 to 66 years in 2003. Healthy life years at birth in the EU-15 are, on average, 12 years shorter than overall life expectancy for men and 17 years shorter for women. Healthy life expectancy is higher for women than for men in all countries with the exception of Denmark, the Netherlands, Finland the United Kingdom. While men have seen an increase in their healthy life years in all countries, some countries (Greece, Ireland, The Netherlands, Finland and the United Kingdom) show a small reduction or only a very small improvement in female healthy life expectancy over the decade. In 2003, for all Member States with available data, men in the EU-15 can expect to live 84.9% of their life without disability. Women can expect to live 81.3% of their lives free of disability. Hence, though women live longer and more (absolute number of) years free of disability they also spend a higher proportion of their lives in disability (potentially at an older age). Looking at healthy life years at 65, a trend cannot be identified and the following remarks must be treated with caution. Overall, healthy life expectancy at 65 is greater for women than it is for men except in Germany and Portugal. The increase in healthy life expectancy at 65 is clearer for men than for women in all countries (from 9.4 in 2001 to 9.5 in 2003) except in Denmark, Greece and Sweden where a small reduction is noted. The healthy life expectancy of women at 65 shows no overall increase though Spain, France, Italy and Austria show an increase.
Population ageing has led to the belief that older people are an economic burden to society. This is not necessarily the case if an increase in life expectancy goes along with an increase in the number of years in good health. Older but healthy people can be an important resource to their families, communities and economies through formal employment and informal activities such as care for dependent relatives, friends and children and volunteer work. Moreover, as a 2005 European Commission report, The contribution of health to the economy in the European Union , highlights, together with the report by the Commission on Macroeconomics and Health (2001) and a vast academic literature in the area, a healthy population at all ages is positively associated with better cognitive functions and thus better education attainment in early years, better earnings and wages, higher labour market participation and a higher amount of hours worked in adult age, whilst ill-health is associated with early retirement. Health is also shown to be positively associated with economic growth (GDP) and social welfare.
Consequently, ensuring that people make positive/active contributions to society and enjoy a high quality of life throughout their life and well into their late years requires a high level of health that can be attained through a concerted set of policies such as adequate health care and health promotion and ill-health prevention, education and social protection and general supportive social and environmental conditions.
BOX 5: Health care spending, health status and health inequalities The health status of the EU population has improved considerably in recent decades. Life expectancy at birth increased by more than 30 years in the 20th century and infant mortality fell remarkably and is among the lowest in the world (Social Situation Report 2003; WHO European Health Report 2005). Healthy years of life have also increased and avoidable mortality has declined. Two broad developments are typically associated with a secular increase in life expectancy: improvements in overall living conditions and medical advances and more widely available medical care (i.e. a rising share of resources devoted to health and a more equitable distribution). Measuring the effect of health care on health has received considerable attention in the past. McKeown (1979), in a first influential study, suggests that better nutrition, hygiene and the use of immunisation and therapeutic interventions (emphasising the importance of preventive and primary care) explain the decline in death rates. A study in the Netherlands estimated that the contribution of health care to the mortality decline between 1850 and 1970 ranged from 4.7% to 18 %. A pool of studies shows that health care expenditure is associated with growth in life expectancy and disability-adjusted life expectancy and a decline in infant, child and maternal mortality. Other studies confirm that healthcare interventions (i.e. treatment and preventive activities) have had a substantial effect on the decline in ‘avoidable’ mortality especially over the past 30 years. Moreover, the quality of a country's primary care system is negatively associated with all-cause mortality and premature mortality and cause-specific premature mortality in 18 wealthy OECD countries over three decades (WHO Health Evidence Network, 2006; Macinko et al. 2003). In Europe the SHARE study (2005) demonstrates that a 1% increase in health care expenditure is associated with a 4.2% increase in the proportion of very healthy respondents in SHARE countries. Nixon and Ulmann (2006) find that increases in health care expenditure are strongly associated with declines in infant mortality and increases in life expectancy in the EU, as in the studies they review. Despite economic growth and increases in health care expenditure and population coverage, substantial inequalities in life expectancy, healthy life expectancy, mortality, avoidable mortality and specific mortality causes, self-perceived health and disability, and mental health continue to exist across population groups in all European countries and may have widened during the last decades of the 20th century. People with less education, lower occupational class and lower income tend to die younger and have a higher prevalence of disease. Differences in access to care and care utilisation (e.g. Van Doorslaer and Masseria, 2004) may explain part of the observed inequalities. Higher socio-economic groups may have taken up more effective health care interventions and may have higher survival rates because of better access, quality and compliance to treatments. Indeed, as highlighted in the 2007 Joint Report on Social Protection and Social Inclusion there are important barriers to access such as service availability and distribution, waiting times, financial costs of care, information. Inequalities are also strongly associated to health-related behaviour (smoking and alcohol intake, nutrition, physical exercise), the environment (safe water, air and food, working conditions, adequate housing), economic and social conditions (income, education), gender and cultural values. Recent research also stresses the link between promoting active participation in employment and society (e.g. volunteer work) and health (e.g. SHARE, 2005; WHO European Health Report 2002). Hence, improving health status and reducing health inequalities requires a multi-sector approach, including equal access to timely and effective health care interventions (treatment and preventive care), pensions schemes that ensure an adequate income, policies that reduce social inequalities, poverty and social exclusion, a generally supportive social environment providing education opportunities and opportunities to participate in paid and unpaid volunteer work throughout life and adequate health promotion. |
The Lisbon Strategy and its Impact on Social Cohesion
The second overarching objective of the OMC for social protection and social inclusion is to promote effective, mutual interaction between the Lisbon objectives of greater economic growth, more and better jobs and greater social cohesion, and the EU's Sustainable Development Strategy. While it is certainly too early to draw any firm conclusions about the effectiveness of this interaction in the Member States since the adoption of the revised objectives, the following chapter looks at the impact of employment growth on social inclusion and health and how far it benefits all households. Then it examines the impact of increased working lives on the adequacy and sustainability of pension systems. This is of course only a partial analysis of the interactions between the different objectives.
Employment and its impact on the poverty risk
A job is the best safeguard against poverty and social exclusion…
Employment policies have a key role to play in promoting adequate living standards and greater social cohesion. In the EU as a whole, the risk of poverty is nearly 2.5 times greater for those who are not in work than for those who are.
…but a job does not guarantee a life free from poverty
However, the at-risk-of-poverty rate is still relatively high even for those in work. In the EU25 it stands at 8%, ranging from 3% in the Czech Republic and 4% in Belgium and Finland to 13% in Greece and 14% in Poland and Portugal. Furthermore, the proportion of those working within the income-poor population aged 16 or more is a significant 28%. Therefore, in order to achieve the objective stated by the Barcelona European Council of significantly reducing the number of people at risk of poverty and social exclusion by 2010, the problem of in-work poverty has to be addressed.
Figure 20: At-risk-of-poverty rate by labour force status – individuals aged 18 and over - 2004.
Notes: provisional data for HU. Data for RO, SI and UK not available.
Source: Eurostat, EU-SILC (survey year 2005, income year 2004). National data source for BG (survey and income year 2004
In-work poverty is linked to low pay, low skills, precarious and often part-time employment. Quality employment is essential to lift individuals out of poverty and "in order to promote [it] it is necessary to develop employability, in particular through policies to promote the acquisition of skills and life-long learning". It is also necessary to put in place sound macroeconomic policies to facilitate employment creation and a stable economic climate conducive to higher investment in human capital on the part of employers.
The poverty risk increases when joblessness is combined with the presence of dependent children
But poverty risks are associated not only with the employment situation of individuals but also with the household type in which they live and with the economic status of those with whom they share the household. The incidence of poverty risk is broadly similar for households with or without children when all working age members of the household are in full-time work. However, the combination of care responsibilities and exclusion from the labour market for all household members produces the highest risk of poverty, where as many as 64% of those living in jobless households with dependent children are at risk of poverty in the EU-25. This percentage rises to just over 70% in Belgium and France, to 78% in Belgium and the Czech Republic and 81% in Estonia and over 80% in the Baltic States. Low levels of labour market attachment can also be insufficient to safeguard individuals from poverty, especially in the case of households with dependent children. Households with a work intensity of less than 0.5 and dependent children have a particularly high incidence of poverty risk in Luxembourg (54%), Estonia (56%) and Lithuania (64%).
Employment growth and jobless households
Apart from the issue of in-work poverty, it is important to consider whether employment growth benefits all households, in particular those with the least attachment to the labour market. For example, is employment growth matched by a decrease in the proportion of jobless households, or is it concentrated on those households that already have a strong labour market attachment? In general, between 2001 and 2005, the proportion of jobless households remained roughly stable. Only the Baltic States, Bulgaria and to a lesser extent Italy and Spain, experienced a relatively sharp increase in the employment rate coupled with the largest decrease in the proportion of jobless households. Greece experienced a high rate of employment growth, equal to 3.8 percentage points, but a decrease in the proportion of jobless households of only 0.7 p.p. Seven Member States (Belgium, France, Cyprus, Luxembourg, Hungary, Austria and Finland) experienced a weak increase in the employment rate that did not translate into a decrease in the proportion of jobless households. In four countries - Denmark, Germany, the Netherlands and Portugal - the employment rate went down and at the same time the proportion of jobless households increased (in Portugal the percentage point change in employment was – 1.5 and that in jobless households + 1.5).
Figure 21: percentage point change in the proportion of individuals aged 18-59 living in jobless households and the employment rate of people aged 15-64, 2001 to 2005.
Source: Eurostat, Labour Force Survey - Quarter 2 results for jobless figures and annual averages for employment rates. 2002 jobless figures for DK, LV, LT and RO and 2003 figures for FI and HU. 2004 employment rates for DE and ES and 2002 figures (starting year) for RO.
Working longer and its impact on the adequacy and sustainability of pension systems
A significant factor in meeting the pension challenge and more generally meeting the challenge of an ageing society is to ensure that people work longer and that average effective retirement ages continue to increase. Extending working lives can strongly contribute to both the adequacy and the financial sustainability of pension systems. An extra 2 years of active life would translate into a corresponding increase in the theoretical replacement rate ranging from 5 to 10 percentage points depending on the Member States. More in-depth analysis is nevertheless needed, in particular of the extent to which these increases in replacement rates associated with extending active life will change in the future.
While pension reforms can greatly contribute to increasing the employment rates of older workers, by strengthening incentives to work longer, it is essential to note that to deliver the expected outcomes, pension reforms need to be accompanied by positive developments in the labour market. People must be able to find adequate employment to be able to work longer, and this underlines the link with the question of employment and growth.
Importantly, early retirement is no longer seen as a way to make room for young people or reduce unemployment. Continued vocational training offers a tremendous opportunity for older workers to acquire new skills and to update qualifications throughout their professional lives. Furthermore, it is essential for Member States to provide suitable access for older workers to appropriate employment. Progress in this area is set out in detail in the 2007 Annual Progress Report on Growth and Jobs. The report provides evidence that comprehensive ageing strategies can achieve good results, though few Member States address ageing as an integral part of the lifecycle approach to work.
The potential increase in employment rates among older people is significant. The pace of the decline in employment rates at age 55 and 60 varies greatly among Member States (see figure 22 below). While, on average, the employment rate of those aged 55-59 is 17 p.p. lower than that of those aged 50-54, the decrease varies from about 5 p.p. (Denmark and Sweden) to 25 p.p. or more (Belgium, Italy, Luxemburg, Slovenia, Austria, Poland and the Slovak Republic). A particular objective for all Member States is to reduce the extent of inactivity before retirement; for many Member States the main focus will be on the 55-59 age group, for whom the employment rate is already falling considerably (see figure 22), whilesome will also target earlier ages.
Figure 22: Pace of decline of the employment rate of older workers by age bracket, in percentage points (2006)
Source: Labour Force Survey, 2006 second quarter.Note: In some Member States the decline in employment rates with age can also be significant before 55.
If all Member States recorded a decline in the employment rate between the 50-54 and 55-59 age groups comparable with the levels of those Member States with the best records (about 5 p.p.), employment rates among people aged 55-59 would increase by about 10 p.p. If this could be maintained for the 55-59 to 60-64 cohorts, employment rates among the 55-64 age group would increase by about 10 p.p., going beyond the 50% objective. This shows that achieving an increase in the employment rate of older workers to meet agreed targets can be attained, on the whole, by reducing early exits from the labour market. However, this should be seen as the first step. Improving employment rates for those aged 60-64 will also be necessary in order to contribute to future adequacy and sustainability.
The impact of economic outcomes on health
Currently, the health and social sector employs a significant and growing proportion of the active population in the EU-15 many of whom are highly skilled: in 2003, the sector represented 10% of total EU employment, up from 9% in 1995. In some countries this proportion is even higher (11% in DE and 15% in the NL in 2003, up from 9% and 14% in 1995). An ageing population and important changes in society (e.g. smaller families, families living further apart) will potentially lead to further requirements in terms of care personnel and thus translate into more employment opportunities. As has been stated, health care and health policy (promotion, prevention and curative care) can make a positive contribution to employment and growth by ensuring that a working population is and remains healthy and highly productive over a lifetime.
It can also be shown that economic outcomes also matter for health, as highlighted by extensive academic literature in the area, the 2005 European Commission report The Contribution of health to the economy in the European Union and the 2001 WHO report by the Commission on Macroeconomics and Health. Sustained economic growth is typically associated with better living conditions (e.g. housing, sanitation, hygiene, nutrition) and fewer living and occupational hazards. The positive impact of economic growth on health is particularly strong if growth is channelled into raising the incomes of the poor and increasing public expenditure, notably health care expenditure, social security and education. Thus, though GDP growth impacts positively on health, much depends on how the additional wealth is distributed and utilised.
Poverty also has a negative impact on health: living in poverty is associated with lower life expectancy, higher mortality (including infant mortality) and morbidity. Poverty is related to poor diet, sanitation and housing, higher prevalence of smoking, alcohol and drug use, greater violence and lack of access to care. Unemployment is a major cause of poverty and thus ill-health. Therefore, increasing employment and tackling poverty can improve the general health of the population.
More recently, employment and activity, notably in older ages, are also shown to contribute positively to health status. However, the quality of employment (e.g. jobs compatible with skills and expectations, matching reward and effort, control of work, exposure to risk and unsafe working conditions, job security, job turnover, flexibility, and social dialogue, amongst other things) is an important determinant of good health and well-being (e.g. SHARE, 2005; "Health and Quality in Work", 2005; WHO European Health Report 2002). Adapting work practices and working conditions – e.g. ending discrimination, creating barrier-free workplaces and promoting flexibility for employees – will help workers maintain their health.
PART TWO: THEMATIC ANALYSIS
Strategies for Social Inclusion
In September/October 2006, Member States adopted renewed National Action Plans for Social Inclusion under the new streamlined OMC as one chapter of the National Report on Strategies for Social Protection and Social Inclusion. They presented the key priorities in Member States efforts to promote greater social inclusion and make a decisive impact on the eradication of poverty and social exclusion. Member States have responded to the guidelines that they agreed, together with the European Commission, by selecting three or four key priorities that they consider to have particularly strong potential to make a real difference, rather than covering the full spectrum of relevant issues. The reports are thus more strategic than in previous years, and this assessment, which sets out to reflect Member States' choices, is therefore not exhaustive in its treatment of each specific theme. Nonetheless, Member States continue to recognise the multidimensional nature of poverty and exclusion, by tackling their priority issues from many angles.
This more focused and strategic approach, and the strengthened emphasis on policy implementation, will contribute to making further progress on the achievement of the three Common Objectives relating to social inclusion which were adopted by the European Council in March 2006:
(d) access for all to the resources, rights and services needed for participation in society, preventing and addressing exclusion, and fighting all forms of discrimination leading to exclusion;
(e) the active social inclusion of all, both by promoting participation in the labour market and by fighting poverty and exclusion;
(f) that social inclusion policies are well-coordinated and involve all levels of government and relevant actors, including people experiencing poverty, that they are efficient and effective and mainstreamed into all relevant public policies, including economic, budgetary, education and training policies and structural fund (notably ESF) programmes.
As highlighted in the Joint Report some issues emerge clearly as the major priorities for Member States' efforts:
They have responded strongly to the Spring 2006 European Council challenge to reduce child poverty, with clear commitments to breaking the cycle of deprivation. Measure include facilitating parents' labour market participation, improving access to quality education and adequate housing and protecting children’s rights.
Further, active inclusion emerges as a powerful means of promoting the social and labour market integration of the most disadvantaged. Increased conditionality in accessing benefits tends to be a major component, but this must not push those unable to work further into social exclusion.
Thirdly, considerable attention is given to further reinforcing governance of social inclusion policies.
Full participation in society requires access to resources, rights and services
Tackling child poverty
Some groups of people are more likely than others to have difficulties accessing resources, rights and services necessary for their full participation in society. So children face a higher risk of poverty than the average citizen in almost every Member States. In some, nearly every third child is at risk. Living in a lone-parent and/or jobless household or in a family with many children further compounds the risk. This is a clear threat to social cohesion and to sustainable development. Children growing up in poverty are less likely than their better-off peers to do well in school, enjoy good health, stay out of dealings with the criminal justice system, and – as young adults – to find a foothold in the labour market and in society more broadly. Member States recognise these facts; the vast majority have set as a key priority the need to develop a strategic, integrated and long-term approach to preventing and addressing poverty and social exclusion among children. Education tends to play a key role in this.
Member States approach the issue in different ways, but often with a mix of policies addressing the manifold dimensions of the problem – increasing the family's income, improving access to services, including decent housing, or protecting the rights of children and their families. While the overall approach is universal, complementary measures targeting the most disadvantaged children and families are often part of the strategy. Two aspects stand out: ensuring equal opportunities with respect to education, including early intervention, and promoting parents' participation in the labour market.
Many Member States plan increased or more targeted financial support, but tend to see the main route out of poverty and exclusion in eliminating any obstacles to parents' , especially mothers' , labour market participation . Measures to facilitate reconciliation of work and family life are often highlighted, including but often going beyond improved access to quality child care (e.g. DE). However, broader gender equality issues, such as the need to promote a more equal sharing of domestic work and of care responsibilities, receive attention only in a few reports (AT, EL, HU, IE, LT, IT and PT), as does the potential role of ICT to facilitate reconciliation. IE is setting out to improve access to quality learning opportunities for those in low-skilled employment; MT is introducing new legislation on children and setting welfare standards and AT to provide job opportunities to women returning to the labour market. Some Member States address the issue of housing in relation to improved labour market access of adults in marginalised families (IE, HU, LV, LT, MT).
Since 1997, the UK has been tackling child poverty as a priority; the proportion of children living in low-income households has fallen from being among the highest in Europe with 27% in 1997/98 to 22% in 2004/05. Eliminating child poverty thus remains a challenge and is addressed via a combination of measures to ensure financial security of parents and break cycles of deprivation, with particular emphasis on early learning opportunities, childcare services and support for children's transition to adulthood.
HU envisages a comprehensive policy mix to tackle child poverty and is making full use of the Community funds available in its efforts. Measures include the promotion of parents' participation in the labour market and improvement of childcare services, and of equality of opportunities for all pupils/students, strengthening of the family benefit system, strong child welfare and child protection services, in particular for children with special needs, and better access to health care and other services relevant for the well-being of children.
NL promotes participation by children, with interventions aiming to support families facing difficulties/problems, and measures to increase opportunities for children and young people from deprived families to participate in social life. Through combined state/municipal intervention, a customised approach is taken with a strong emphasis on results.
CY's Educational Priority Zones , implemented by the Ministry of Education and Culture in three school areas, is a measure aimed at combating school failure and illiteracy and achieving equality of opportunity in education. The criteria for creating an Educational Priority Zone include a high degree of school failure and dropouts, of functional illiteracy and of foreign or foreign-language speaking pupils. Specific actions include reducing the number of children per classroom; employing teachers speaking the mother tongue of foreign-language speaking pupils, and keeping schools in EPZs open all day, with extra-curricular activities offered. The pilot recorded a reduction in dropouts, absenteeism and failures.
In IT a mix of actions has been defined to promote rights of children and families, with specific attention to the reform of family support allowances, to increase of supply of childcare services, and to enhance measures aimed at reconciliating work and family life and increasing participation of women to the labour market.
In line with Member States' priority-setting, child poverty will receive particular attention in implementing the OMC in 2007. A Peer Review will be dedicated to the issue with the purpose of promoting mutual learning between the Member States. Furthermore, Member States and the Commission are committed to developing an indicator that better captures the notion of children's well-being, thereby allowing measures to be designed and progress to be monitored more efficiently.
Striving to make education systems conducive to social inclusion
The reports present measures on how education systems may foster inclusion rather than perpetuating exclusion: a new Education Act based on this principle (ES); considerations on social selectivity in education (DE); emphasis on the link between low socio-economic background and school failure (LU); linking education with employability and reducing illiteracy and school drop-outs (MT); and education and training policy aimed at fostering social equity (FI). Some Member States (BE, ES) set out to provide parents with the skills necessary to assume their role fully.
Adequate investment in pre-primary education is of particular importance for disadvantaged children and for those with a different mother tongue from the majority. Many reports focus on this issue, with a number of Member States (AT, DE, ES, HU, IE, LT, PT, LV, BE, SE) planning to develop capacity, and some specifically targeting the needs of children from areas of acute economic and social disadvantage (IE, CY for immigrant children, IT, CZ, LT, PL, RO for Roma, UK).
Variations in quality of education may translate into structural disadvantage for people from underprivileged areas. To tackle this, Member States support schools in disadvantaged areas and communities in order to achieve greater equality in terms of educational participation (IE); set out to improve quality, especially in relation to areas with a large Roma community (HU); or work on the principle of positive discrimination, based on the provision of different levels of funding to regions or to specific urban areas to compensate for inequalities (CZ, CY, FR and others).
Breaking the link between social origins and educational outcomes is crucial in order to prevent deprived children from becoming disadvantaged young people. The key is to tackle early school leaving , which increases the risk of exclusion from the labour market, of job insecurity and of low quality employment. On average, 15% of students leave school early, but in some countries more than a third of young people are affected. Member States have set a benchmark for reducing early school leaving in the framework of the Education and Training 2010 work programme, and almost all reports focus on the issue. Significant additional efforts are needed in order to reach this benchmark – no more than 10% early school leavers by 2010.
A mixture of preventative and compensatory measures are envisaged: redesigning educational policies with a gender focus, as boys tend to leave school earlier than girls (IE); investing in second-chance schools (DE); action to prevent early school leaving and truancy among impoverished children (RO); ambitious targets for reducing school failure coupled with a set of preventive measures, such as establishing full-time school (longer school hours) (PT); a plan for reinforcement, guidance and support, and pedagogical improvements with particular focus on diversity (ES); introducing non-formal and informal learning as a preventative measure (MT); raising the school-leaving age (NL); grants and logistical support for disadvantaged pupils (PL, LT, HU); extension to upper secondary level of rights to student welfare and guidance (FI); and cooperation with NGOs in addressing early school leaving (CY). Developing these measures into comprehensive strategies will help Member States achieve significant results in tackling early school leaving.
In FR the programme for educational success ( Réussite educative ) is targeted at children experiencing hardship and/or living in deprived areas. The aim is to reinforce the capacity of the educational system and institutional partners to follow up personally 200,000 children over time from age 2 to 16. These actions will mobilise multi-disciplinary teams (teachers, social workers, psychologists, health workers, etc.). A strong monitoring system is in place and results are expected from 2007 on.
RO 's Gata, Dispus si Capabil project involves the NGO Associatia Ovidiu Rom working in partnership with local government in three neighbourhoods to increase school attendance and performance among Roma children, and to help Roma mothers find jobs. Since 2001, 400 children have been helped to enrol in school, stay on longer at school or improve their school results, and 100 women have obtained and kept jobs.
In general, better system flexibility improves access to education and limits social exclusion by maximising the value of learning. So FR is promoting the validation of prior learning, with an ambitious target of 60,000 cases in 2006; DE is putting initiatives in place to improve mobility between education and training systems; and CZ refers to the adoption of a new Law on Recognition of the Results of Further Education and the creation of a National Qualifications Framework. The issue of equal opportunity of access to higher education, however, is addressed only by a small number of Member States (UK, CZ, SK, LT).
Ensuring access to lifelong learning
The importance of adult participation in lifelong learning is recognised in many reports. The focus is mainly on the acquisition of basic skills. A number of measures are planned to reconcile family responsibilities and participation in LLL activities (e.g. in DE: special aid programmes and adequate infrastructure). In IE, the Back to Education Allowance will facilitate access to education for disadvantaged groups and disadvantaged communities. In PT, an ambitious training and certification measure is also planned for adults with poor qualifications. EL is implementing legislation aimed at increasing participation in adult education, and is focusing on second-chance schools. MT is setting up lifelong learning community centres that encourage literacy and skills development.
Some recognition is given to the fact that, as Europe continues to move towards a "knowledge-based society", accessibility and usability of ICT products and services, coupled with the necessary digital skills are paramount to people's social and economic participation.
The significant contribution that guidance and counselling can make to social inclusion is often highlighted. Several reports state that the national guidance system should be reinforced. IT, in particular, refers to setting up a comprehensive, lifelong guidance system.
Ensuring access to services and upgrading their quality
Overall, Member States recognise the general need for access to quality services to allow participation in society, and to prevent and address exclusion. Many address access to different kinds of services separately (education, as outlined above, training, housing, health care, transport, ICT, financial services, etc.). But some (BG, FI, IE, IT, SK, UK) have highlighted as a cross-cutting priority the general improvement of access to essential services. RO is taking measures to address the problem that many Roma people do not possess identity cards, hampering their access to services. As to the social services system, some Member States (CZ, FI, DE, HU, IE, LT, PL, RO, SK, UK) give priority to better balancing income transfers and services, institutional care and community or home care, and to improved availability, quality, client orientation, and versatility.
EE 's Community Services in a Village was initiated by the Estonian Village Movement Kondukant and ran from October 2005 to May 2006. The objective of the project was to create preconditions for a network of community services and to share experience in initiating community services in order to help people living far from centres to have access to local and flexible services, tailored to their needs. An assessment of service availability and financing options was compiled, service development training was provided and a service development guide was published. Cooperation contacts were established with 15 Finnish village societies that offer services.
Some Member States (EL, HU, LT, LV, MT, PT, SK) point out that the lack of provision of non-institutional social services makes it difficult to address the needs of various social groups and hampers full labour market participation by those taking care of dependent persons. In those countries, more innovative, community-based ways of providing social services have yet to be developed and attention has to be given to preventive and rehabilitation services targeting the most vulnerable. Some Member States, e.g. DE and MT, stress the priority of strengthening the role of NGOs, promoting voluntary work and encouraging self help. Most Member States recognise the need to take better account of developments such as ageing, changing family structures, female employment, migration and diversity, and to promote the involvement of users themselves, meet expectations of greater choice and strengthen personalised measures.
Increased spending on its own is not enough to ensure improvement. Other factors that emerge from the strategic reports include: the development of social care standards; quality assessment and control applicable to all providers of social services; the development of professional standards for social services employees; high-quality professional education; lifelong learning; supervision; a helpline offering advice to carers; and pressure from citizens (choice and voice).
Improving access to housing and fighting homelessness
Access to adequate housing is a particularly vital factor for social and labour market integration: almost all Member States consider it a key priority requiring more efforts. A number of them (BE, CZ, DK, FI, FR, HU, IE,PL, SE, UK) set out to address all dimensions: improving access to affordable housing, helping the most disadvantaged and their families to obtain housing suited to their specific needs, tackling the poor quality housing of people on low incomes, and tackling homelessness. Others (AT, CY, DE, EE, EL, ES, IT, LT, LU, LV, MT, NL, SK, SI, PT) present actions focused on specific groups or problems, such as improving access to housing for vulnerable groups, re-housing for people living in slums or shanties, housing refurbishment and the prevention of evictions.
Most Member States set out to address the shortage of affordable adequate housing, in particular in high-cost urban areas (BE, CZ, DK, EE, ES, FI, FR, HU, IE, LU, LV, PL, PT, SE, SK, SI, UK). Measures targeted at low-income groups include: new social housing units, rent subsidies, tax relief, favourable housing loans, earmarking of land or requirements that local authorities build new social housing, and state funds for housing development.
The need to increase the supply of adequate and reasonably priced independent homes for disabled people, people with health problems or social integration difficulties or with special needs is addressed in some reports (BG, DK, FI, HU, MT, SE, SK). This will help contain pressure on supported and service accommodation organised by social services. The transformation or the demolition of housing falling below the minimum standards of decency are also priorities highlighted by some Member States (BE, DK, FR, HU, MT, SL, PL, PT and UK).
With a view to halting the influx of disadvantaged people into the most deprived estates (and the corresponding exit of the most resourceful) and to curbing trends towards urban segregation, a few Member States (DK, FI, FR) plan measures such as: obligations on municipalities with a shortage to construct new social housing, tenants selection, the sale of social housing without efforts to re-let them first, removal support for disadvantaged residents in troublesome areas, more say for local authorities in allotting land to cater for social needs, specific integration initiatives in disadvantaged housing areas (e.g. special crime prevention activities, homework help, voluntary work and business start-ups).
Homelessness is an extreme example of social exclusion, usually indicative of shortcomings in a range of policy areas (for example, health, welfare, housing, employment and justice). Rather than focusing on homelessness only, Member States are increasingly adopting a structural approach to tackling housing exclusion. The growing issue of families with children without permanent homes is receiving more attention (e.g. SE). Some Member States set out to ensure that people leaving institutions find homes (CZ, ES, FI, NL). In addition to improving temporary housing, some Member States (BE, DK, IE, HU, NL, SE, FI, FR) are committed to ensuring alternative forms of housing for homeless people with multiple problems as well as opening up the housing market to those excluded from it. Some Member States (AT, FR, HU, SE, LV, NL, IT) are working on preventing eviction, often in relation to families with children or older people, and linking this to plans to address debt problems. Some countries have successfully implemented comprehensive strategies in recent years. In the UK, in 2005, the number of households becoming homeless fell by 27% compared with 2004; in DE, the number of homeless people fell from 530 000 in 1998 to 292 000 in 2004.
AT 's Länder programmes to "prevent eviction" aim at durably reducing and preventing homelessness with a special focus on lone parents. The project aims at ensuring proper cooperation between all stakeholders (landlords, communities, social services providers and courts) that can help prevent the multiple factors that lead to the risk of eviction. The specific objectives are, for instance, to prevent forced eviction, and provide integrated access to welfare structures (enhancing access to social services), as well as affordable housing for the most vulnerable. In the Vienna region, where they have long been implemented, the projects have produced positive and sustained outcomes.
Reducing health inequalities and ensuring equal access to health care
In all Member States there remain disparities in health status and inequalities in access to care between socio-economic groups, in addition to regional and/or urban/rural disparities. This occurs despite the fact that health care systems have been designed to ensure universal or close-to-universal coverage, and it jeopardises some people's chances of participating fully in society and in the labour market.
Most Member States are endeavouring to break the remaining barriers to access to healthcare. This entails reducing financial barriers for low earners by reviewing eligibility criteria for access to free or cheaper care (DE, FR, IE,CY), setting up specific schemes (BE, FR, LU) or abolishing fees for children (FI). Some Member States set out to enhance primary and preventive care provision (EE, EL, IE,HU, PT, SI, SK), to adapt services better to people with special needs (e.g. the disabled in CZ, ES, LT, PL, SI, FI; the mentally ill in EL, MT, SI, SE, children in FR, MT), to correct for territorial inequalities (EL, ES, HU, LT, PT, FI, UK, RO) or extend coverage in terms of types of services (e.g. dental care). The voluntary sector will be strengthened in MT. Some Member States focus on reducing waiting times (DK, IE,FI, MT), and a number also target measures at the most vulnerable in general (PT, BG, RO) or at particular sub-groups: children (DE, ES, FR, HU, LV, LT, MT, PT, UK, RO), the unemployed and minimum income beneficiaries (EE, FR), dependents (CZ, EL, ES, PT, FI), the homeless (CZ, IE,SI), the elderly (CZ, EE, EL, ES, LV, MT, PT), immigrants (EL, FR, MT, SI) (e.g. extend universal coverage to all non-accompanied foreign children under 18), and ethnic minorities (EL, BG, RO).
In most countries which require co-payments, the measures referred to above help to reduce their impact on the most vulnerable. This impact needs to be closely monitored, however, especially in countries that have just introduced such cost-sharing schemes.
Income disparities and differences in living conditions are the source of health inequalities, and are often compounded by lifestyles and risky behaviour. Therefore, most measures tend to be on promotion and prevention (see chapter 2.4.3). A number of Member States (DK, DE, FR, IE,CY, LV, LT, MT, NL, PT, FI, UK, BG) are attempting to mobilise a wide range of services (including education, housing and employment services), especially those close to the most vulnerable groups: children and minorities (e.g. breaking cultural health barriers in BG). Health prevention addresses eating habits, smoking, drinking, and drug abuse, for example. Screening campaigns are carried out at school (FR, NL, FI, UK), and NGOs contribute to the reintegration of young people (SE) and those in institutions (FR). Involvement of actors at all territorial levels is sought (CZ, ES, FR, FI, PT, UK), and some Member States target specific deprived areas (FR, UK).
Access to financial services and tackling over-indebtedness
Over-indebtedness, a growing problem in the EU, can jeopardise health, family life, access to housing and employment. It badly affects the living conditions of the families involved and the education of their children. A number of Member States (AT, DK, FR, HU, NL, UK) make over-indebted people a target group for their social inclusion strategies.
Action to prevent and combat financial exclusion includes measures to educate the young, who are particularly at risk (AT), making financial budgeting a compulsory subject of secondary education (NL), improved access to bank accounts and affordable credit for lower-income groups (FR, UK), a code of conduct to prevent the provision of excess credit including rules on advertising, and an obligation to assess creditworthiness (NL). Since services offering guidance to those affected are currently often stretched because of rising demand, some Member States plan to add resources to reinforce provision (FR, HU, UK).
FI 's Social Credit Act gives local authorities responsibility, as a part of adult social work, for social lending to people on low incomes or lacking the means to solve problems arising from over-indebtedness and unemployment. Social lending has helped borrowers achieve sound financial management (by providing financial advice and guidance when the loan is granted and during repayment), broken debt cycles, promoted rehabilitation and employment, safeguarded accommodation, helped in managing social crises, and otherwise fostered independent life management. As a method of early intervention in the debt problems of young people, social credit has also helped them to start training and to find accommodation and employment.
With regard to debt settlement , NL is putting in place a comprehensive debt amnesty system and measures to strengthen the amicable settlement process. DK is launching a pilot project on remission of public-sector debt for people who have been social assistance claimants for four years or more, provided that the person finds and keeps a job or subsidised employment, or starts a course of education or rehabilitation process.
Furthering territorial cohesion
Most of the larger Member States provide information about territorial disparities by referring to regions, to the urban/rural divide and/or to deprived/disadvantaged areas. However, given the efforts to select a small number of priority policy objectives, the regional or local dimension is less visible than in the previous generations of national action plans.
A number of Member States express concerns about rural poverty and different aspects of social exclusion, in particular as regards access to education/lifelong learning, to health/long-term care and quality social services, to housing and to transportation. HU envisages comprehensive territorial developments with the support of the Structural Funds. In Member States such as PL and RO, where a high proportion of the agricultural population lives from the subsistence economy, the ongoing economic transformation process needs to be taken into account in addition to the challenges common to all Member States exposed to ‘normal’ forms of rural exclusion. Self-employed or unpaid family workers who live from the subsistence economy are in some countries the most numerous sub-group of the working poor. The necessity of providing quality jobs for them, including support for mobility, seems widely overlooked in the strategic reports.
DE's Handlungsprogram "Soziale Stadt NRW" (Social City Action Programme in Nordrhein-Westfalen) is an interdisciplinary programme of action targeted at eradicating complex disadvantages in neighbourhoods. This programme has been running under the Urban Planning Ministry since 1993. The programme is currently supporting multi-objective projects in 37 neighbourhoods, combining town planning measures with social, housing and economic and labour market policies. The local population participate in the renewal of their own neighbourhoods. Evaluation, conducted largely by the local authorities, has been standardised since 2003.
As mentioned above, Member States also highlight efforts to improve living conditions in certain urban areas (FR: ‘quartiers périphériques’/‘sensibles’/défavorisés’; EN: ‘socially deprived areas’, and IT, in particular inner cities in the South) and to fighting segregation in cities (DK) through urban development. In the EU-15, the perception of such challenges is often linked to the handling of diversity and the integration of immigrants, whereas in new Member States a general need for urban renovation tends to be acknowledged, linked in some cities to the specific problems affecting the Roma minority. The particular difficulties facing the outermost regions, including considerable problems in accessing both services and employment, are not covered in the reports.
Promoting active inclusion and fighting poverty
Employability and integration of people furthest from the labour market
A quality job is often said to be the best safeguard against poverty and social exclusion; the incidence of poverty among the working population is far lower than among the jobless population. A job provides an opportunity, ideally, for the individual to develop his or her potential and integrate into society. To be precise, employment is a sustainable way out of poverty and social exclusion when it lasts, when it pays sufficiently to lift workers out of poverty and when it has all those features, normally referred to as "quality in work", that promote the individual's future employment prospects, safeguard their health and safety, and enhance human and social capital.
Member States are increasingly adopting "active inclusion" as the preferred route to promoting social and labour market integration. An element of this is the clearly discernible trend towards making access to benefits conditional on job searching and availability for the labour market. A balanced active inclusion approach requires this to be accompanied by opportunities to build human capital, including the acquisition of IT skills, and address any existing educational disadvantage, and by adequate counselling and guidance offered to the individual. Crucially, income support should be guaranteed at an adequate level, otherwise conditionality risks pushing the most disadvantaged even further to the margins.
In general, Member States give insufficient attention in their reports to the issue of minimum resources. Some Member States, however, point out that the balance between rights and responsibilities should be fairly assessed and that where conditionality has been strengthened safety nets also need to be more finely knit. This is not only an equity argument, limited to people who do not have the capacity to work. It is also an efficiency argument, as strong social protection improves the functioning of the labour market by supporting job search and re-skilling, thus enhancing versatility. In this vein, some Member States set out to improve the coverage and generosity of their benefit systems hand in hand with the focus on activation.
Member States acknowledge that universal employment policies are often not sufficient to reintegrate the most vulnerable. The people concerned often suffer from multiple disadvantages and a targeted approach needs to be put in place. In most Member States, reforms of the public employment services (PES) are centred on the development of personalised and customised approaches for specific groups of people.
This is, for example, the case in ES with the creation of special employment centres for people with disabilities, facing special obstacles to labour market entry, and the implementation of personalised job search pathways for socially excluded people; in FR, with the creation of individualised social support and personalised projects to access employment; in DE, with targeted support for young people, through training, work opportunities, intense mentoring, and comprehensive assistance including looking for accommodation and offering debt and addiction counselling (covered by a budget of € 7 billion in 2005 supporting 550,000 people); in BE, with a focus on low-skilled individuals and the development and acknowledgement of their competencies; in SE, where PES are given overall responsibility for newly arrived immigrants; and in CY, with personalised assistance offered together with benefit registration.
FI's Labour Force Service Centres are an integrated, comprehensive approach to addressing the needs of the structurally unemployed in order to integrate them into the labour market as part of the reform of the public employment service. Funding is granted by the Ministry of Labour for centres if there are many clients in the area unemployed for at least two years. The Centres offer multi-occupational services under one roof – the client can start with a health survey, medical occupational rehabilitation and activating measures by social services, and then move onto training or wage-subsidised work.
Policies to support labour market integration operate from both sides of the labour market, i.e. the supply side and demand side. With respect to supply , the strategic reports recognise the need to equip individuals with the skills and knowledge required by today's labour market, to provide them with the right incentives to participate actively in society and to support them in their job search. This approach covers a set of policies in the following three areas:
Active Labour Market Policies to tackle lack of employability – in particular through investment in education and training and job counselling. Most of these policies are delivered by the PES, in partnerships with other social and economic actors. In order to promote the integration of people furthest from the labour market, education and training policies often address the need of specific groups of people over and above low-skilled individuals. These groups include older workers and young entrants into the labour market, migrants, women, the long-term unemployed, disabled people and those living in disadvantaged areas, including those affected by economic restructuring. Targeted human capital policies have been put in place in most Member States. Another important aspect is the certification of job-related competencies and the assessment of skills and qualifications for groups such as migrants to improve skills-matching and the employability of individuals concerned (NL, UK, FR and SE).Most Member States stress increased efforts on job counselling programmes, to make them more efficient, timely and more regularly available. Some programmes highlight a more comprehensive approach to employability, covering issues such as the loss of accommodation (CZ) and transportation and accommodation allowances (EE). DK has put in place mentor schemes at drop-in shelters to reach out to the most socially disadvantaged groups.
"Make work pay" and financial incentives to work. The interaction between tax and benefits should provide the right incentives for people to enter and remain in the labour market without weakening support for those who are not in a position to do so. Policies that address this balance most effectively introduce (or expand) tax credits (e.g. UK, FR and NL), establish gradual withdrawal of benefits (IE, NL) and improve their administration (NL, SI, DE).
Non-financial incentives and social obstacles to entry into the labour market. Addressing poor employability and providing appropriate financial incentives are only two factors determining an individual's capacity for and decisions on labour market entry. Other social factors can represent serious obstacles to labour market integration. As mentioned above, several Member States stress the need to support the reconciliation of work and family life – for example by improving the availability of flexible and affordable child care (UK, LU, CY, NL, BE, HU), often with a view to meeting the needs of lone parents, too. FR presents a set of policies to address a number of obstacles to entering employment, including mobility, health, housing and over-indebtedness.
Labour force participation as an active jobseeker for someone previously inactive is only a first step to obtaining employment. Good quality jobs, that facilitate employment retention and progression, need to be available and an integrated approach to labour market integration should also focus on the demand side. Overall job creation and growth is necessary but not enough to include people furthest from the labour market, who are often at a marked disadvantage in a competitive economy. Member States' strategies centre on two issues:
Financial incentives for employers to hire . To boost recruitment of specific groups of disadvantaged people, Member States have introduced reductions in social insurance contributions, wage subsidies, subsidised employment and credit facilities (FI, SI, CY, RO, AT, ES, FR, DK, SE, DE, HU), often targeting certain types of enterprises. Reductions in the "tax wedge" on permanent employment contracts are also used to curb labour market segmentation (for example in ES and IT, where further targeted incentives are meant to promote women's employment in the south).
Anti-discrimination and labour law, together with social dialogue . Member States have reiterated their commitment to the appropriate legal framework and industrial relations to give everybody an equal chance in the labour market. In particular, some Member States have introduced legislation and enhanced social dialogue to increase labour market flexibility and address the needs of disadvantaged groups for which full-time or regular work is not always suitable. These measures include flexibility and availability of parental and child care leave; availability of care for children and other dependents; reduced working hours, longer holidays and adapted job content for senior workers; and teleworking. Discrimination is one of the main determinants of social exclusion and Member States have either enhanced their anti-discrimination legislation or reinforced their instruments to deal with it (e.g. funding for an Ombudsman, a code of practice for employers, and inter-ministerial working groups). Finally, raising awareness is seen as essential to the effective implementation of current legislation.
In BE the Walloon region's project " management de la diversité " aims at enhancing the integration into the labour market of people who are discriminated against on grounds of ethnic origin, age, gender or disability, through "positive discrimination" practices. The main thrust of this action is to foster social responsibility among employers by setting standards for "good management of diversity". It involves employees' organisations and both private and public sector employers. Integrating vulnerable groups is one of the key challenges of the Region's employment strategy, which sets out to give these groups priority access to measures such as sectoral agreements, job coaching and individual attention from employment and social services.
Many Member States recognise that those furthest from the labour market may need to be supported in getting a firm foot-hold in the labour market. Policy measures include providing in-job support, via employment retention and advancement projects, and promoting (including by subsidising) on-the-job training. Several reports have underlined the need for interaction between PES and Social Services, together with the need for social support, especially for people with social problems that need a focused approach. NL highlights the role of the Social Support Act (WMO) in improving social cohesion and quality of life at local level, and enhancing social support for disadvantaged groups. Minimum wage provisions are important instruments in reducing the risk of poverty for workers, improving the quality of work and making work more attractive; some Member States have reported plans to increase the minimum wage level (UK, ES, CY, LT and LV). Policies addressed to individuals have been accompanied by those focusing on the environment and addressing the problems of deprived areas, both urban and rural (CZ, UK, BE, FR, SE, DE).
On active inclusion, the Commission is set to support Member States by following up on the consultation carried out in the first half of 2006.
The contribution of the social economy
The social economy is an important source of jobs and entrepreneurship, including for people with poor qualifications or whose capacity for work is reduced (see examples below). It can enable the most disadvantaged to exercise some kind of gainful activity or to create employment in areas without mainstream companies and employers (peripheral areas, remote rural areas). It also provides vital social services and assistance that are often overlooked in the market economy and plays a key role in involving participants and European citizens more fully in society since stakeholders, i.e. workers, volunteers and users, are as a rule involved in management.
Several Member States have highlighted its contribution to better governance in the field of social inclusion, and in social and economic regeneration. Nonetheless, programmes and policies vary in scope, quality and comprehensiveness and national approaches vary from strong policy support to an almost complete absence of support.
Examples of measures that help provide job opportunities for those furthest from the labour market include: support for activity cooperatives and reintegration enterprises, the creation of new jobs in community services and of social economy "guichets" (BE); the creation of a sustainable model for the development of social enterprises (BG); partnership between local authorities and local stakeholders to help mentally ill people into employment (DK); structures for the employment and economic integration of travellers (FR); priority in active labour market policy schemes for ‘non-progression ready’ unemployed (IE); reform of employment subsidies and the development of social enterprises (FI); encouragement to start up of cooperative enterprises (SE); and a social enterprise pilot project providing paid work experience placements for blind people (UK).
In PL the new social inclusion policy aims to reform vocational and social activation to enable regional and local governments to be more proactive in developing social services and the social economy. Specific attention is paid to the development of institutions: it is planned to establish a platform for cooperation between various public and non-public institutions active in the social economy. The social economy will also be supported through the development of advisory services and information for social economy initiatives, developing local loan funds and promoting education.
Measures to help meet needs for social services and assistance include: reinforced community-based social services for the most vulnerable (BG); investment subsidies for the construction of cooperative flats targeting Roma communities and vulnerable children (CZ); involving voluntary social organisations in tackling substance abuse (DK); integrated services to support the immigrant population and involvement of third-sector associations in anti-discrimination activities (PT); joint efforts on a range of inclusion issues by local authorities, social organisations and foundations, and service companies (FI).
Addressing obstacles to young people's labour market entry
Youth unemployment, precarious jobs and the problems young people face in gaining a secure foothold in the labour market are concerns frequently cited in the strategic reports. All reports focus on vocational training, especially as a tool to support labour market entry or job retention by vulnerable groups including the young. There is a general commitment to reinforcing the role of PES in addressing the needs of young people at an early stage of unemployment. Many Member States are reinforcing their programmes to provide support for young people with difficulties in the transition from school to work, by providing individualised support, including counselling and suitable forms of further education and vocational training. FI, for example, is continuing to implement the ‘Social guarantee for young people’, launched in early 2005 in line with the EU target: after a continuous maximum period of unemployment of three months, young unemployed job-seekers under the age of 25 are offered an active alternative that furthers their position (training in job-seeking, preparatory or occupational labour market training, trial work placements, on-the-job training, preparatory training for working life, start-up grants, or wage-subsidised work).
HU 's Study Hall ('Tanoda') Programme, implemented by the Ministry of Education and the Employment Office, addresses the need to encourage disadvantaged youth, in particular Roma, to complete elementary school and to increase their chances of attending secondary school and obtaining a school-leaving certificate. The goal of the programme is to provide extracurricular, accessible, effective learning programmes for disadvantaged students. The learning experience and good practice of the successful "study halls" is to be disseminated to the new study halls. The project has been run as part of the National Development Plan 2004–2006. In 2004, 23 study halls received operating subsidies in 2005, while in the second round 46 applicants received support for 2006-2007.
Beside the Ausbildungspakt and among other initiatives, DE is planning to continue with the ‘Expertise Agencies’, offering specific assistance for the social inclusion of particularly disadvantaged young people in socially deprived areas, and maintain the goal of ensuring that every young person interested in a vocational education who meets the entry requirements is given a chance of obtaining a professional qualification ( Ausbildungspakt ). LV has presented a list of measures for improving access for young people at risk of poverty and social exclusion, underpinned by output indicators designed to measure their effectiveness. In NL, educational reform will make it compulsory for young people without qualifications to participate in a work-study programme. AT is building on previous initiatives, e.g. Jobs4Youth, intended to enable all young adults (under 25) to participate in a training or re-entry programme. In some countries, efforts are being made to pay accommodation expenses for people attending training. In the UK, partnerships are being put in place by autumn 2006 to bring together schools, further education colleges and work-based training providers in order to improve education and training for 14-19 year olds and to improve its labour market relevance.
Immigrants, ethnic minorities and Roma
There remain gaps, often considerable, between immigrants and ethnic minorities and the rest of the population with respect to employment and unemployment, income, education, early school-leaving, health and poverty. In recognition of this fact, most Member States have made the social inclusion of immigrants and ethnic minorities a priority.
As far as broader integration policies are concerned, the holistic approach taken in some countries to the various dimensions of the integration process (labour market participation and promotion of participation in social, cultural and political life, etc.) is a positive development, as is the focus on involving both immigrants and the host society.
The integration agenda that is presented in the UK report is based on a "virtuous triangle of equality (meaning non-discrimination), participation (of all communities in political and community decision making on all levels) and interaction (between all communities in various localities, such as schools and neighbourhoods)". Similar integrated plans have been drafted for Wales (Race Equality Scheme), Scotland (One Scotland Many Cultures campaign) and Northern Ireland (Racial Equality Strategy).
The draft strategic plan for citizenship and integration 2006-2009 presented in the ES report is an example of a comprehensive policy of integrating immigrants which aims to boost social cohesion through policies based on equal rights, duties and opportunities for all immigrants and Spanish citizens, by adapting services to the realities of a diverse society and by promoting understanding of the migration phenomenon within the host society and, at the same time, fostering a feeling among immigrants that they belong to the society they live in.
Some Member States (AT, BE, CY, DK, IE, NL) focus on labour market participation as a key element in integrating migrants into a new society which potentially brings benefits such as facilitating the acquisition of language skills and closer interaction with the host society. An increasing concern appears to be the acquisition of language abilities and civic orientation as means for successful integration. DE, for example, plans wide-ranging integration courses for newly arrived immigrants and for those already living in the country. FI and EE focus on the need for language training and NL is introducing pre-departure training. Other reports focus on issues such as improved access to services in general (EL) or better housing conditions (SI), while IE is taking measures to strengthen the labour market situation for female migrant workers. 
As regards social inclusion activities for ethnic minorities, only a few Member States provide information on measures for groups facing multiple disadvantages, e.g. special courses targeting women and girls from an immigrant background aimed at strengthening their self-confidence and offering them job prospects (DE); and measures to promote the emancipation of women of different ethnic origin to help their social inclusion (NL, DK).
Although a number of Member States have emphasised the importance of anti-discrimination policies to tackle social exclusion, with some exceptions (e.g. UK) there is little trace of measures to improve information on equal rights.
The lack of data on immigrants and ethnic minorities remains a problem (UK, IE, DK, and NL are exceptions). As set out in the IE report, breaking down data between different ethnic groups would allow variations in the degree of social inclusion and vulnerability to be documented. At present, the reports typically do not distinguish specific target groups (i.e. the immigrants/ethnic minorities concerned).
With respect to policies on the Roma population, CZ, HU, BG and RO provide for measures to tackle the disadvantages of Roma communities, with the main focus on education and living conditions.
In CZ, the city of Ostrava has launched an initiative to prevent multiple exclusion of Roma people from access to the labour market, to education and to social and health care services. Dedicated staff in the city council maintains permanent contact with public administration and local authority workers, regional and local NGOs, schools and health care providers. They are also in charge of monitoring the concrete outcomes of the project (50 jobs created, 31 Roma assistant teachers employed in schools, 16 mothers involved with their children in lifelong learning projects).
Inclusion of disabled people in society and in the labour market
Promoting the inclusion of disabled people is more extensively covered than in previous National Action Plans, with all Member States highlighting measures targeted at disabled people; AT, EL and PT have made it one of their priority objectives. Most Member States identify the need to mainstream disability issues into all relevant policies, but there are considerable variations in the degree to which they explain how this will be done in practice (HU, SE and IE present advanced mechanisms). The UK is introducing a new Disability Equality Duty requiring all public bodies to promote equality of opportunity for disabled people and to publish and implement Disability Equality Schemes.
For disabled people to live as independent a life as possible and to be socially included in their local communities, it is vital – and also cost-effective – to build up local services, which, to a large extent, can replace institutional care. A number of Member States (BG, CY, CZ, EL, LV, LT, MT, PL, RO, SI, SK) focus on measures to develop community-based services, i.e. to cater for ongoing deinstitutionalisation. DK, DE and UK are promoting independent living by introducing individual choice of service providers; DE has introduced personal budgets. FI, CZ, DK, IE, FR and AT are all taking measures to promote accessible housing. As further explained in the section on health care, e-Health can play an important role in making independent living possible.
Several reports refer to the elimination of barriers to education and training at all levels for disabled people and people with special educational needs (both through the elimination of physical barriers and through the provision of specific support). Many countries envisage specific support. The choice varies between special schools and special needs education in mainstream schools.
BG 's National Programme for Employment and Vocational Training for persons with permanent disabilities is a programme to increase the employability of people with disabilities, to make employers aware of the possibilities of employing disabled people, and to raise public awareness and combat stereotypes. Motivational and vocational training is provided for disabled people, suitable sustainable employment is sought and financial support to employers who employ disabled people is provided. The outcomes are monitored via monthly Employment Agency statistics. To encourage good practice among employers, a symbol for a positive attitude towards people with disabilities has been introduced, which can be awarded to selected employers following certain evaluation criteria.
Most attention is given to measures promoting active labour market inclusion. AT, BE, DK, IE and LV are setting clear targets for increasing the employment rate among disabled people. In the UK, the New Deal for disabled people has helped almost 75 000 people into jobs, and the Pathways to Work programme will be extended to the whole country by 2008. DK has a funded action plan up to 2009 to bring more disabled people into work. In IE, public bodies are required to be proactive in employing disabled people. AT, CY, DE, IE, IT, PL and SE all have different forms of subsidy schemes, while FR and HU focus on measures to make workplaces and training accessible. EE and HU are introducing new employment rehabilitation/welfare systems in 2007. In CZ, the legal obligation to provide individual plans for vocational rehabilitation still remains to be implemented. LV is launching a National Programme to improve infrastructure, social care facilities and social rehabilitation institutions with EU co-financing. BE and DK are promoting diversity in the labour market (BE: an annual award to the best enterprise, DK: a network for raising awareness among municipalities and jobcentres). In all Member States there is still a long way to go, however, before access to the labour market is even remotely comparable to that of non-disabled people.
Strengthened governance of social inclusion policies
Mobilising stakeholders and raising awareness
The bulk of Member States have made progress, since the previous NAPs for inclusion, in mobilising and consulting those concerned. Among the arrangements for preparing the 2006-2008 National Strategy for Social Inclusion a number of new good practices have emerged, building on the experience gained so far in the OMC.
In many countries (DK, BE, CY, CZ, EE, ES, FI, FR, IE, LU, MT, NL, PT, SE, UK) the process of drafting the NAP was open, from the outset, to participation by NGOs and social services providers, allowing thorough discussion. Nonetheless, in all Member States there is scope for improving the quality of this involvement, ensuring that it actually impacts on policies and priorities, and for extending it beyond the preparatory phase.
Several methods of gathering the views of civil society are being tested. Some countries (AT, ES, MT, LV) used questionnaires to sound out NGOs, service providers/users and/or competent authorities at all levels of government, on access to essential services for vulnerable groups. NL put in place a facility for “interactive” consultation of small groups of stakeholders allowing them to give views on the categories of people most in need of measures, priorities and needs beyond existing policies, and the parties' own action. FR experimented with local forums bringing together people experiencing poverty and professionals expressing their views (supported by innovative facilitation techniques) on institutional arrangements and their impact on obstacles to full participation in society. In BE the report “Abolish Poverty” resulted from debates and ideas from consultative groups including people experiencing poverty.
In the UK, "Get Heard" is a toolkit enabling “grass roots” organisations to gather opinions on social inclusion. It has helped people experiencing poverty get involved in their local communities and to make a difference to policies and services which affect their lives, and those working in the voluntary and community sector to discuss what was working and what not in the anti-poverty strategy and possible solutions, and have their contribution better reflected in the national strategy. 146 "Get Heard" workshops have been held around the country. The project was funded by the EU and the UK Government.
While most Member States continued to involve relevant ministries and agencies through committees to coordinate and mainstream social inclusion policies, some tried to open up the process, setting up specific working groups to draw up the plan, with representatives of national, regional and local government and agencies, NGOs and in some cases social partners (BE, BG, CZ, EE, ES, LV, LT, PT, SL). Besides involving representatives of municipalities and regions in national consultative meetings or committees, some Member States (BE, CZ, FR, LV, SE, ES, IE) organised discussion seminars, forums or round tables at regional level, enabling local actors to participate directly in the design of national and regional social inclusion policies. In DE, the cooperation between federal government, Länder and NGOs has continuously improved since the preparation of the first NAP/Incl. in 2001.
While the key role played by regional and local authorities tends to be emphasised, only a few Member States (including RO and BG) reported on new or additional arrangements to better articulate the priorities set at national level with the responsibilities of regional or local authorities. Examples are: building on the experience of financially rewarding local authorities for their contribution to government outcomes (through local public service agreements (LPSAs)) by establishing Local Area Agreements setting multi-annual outcome targets for numerous national policy priorities (UK); developing a methodology for creating local and regional action plans for social inclusion by August 2007 (CZ); implementing Social Cohesion Urban Contracts (FR); improving information exchange between local/regional authorities and national government on the outcomes of social inclusion policies (BG, NL, SE, PT).
Cooperation needs to be further strengthened in many Member States to ensure genuine consultation; this raises issues of resources and capacity building. While administrative coordination across government ministries has been improved, and cooperation with stakeholders strengthened, there is still typically much to be done to embed the objectives of the EU social inclusion process fully into policy making systems. This should also involve the participation of people suffering exclusion themselves, both in the implementation and monitoring of the strategy and in steering future policy development.
As to arrangements for the implementation phase, some Member States plan to keep stakeholders involved through round tables, seminars, national or regional conferences, etc. to assess progress and to issue proposals for the way forward (BE, DK, CY, FR, LU, MT, ES). In AT, the two anti-poverty umbrella organisations have been commissioned by the Federal Ministry to consult their member organisations about areas in need of social welfare reforms. The UK is considering setting up a formal stakeholders group. In numerous Member States, the challenge is still to increase coordination, cooperation and the visibility of implementation of the NAP for inclusion across all relevant policy domains. Some Member States (BE, CZ, ES, FR, IE, LT, MT, SE, SI, UK) plan to review progress regularly and if necessary adjust the measures presented. BE and ES have set up a dedicated website with information on the measures and on the activities of the different implementation and monitoring bodies.
Mainstreaming social inclusion
A strong approach to consultation using the expertise of stakeholders is a vital element of social inclusion mainstreaming. All Member States' reports cover the issue (e.g. BE with on-the-spot mediators in poverty and social exclusion placed in 10 branches of the federal administration). Some Member States show a clear understanding that mainstreaming involves integrating social inclusion into all areas and levels of policy making, backed up by the drafting of plans/structures (IE, FR, HU, PT, BE, SE, UK, RO, BG). Some have relatively long experience of implementing structures/tools, whereas others are at an early stage in designing new governance structures.
IE 's policy coordination structure starts at political level with the Cabinet Committee on Social Inclusion, supported at administrative level by a Senior Officials Group which promotes and oversees policy initiatives of a cross-cutting nature. An Office is dedicated to promoting social inclusion, developing mainstreaming tools, and reporting, monitoring and evaluation of the national system of social protection (NSSP) for social inclusion and the social inclusion components of the National Development Plan. The Office has developed a poverty proofing exercise (Poverty Impact Assessment) designed to assess the impact of all policies from the policy formulation stage. Mainstreaming for other target groups is addressed through legislation (Disability Sectoral Plans); specialist expertise (local authority social inclusion units) and strategies such as the National Action Plan against Racism (mainstreaming intercultural issues into the formulation of policy).
The FR strategy comprises a political and administrative framework, a targeted approach, and cross-cutting policy objectives directly built into the budgetary process, with indicators to monitor progress. FR plans to draw on the expertise of people experiencing poverty. An interministerial committee (CILE) coordinating social inclusion policies is in place at political level, supported by a permanent committee with representatives of 13 ministries which prepares the work and promotes the implementation of CILE decisions in the relevant ministries. Key activities are national conferences to prevent and combat social inclusion (since July 2004), preceded by five thematic regional conferences and a regular report (DPT) setting out state funding for social inclusion, together with objectives and indicators. It includes cross-cutting objectives such as reducing child poverty, integrating young people, combating illiteracy, eradicating sub-standard housing, and mobilising both institutional stakeholders and sectoral stakeholders organised around the common objectives of the National Plan for Social Inclusion. (
In Member States where it has not become a cross-government policy or where policy coordination mechanisms are not fully developed, poverty and social exclusion are nevertheless addressed, but in a way that does not always ensure that the multidimensional nature of the issues is taken into account by the various competent ministries and agencies. A number of Member States tend to describe various components in isolation instead of interpreting mainstreaming as a holistic and strategic approach; for example, they stress commitment and participation (NL, LT, AT); describe advisory councils/collaborative committees (DE, DK); focus on creating more efficient social services (MT) or greater cooperation between various public bodies (MT, DK, ES, PL) or describe how structural funds will be spent on social inclusion (PL, LT). Developing this into fully fledged strategic approaches could reinforce the impact of mainstreaming. It could be a question of strengthening back-up by appropriate plans and structures, or addressing obstacles such as insufficient interdepartmental cooperation, lack of awareness of the issues or a concentration of attention to specific areas. Certain Member States have implemented practical tools to help integrate social inclusion issues in relevant public policy areas and ensure the monitoring of their implementation. So, for example, in PT "Focal Points" in each Ministry will assess the contribution to mainstreaming and train all governmental institutional actors on the importance of mainstreaming.
Certain Member States bring out the importance of not losing sight of specific target groups in implementing mainstreaming. HU, for example, has chosen to concentrate its mainstreaming strategy on the Roma and people with disabilities, and highlights equal opportunities and anti-discrimination as a strong theme (National Equal Opportunity Network charged with promoting the social inclusion of Roma, disabled, children, elderly, women and people living in disadvantaged areas). 16 Opportunity Centres have been set up to cooperate with the relevant organisations, promote dialogue between local governments, institutions and organisations and organise programmes and training courses.
However, ad hoc mainstreaming, with proposals to address certain governance issues, may be necessary to build up a more complete and integrated approach. For example, a key priority for MT and SK is to improve governance structures, which will enable better networking of the social welfare sector (MT) and better coordination of policies at national, regional and local levels to enable policies reach target groups (SK).
In Member States where mainstreaming has yet to be established, key components – improved coordination, strengthened mechanisms for stakeholder involvement, improved systems for delivery of social services, just to give a few examples – may indeed need to developed gradually. In general, mainstreaming needs to be better understood as a strategic tool that requires a wide variety of structures and processes to be in place in order to be used successfully. There is a balance to be struck between targeting vulnerable groups with specific actions, and ensuring that this special treatment does not result in further segregation, and consequently discrimination.
More gender awareness is demonstrated with respect to the social situation and social inclusion policies than in previous reports. Many Member States stress the importance of promoting equality between women and men, make a commitment to gender mainstreaming and/or refer to the government’s gender equality programme (AT, CZ, DK, EE, ES, FI, FR, HU, IE, LT, MT, NL, PT, SE, SI, SK, UK, BG). A handful of Member States strive to adopt a consistent gender mainstreaming approach in the majority of priority policy objectives (EL, FR, IE, LT, LU and SE). For the bulk of countries there is considerable scope for developing this consistently across policies, e.g. by allowing available statistical information on gender inequalities to influence policy design more, and for providing more detail on how gender mainstreaming is implemented.
For LT , the gender aspect is consistently present in the social situation analysis and is mainstreamed into all policy priorities. The priority to integrate more people into the labour market, for example, acknowledges the difficulties faced by women with caring responsibilities. The proposed measures include an emphasis on changing traditional stereotypes on the role of women and men with a view to establishing gender equality on the labour market; on increasing the possibilities for women, in particular in rural areas, to start and develop businesses; and ensuring that activation measures reach disadvantaged women, such as victims of trafficking, pregnant women, and mothers of children under 8 or a disabled child under 18.
IE presents a consistent awareness of gender equality issues in all policy priorities. The measures under the priority to improve access to quality services, for example, include promoting gender equality across all government services, policies and programmes. This is to be achieved by developing, implementing and monitoring appropriate policies including programmes for Positive Actions to Promote Gender Equality (including the implementation of the National Women's Strategy) and Equality Proofing . The National Women's Strategy, due to be published in the first semester of 2007, will be a cross-departmental strategy aimed at enhancing the socio-economic status of women, their well-being and their participation in decision-making and civil society.
Examples of gender mainstreaming are found in the majority of EL policy priorities. In education and training, for example, addressing disadvantage includes offering counselling and career guidance programmes based on a gender dimension, planning/revising curricula so as not to reproduce stereotypes, and producing education material to introduce gender equality issues. Positive action in favour of women is being promoted in higher education and lifelong learning via specific programmes and incentives such as scholarships to attract women into fields in which they are under-represented. An 'Equality in Education' Observatory is also planned.
A large majority of Member States are focusing on increasing labour market participation, and about one third (AT, CY, EL, ES, FR, HU, IE, LT, UK, IT) have signalled measures targeted specifically at women. Many are also providing assistance to families (CZ, DE, EE, FI, EL, FR, IE, LT, LV, NL, PL, SK) and most are committed to increasing child care provision and to promoting reconciliation of work and private life. The role of men in informal care is also addressed in some reports (CY, EL, HU, LT, LV). All these policies have an impact on gender equality and can be instrumental in promoting female employment and thereby in halting the trend towards the feminisation of poverty.
As highlighted above, a majority of Member States are setting out to tackle child poverty and some of them recognise the importance of the gender dimension in this respect (AT, EL, HU, IE, LT and PT). This includes measures such as providing opportunities for mothers to return to the labour market, supporting lone parent families, implementing reconciliation policies, increasing the availability of child care facilities, and encouraging men to take paternal leave. Some acknowledge the differences between girls and boys in early school leaving (EE, IE, LU, SE). A small number of the proposed education and training programmes aim explicitly at promoting greater gender equality (EL, ES, FR, LT).
In their policy priorities, some Member States address the specific problems faced by ethnic minority and/or immigrant women (DK, DE, EL, ES, FR, IE, NL, SE). Some include measures to improve the situation of women victims of trafficking and/or violence (AT, DK, EL, ES, FR, HU, LT, LV, MT, PT, SE, SI, SK, IT) or refer to the gender perspective in the design of measures targeting the homeless (BE, IE, NL, SE). A number of reports acknowledge the gender pay gap (AT, CY, DE, EE, ES, FI, FR, LT, MT, SK, UK).
Targets tend to be disaggregated by gender when looking at raising female employment (BE, CY, DE, ES, HU, IE, LU, MT, SE) but not in all areas where it would be relevant, except for SE. Monitoring targets broken down by gender and analyzing sex-disaggregated statistics, where possible, would help in making visible both positive and negative policy impacts on the respective situation of women and men.
A handful of Member States provided information as to whether gender equality units or women's organizations with specialised expertise in the field were among the stakeholders consulted.
Use of indicators, targets, monitoring and evaluation
The National Strategy Reports show how common EU indicators can be used to assess the situation in the wider EU context and in relation to all dimensions of the objectives. Most Member States draw on the EU's lists of overarching and social inclusion indicators to describe the social situation, often focusing on the key indicators that are most relevant to their strategy. A number of countries also base their assessment on a full review of the overarching and social inclusion indicators presented in an annex to this document. The EU-based indicators are often supplemented by national outcome indicators , used as an alternative to the EU measure, or to cover populations such as specific vulnerable groups (immigrants, ethnic minorities, the disabled, people living in deprived areas, the homeless), or to cover dimensions that are not yet covered by EU indicators (housing, persistent poverty, socio-economic gaps in life expectancy, etc). Member States also use national input or output indicators that are often more timely and directly related to specific policy measures, such as the number of child care places, the number or percentage of beneficiaries of a given programme, the number of homes built in the social housing sector, etc. In many cases, these policy-related indicators are accompanied by targets.
Some Member States have been more successful than others at pointing out how the quantitative assessment presented is used in policy making, in terms of identifying priorities, monitoring progress and, in some cases, setting targets. A number of countries have set up specific inter-ministerial indicator groups or bodies that are in charge of developing the indicators used and/or monitoring progress.
The UK report is an example of good practice on how indicators can be used for policy making in all three areas quoted above: in addition to the fact that monitoring on the basis of indicators and targets has been part of its social inclusion strategy since the late 1990s, the UK has made an effort to link its national monitoring exercise to a thorough assessment of the newly adopted EU indicators (including summary tables), thereby assessing the UK performance in the EU context.
The FR report is another good example of how common EU indicators and supplementary indicators can be used in policy making. National priorities are accompanied by the relevant indicator(s), both to justify their selection as priorities (outcome indicators) and to monitor progress (both outcome and input/output indicators). A nationally defined set of indicators consistent with the EU common indicators has been agreed to monitor social cohesion.
Monitoring and evaluation are greatly facilitated when plans are focused on clear political outcomes and contain quantified targets. There is some increase in the use of quantified targets, but there are important differences between Member States. Some of them either have put forward no targets at all or present so few targets that it seems unlikely that these will give meaningful direction to the plan. Several Member States, however, put forward a broader set of targets. Most systematic use of targets seems to be made in the reports from IE, UK, NL and PT. Across the board there is considerable scope to strengthen the use of targets.
One issue worth noting is the way in which strategies are formulated and targets are set in countries where regional and local authorities have considerable power in the field of social inclusion. In the UK, as indicated above, national targets are supplemented by targets for Scotland, Northern Ireland and Wales. In some cases local governments receive a financial reward if they commit themselves to targets for national priorities.
The need for effective monitoring and evaluation is acknowledged more than previously in the reports, and although often very little concrete information about the arrangements is provided, it can be concluded that there is a basis for mutual learning. Almost half the Member States indicate that they have working NAP or social inclusion monitoring systems, and some others plan to develop them in the near future. In other Member States, implementation of the strategy on social inclusion is to be monitored as part of broader strategies or through other existing processes and reports (e.g. by statistical institutes). In addition, often specific monitoring systems exist for each policy priority. Many Member States provide a list of monitoring indicators for each political priority.
Typically, a social inclusion coordinating unit in the Ministry responsible is charged with coordinating monitoring activities. A number of Member States have appointed social inclusion liaison officers in the ministries and organisations involved (IE, PT) to facilitate the process. In some Member States, monitoring is the responsibility of the government alone, while in others a specific monitoring committee involving NGOs and social partners, for example, is in place to assist the government in developing the monitoring framework and to assess results. Where specific monitoring systems for each policy area have been developed, specific stakeholders are often involved. So in LU, for example, there is tripartite participation in monitoring labour market policies (government, unions and employers) and education (teachers, parents, pupils).
Sometimes annual monitoring reports are produced. A few countries have integrated monitoring of the resources invested in social inclusion policy in the budgetary process (e.g. FR, PT). The NL and UK produce easily accessible reports that show clearly whether they are on track or not. Some countries continually update indicators on a website.
Issues to be resolved include a lack of recent data, breaks in the time series and unavailable indicators. Clearly, countries need to invest in statistical and analytical capacity. Some Member States set out to address this through well developed data strategies (IE), making the provision of high quality and reliable data a political priority (SK), developing new data and information systems (e.g. EE: employment policy statistics, IE: data on migrants, LT: social assistance information system) to allow for more evidence-based planning. The annual reports of ombudsmen are cited in several cases as important sources of information.
On the issue of including regional and local levels of government in monitoring, NL provides an interesting example. Local authorities are responsible for the results of policies at their level, but the central government provides (national) benchmarking instruments on a website allowing local governments to compare the results of their policies. PT intends to link national and regional-local information systems for monitoring purposes.
Overall, there is very little information on evaluation arrangements. Sometimes an evaluation plan, report or conference is mentioned. Efforts will face the challenge of establishing the causal impact of an intervention. Evaluation tends to be scheduled at the end of the planning period to feed into the next strategic cycle. Different tools are used – surveys, conferences, seminars, consultation processes, etc. – and procedures may be formal or informal. Often stakeholders and independent experts are involved (more so than in the case of monitoring). Evaluation is sometimes mentioned in relation to monitoring bodies. Obviously, establishing the causal impact of policy interventions on outcomes represents an important challenge and progress in this field could be greatly facilitated if Member States' were more informed about each other's experiences.
For such mutual learning purposes Member States should be encouraged in future to provide more information on evaluation methods, the questions, the format and dissemination, the stakeholders involved, the availability of internal and independent expertise, and the financial and human resources devoted to evaluation.
As an example of ex ante evaluation, IE's Poverty Impact Assessment was referred to above. Some Member States apply the idea of systematically organising and evaluating smaller scale policy experiments before applying them on a bigger scale (e.g. the UK: employment retention and advancement project and pathways to work: testing innovative approaches).
Use of structural funds, in particular the European Social Fund
Member States have, to large extent, made progress towards better coordination between social inclusion measures and use of the Structural Funds, notably the European Social Fund (for example NL, DE, AT, SK). However, there is considerable room for improvement, particularly in increasing the visibility and importance of the ESF, as well as the ERDF, in achieving social inclusion. The new programming round (2007-2013) presents an exceptional opportunity for upgrading. Member States and Regions now have at their disposal a financial instrument which is both more precise and simpler to use.
Reinforcing the social inclusion of disadvantaged people with a view to lasting employment is now a specific priority for the ESF. Action to develop preventative and active policies to integrate or re-integrate the socially excluded into the labour market also can be supported under all ESF priorities for 2007-2013, underpinning the call for the mainstreaming of active inclusion policies in national policy-making.
Many of the National Reports stress that employment offers the main route out of poverty and consequently a pathway to social inclusion. It is appropriate, therefore, that ESF support should be concentrated on actions which are likely to help people back to work, such as education and training, employability and lifelong learning. It can also be used for measures aiming at the social inclusion of persons not yet ready to integrate in the labour market. However, employment in itself may be insufficient to secure social inclusion; other types of intervention allowing for the wider and gradual integration and empowerment of social groups should also play a role here.
The regulations call for action to be based on prior identification of needs by, for instance, using relevant national and/or regional indicators such as unemployment and participation rates, long-term unemployment rates, population at risk of poverty rates and levels of income. But attention should also be paid to the local level, where disparities may fail to be picked up by regional statistics.
In addition, visibility should be improved as to the scope for ERDF contributing to the improvement of infrastructure related to social inclusion and fighting urban deprivation. There will be scope under the 2007-2013 programmes to support human capital investment, promote awareness and improve awareness and access to start-up financing for entrepreneurship, including for the unemployed and ethnic minorities.
Annexes to section on social inclusion
Annex 1: Good Practice Examples in Social Inclusion Policies in the 2006 National Reports
The examples of good practice described below are taken from the many and diverse examples of good practices presented by Member States in their National Reports. In the Guidelines for preparing national reports on strategies for social protection and social inclusion , it was suggested that MS give examples of policies or projects that have been evaluated and shown to have important lessons for policy-making or cover a key institutional arrangement relevant to some aspect of the common objectives. The inclusion of specific monitoring/evaluation results is useful, inter alia, when disseminating good practice among other Member States. The examples selected below aim to cover key policy areas evenly, and to highlight projects with a comprehensive approach to tackling the multiple facets of social exclusion and the accumulation of disadvantages. The examples are of projects that have received a positive evaluation and would seem to have a lasting impact. Some examples of good practice provided by Member States are shown in boxes in the main text instead. These are listed at the end of this Annex for ease of reference.
Access to resources, rights and services for full participation in society
Tackling child poverty
UK – Working for Families is a funding stream of €50m for the period 2004 – 2008, allocated to certain local authorities under the auspices of the Scottish Executive, based on the number of children in households dependent on workless benefits. The principal aim is to ensure that access to affordable, flexible childcare is not a barrier preventing parents from client groups (lone parents, low income families, families with other stresses causing difficulties with sustaining employment) from accessing education, training or employment. Key workers assess an individual client's needs, and at the same time help the client to access, and sometimes pay for, appropriate childcare so that the client is not prevented from taking up the opportunity identified. Progress is measured using a range of hard and soft outcomes. Hard outcomes include full/part-time employment or entering or completing an educational or accredited vocational training course of 6 months or more. As at 31 March 2006, 6000 parents had engaged with Working for Families in the period 2004 – 2006, and 2600 of these had achieved a hard outcome.
MT's NWAR Programme is a family literacy programme set up by the Foundation for Educational Services in 2003, as part of a strategy to significantly reduce illiteracy in Malta. Specifically, the programme provides an after-school family literacy service to families where children are at severe risk of failure due to poor literacy skills. The service is offered twice weekly to both children and their parents. The second specific aim of the programme is to disseminate throughout the educational system those differentiated teaching methodologies which are found to be effective, in order to raise the level of acquisition of basic skills in Maltese schools. A Basic Skills Assessment Tool has been developed, which allows teachers to assess students' progress and adapt teaching methodologies accordingly.
Access to services
SI's Residential Groups in the area of mental health seek to provide accommodation and individualised care for persons with long-term or moderate mental disorders, who otherwise might only have recourse to institutional care. Residential groups provide 24-hour accommodation in units of up to 7 or14 users, and provide greater privacy and independence for the user than institutions. Under the National Social Security Programme for 2006 – 2010, the network of residential groups is defined as one of the nine public programme networks. In 2006, the residential groups are being implemented by 6 non-governmental organisations and 1 public institution, with 174 users in 33 groups, accounting for 11% of the total population in social care institutions.
LV's Improvement of infrastructure and equipment of social care and social rehabilitation institutions, which was launched at the end of 2004, is an ERDF co-financed national programme aimed at modernising state social care and social rehabilitation institutions, so that persons not in need of institutionalised long-term care can obtain services tailored to enabling them to return to everyday life and, if possible, enter the labour market. There are 5 regional partnership projects between local governments and state social care institutions, which provide clients with additional services such as halfway houses, day-care centres, social rehabilitation, skills development, group apartments, etc. The total budget of the programme is €7.25 million.
LU – Renting of housing by NGOs : The Housing Fund (HF) is the largest public promoter in the country and provides social housing for rental, some of which it makes available permanently to NGOs who, in turn, rent this housing to the persons to whom they provide social assistance, also providing them with housing adapted to their specific needs (low income, disabled). They also carry out regular social supervision of the people in receipt of housing. Over the last 15 years, 22 associations have benefited from one or several of the 85 rental dwellings and all 85 units continue to be managed by the same NGOs without any major problems
UK – A New Approach to Homelessness – Since March 2002, through the Homelessness Act 2002 and a number of strategy documents setting out the need for a coordinated approach to tackling homelessness, local authorities have been both required to and empowered (via statutory powers, increased funding) to tackle the problem of homelessness across the UK. Major successes have been recorded – annual figures for 2005 show a 75% reduction in rough sleepers in England since 1998; use of Bed and Breakfast accommodation for families with children for longer than 6 weeks has been outlawed; it is estimated that 73 884 households will have been prevented from becoming homeless in 2005/2006 through local authority prevention measures.
FR - The national "Eradiquer l'habitat indigne" plan is an inter-ministerial initiative designed to eradicate housing of unacceptable living standards. It provides a solid legislative framework to underpin the duties and powers of municipalities and other authorities responsible in identifying and rehabilitating poor housing in their areas. It also reinforces the duties of owners as well as the rights of tenants. The legislative framework is backed up by specific operational and financial tools to enhance the action of municipalities. The monitoring provides strong evidence of a significant increase in the rehabilitation of poor housing in both rural and urban France.
Migrants and minorities
PT's National Support Centres for Immigrants (NCSI) , located in Lisbon and Oporto, and opened in 2004, provide integrated services to support the immigrant population in Portugal. The Support Centres were set up in response to the problems faced by a growing immigrant population, including too difficult access to dispersed services, linguistic and communication difficulties and no adequate answers to several questions raised by immigration. Socio-cultural mediators mostly from immigrant communities are involved, in an effort to generate trust with the target group. The NCSI have a monitoring system which enables them to collect data on the number of attendees and waiting periods. An external assessment by the International Organisation for Migration was undertaken in 2006.
Addressing financial exclusion and over-indebtedness
In June 2006, the DK parliament adopted an act on Pilot Projects involving remission of public sector debt for socially disadvantaged groups. The act sets up a four-year pilot project combining the need to remit the debt with incentives to involve the person in gainful activity. The target group is persons who have been in receipt of social assistance for four or more consecutive years. To qualify for the scheme, a person must find and retain a job or subsidised employment, start education or enter a rehabilitation process. DKK 25m per annum has been allocated for the period 2005 – 2008.
Labour market integration and fighting poverty
Employability and integration of people furthest from the labour market
AT 's "initiatives of the social partners to improve the labour market opportunities of disadvantaged groups" project provides a consistent framework for measures taken together mainly by employers' and employees' organisations to combat youth unemployment, to encourage the employment of older workers, to integrate the disabled more into the labour market, and to create health-compliant workplaces and a suitable framework for individuals in precarious forms of employment. In addition to the groundwork done at company and public employment services level, the project also involves awareness-raising in the general public.
ES : The multi-regional programme to fight against discrimination was put in place in 2000 and aims to enhance the active inclusion of people most at risk of exclusion. The programme takes an integrated approach and mobilises all the relevant stakeholders in an effort to offer flexible and individualised paths of integration to people with specific disadvantages. A monitoring system provides evidence that over the last 5 years 64 342 contracts have been signed, 619 companies created, 44 863 persons trained, etc. The project also adds to the network of NGOs working with these target groups.
LT 's Programme on Professional Skills Training for Individuals Addicted to Drugs is designed to motivate persons addicted to drugs to take an active role in the labour market and to receive legal income, and to receive training in the field of public catering services through their involvement in the Mano Guru Salad Bar. This project has been run since 2004 by the Social Aid division of Vilnius City Municipality and Vilnius Centre for Addictive Disorders. Since 2004, 29 people from six rehabilitation centres across Lithuania have participated in the programme, and 11 participants have successfully completed the programme and found new jobs. This programme obtained funding from EQUAL for further development of its activities.
NL Amsterdam Form Brigade – This initiative seeks to address people's lack of awareness of their social entitlements, and is also an active inclusion initiative. Almost every district in Amsterdam has 'Form Brigades', staffed by teams of volunteers (100 volunteers in all, themselves unemployed and on benefit for a long time) with the purpose of informing district residents of their rights, and helping them complete all sorts of forms related to social services and entitlements. The volunteers receive training and on-the-job mentoring. Each year more than 20% of them move on to a paid job.
SK's Programme in support of the development of community social work in municipalities is a comprehensive multi-dimensional approach designed to develop social work to assist groups most at risk of social exclusion. The programme targets the Roma community in particular. It aims to support the socially excluded in the field of employment, living conditions and housing, education, health care and social integration, and on specific problems experienced by individuals. Community social workers operate in 176 municipalities, in cooperation with local authorities which, for example, are obliged to provide office facilities for the administration of social work, and to provide a certain amount of co-financing. Detailed monitoring criteria have been worked out, and the programme will be evaluated in the second half of 2006. To date, 600 social work-related posts have been created, with spin-off as regards employment rates.
EL Safeguarding – Promotion of Health and Social Inclusion of Greek Roma is part of Greece's Integrated Action Plan on Roma. Since 2005, 18 medico-social centres have been in operation; these provide the first line health care, social care and social inclusion services, with plans for the establishment of a total of 37 centres. The medical aspect includes referrals to hospitals, vaccination of children, health education programmes and the keeping of medical history records. The social aspect includes communication with enterprises to find jobs for Roma, enrolment of Roma children in the 1st grades of primary and secondary school, intervention in the cases of school dropouts, cooperation regarding domestic violence, etc. There are also mobile units visiting remote communities. It has been noted that the target group's response has improved, and greater trust and cooperation has developed over the course of the project.
SE – University courses for student social workers and former clients together -
Three university courses run by the Basta Work Cooperative and the Department of Social Work at Lund University under the EQUAL Programme. The courses, of 6 weeks duration, bring together students of social work and course participants who are either former social worker clients or marginalised and have no former university education. The aim of the courses is to give both groups an understanding of the working and living conditions of the other, to show how clients can be empowered to overcome social exclusion, and to demonstrate in what ways social work can contribute to this. All of the students are awarded 5 European Credit Transfer points at the end of the course, which is to be put on a permanent footing.
PL's Civic Initiative Fund , planned as a 3-year project, is a fund designed to stimulate and support the development of civic initiatives with the participation of non-governmental organisations. The fund's objectives are to support innovative projects by NGOs; partnerships between NGO and public sectors; cooperation between NGOs; and dissemination and promotion of good practices, as developed in particular within the CIF programme. Projects have to cover one of the following areas: social protection, social inclusion and activation, human/civic rights and freedoms, science, culture, education and care, public safety and public defence. The Fund is monitored through reports submitted by funded organisations
IT - Using the ESF to promote labour market insertion of disadvantaged groups through non-profit organisation. Global grants in Objective 3 regions of Italy directly support non-profit organizations promoting employability of disadvantaged groups. Small grants ranging from 10,000 to 50,000 € were made available to non-profit organizations for projects promoting labour market insertion of disadvantaged groups in particular through the promotion of entrepreneurship and self-employment. Intermediary bodies provide organisational support and training. The scheme aims to build and strengthen networks of non-profit organisations active in regions of the Centre-North. In Lombardy 25% of the final beneficiaries were recipients of invalidity benefits and 10% recovering drug addicts
BE – Insertion de médiateurs de terrain en pauvreté et exclusion sociale au sein de l'administration fédérale sets out to promote the emergence of a new profession in the fight against poverty and social exclusion. Through the expertise of people knowing poverty from the inside, it seeks to ensure that there will be a greater emphasis on and a better understanding of poverty and social exclusion issues at the core of the federal administration. This project, administered by the SPP Intégration Sociale, involves the placement of 16 médiateurs de terrain , 8 French-speaking and 8 Dutch-speaking, in 10 federal public services, including 5 social security institutions. The specific tasks of the médiateurs in each service are constantly evolving, as part of dialogue between the médiateurs , the SPP Intégration Sociale and the specific services.
IE 's Disability Sectoral Plans, which were launched in July 2006, are an example of using legislation as a mainstreaming tool to improve access to mainstreamed services for a specifically targeted vulnerable group. The Disability Act 2005 requires six Government Departments (Health and Children; Social and Family Affairs; Enterprise, Trade and Employment; Transport; Environment, Heritage and Local Government; Communications, Marine and Natural Resources) to develop Sectoral Plans to show how key issues relating to people with disabilities will be addressed. The Plans must give details on the level of access relating to the services specified in the Plan. The first three of the above-mentioned ministries must also give details on cross-Departmental cooperation to ensure coordinated service delivery for people with disabilities. The Act also requires people with disabilities to be consulted in the development of the plans. Progress reports on the Sectoral Plans will be prepared after 3 years.
List of examples of good practice highlighted in the main text
CY: Educational Priority Zones
FR: Réussite Educative
RO: Gata, Dispus si Capabil
EE: Community Services in a Village
AT: Laender programmes to prevent eviction
DE: Handlungsprogram "Soziale Stadt NRW"
FI: Labour Force Service Centre
BE: Management de la diversité
HU: Study Hall "Tanoda" Programme
CZ: Comprehensive approach by the city of Ostrava to eradicate discrimination against socially excluded Roma and Roma at risk of social exclusion
BG: National Programme for Employment and Vocational Training of Persons with permanent disabilities
UK : Get Heard!
ANNEX 2: LIST OF EXAMPLES OF GOOD PRACTICE IN THE FIELD OF SOCIAL INCLUSION BY COUNTRY.
Member State | Example |
Austria | Initiatives of the social partners to improve labour market opportunities of disadvantaged groups |
Austria | Training support and assistance schemes under integration-type vocational training |
Austria | Prevent eviction/retain lodging |
Austria | Anti-poverty conference |
Belgium | Management de la diversité |
Belgium | Accès direct de la rue au logement pour les personnes sans abri |
Belgium | Plan stratégique en matière d'intégration des technologies de l'information et de la communication dans les établissements scolaires de l'enseignement obligatoire de l'enseignement de promotion sociale |
Belgium | Insertion de médiateurs de terrain en pauvreté et exclusion sociale au sein de l'administration fédérale |
Bulgaria | Employment for the Roma |
Bulgaria | National Programme for Employment and Vocational Training of persons with permanent disabilities |
Bulgaria | Care Leavers Integration Programme |
Bulgaria | Social Investments in Children |
Bulgaria | Child Welfare Reform |
Cyprus | Life Education Centres |
Cyprus | Educational Priority Zones |
Czech Republic | Comprehensive approach by the city of Ostrava to eradicate discrimination against socially excluded Roma and Roma at risk of social exclusion. |
Czech Republic | Support from ESF for the provision of social services for the benefit of homeless persons |
Czech Republic | Stop Social Exclusion Information Campaign |
Denmark | Employment initiatives aimed at mentally ill people |
Denmark | Programme board strategy against ghettoisation |
Denmark | Debt Remission Pilot Project |
Denmark | Alternative residential facilities |
Denmark | Upper Secondary School Reform |
Denmark | Combating men's domestic violence against women and children |
Denmark | Employment, participation and equal opportunities for all |
Denmark | Prostitution: a new life |
Denmark | Speech recognition in Danish |
Estonia | Pilot project of home care workers |
Estonia | Training unemployed persons to become call centre operators |
Estonia | Community Services in a Village |
Finland | Social Guarantee |
Finland | Labour Force Service Centre model |
Finland | Social Credit |
Finland | Advisory Board on Romani Affairs |
France | Développer l'égalité salariale entre les hommes et les femmes |
France | Création de l'Agence Nationale de Rénovation Urbaine |
France | Eradiquer l'habitat indigne |
France | Programme "réussite educative" |
Germany | Betrieb und Schule |
Germany | Handlungsprogramm "Soziale Stadt" |
Germany | "Sozialrauemliche Familien- und Jugendarbeit" |
Greece | Safeguarding – Promotion of health and social inclusion of Greek gypsies |
Hungary | Integrated Roma Central Employment Programme |
Hungary | Study Hall (Tanoda) Programme |
Hungary | "Place of Correction" Attendance Centre |
Hungary | Card Operated Consumption Meters |
Ireland | Disability Sectoral Plans |
Ireland | Social Inclusion Units in Local Authorities |
Ireland | Poverty Impact Assessment |
Italy | Local plans for social inclusion |
Italy | ESF global grants for social inclusion |
Italy | Database of social needs |
Italy | Labour market insertion of people with disabilities |
Latvia | Improvement of infrastructure and equipment of social care and social rehabilitation institutions |
Lithuania | "Mano Guru" Bar |
Lithuania | Elderly Women's Activity Centre |
Lithuania | Window to the future alliance |
Luxembourg | Location des logements par l'intermédiaire ONG |
Luxembourg | Suive des décrocheurs scolaires |
Malta | Social Policy Information Centre |
Malta | Care and Repair Service |
Malta | Home Support Service |
Malta | NWAR Programme |
Netherlands | Synergy between Work and Social Assistance Act (WWB) and the Social Support Act (Wmo) in neighbour home care service (Tilburg). |
Netherlands | Poverty and health intervention by municipal health service in West Brabant |
Netherlands | Linking of databases for the Reimbursement of Exceptional Expenses Scheme |
Netherlands | De-bureaucratising in Houten |
Netherlands | The Amsterdam Form Brigade |
Netherlands | Work and Social Assistance Card |
Poland | Social Employment |
Poland | Civic Initiative Fund |
Poland | System of Family Benefits |
Portugal | National Support Centre for Immigrants |
Portugal | Active Participation |
Portugal | Methodology of the Integrated |
Romania | "Gata, Dispus si Capabil" |
Romania | Building a model of Integrated Community Support Services for young drug addicts |
Romania | Samusocial din Romania |
Slovenia | Activation and employment of Roma and people with disabilities |
Slovenia | Residential Groups in the area of mental health |
Slovenia | Foster Care |
Slovenia | Temporary Housing Units |
Slovakia | Programme in support of the development of community social work in municipalities |
Slovakia | Increase of employability of groups affected and threatened by social inclusion through local social inclusion partnerships |
Slovakia | Crisis intervention in Banska Bystrica city |
Spain | Common Fund for Immigrants |
Spain | Integrated Programmes in autonomous regions |
Spain | The experience of private management of the Structural Funds in the fight against discrimination |
Sweden | University course for student social workers and former clients together |
Sweden | Komet programme – Social inclusion through prevention |
Sweden | Good housing in Bergsjon – Project to prevent eviction |
United Kingdom | A New Approach to Homelessness |
United Kingdom | Child Poverty Accord |
United Kingdom | Working for Families |
United Kingdom | Get Heard! |
Strategies in Health Care and Long-Term Care
This section reviews the 2006 national reports in relation to health care and long-term care as part of the first full coordination exercise under the streamlined OMC. Member States submitted national reports on social inclusion, pensions and, for the first time, health care and long-term care in September 2006. This chapter analyses the main challenges Member States face and their planned strategies to tackle these challenges in the fields of health care and long-term care in the light of the agreed common objectives (see below).
Common objectives for health care and long-term care
Member States are committed to accessible, high-quality and sustainable health care and long-term care by ensuring: (j) access for all to adequate health and long-term care and that the need for care does not lead to poverty and financial dependency; and that inequities in access to care and in health outcomes are addressed; (k) quality in health and long-term care and by adapting care, including developing preventive care, to the changing needs and preferences of society and individuals, notably by developing quality standards reflecting best international practice and by strengthening the responsibility of health professionals and of patients and care recipients; (l) that adequate and high quality health and long-term care remains affordable and financially sustainable by promoting a rational use of resources, notably through appropriate incentives for users and providers, good governance and coordination between care systems and public and private institutions. Long-term sustainability and quality require the promotion of healthy and active lifestyles and good human resources for the care sector.
The role of health care systems in combating the risk of disease and contributing to social cohesion and employment has been acknowledged for some time by the European Union. Thus, the April 2004 Commission communication (COM(2004)304) proposed to extend the OMC to the areas of health care and long-term care in order to establish a common framework to support Member States in the modernisation of their systems. This communication was endorsed by the Council in October 2004. The Council also stated that, in 2005, Member States were to present national preliminary statements regarding the challenges faced by their health care and long-term care systems, current reforms and planned policies. The resulting November 2005 Memorandum of the Social Protection Committee highlighted the main issues raised by those statements and contributed to the definition of the new streamlined common objectives.
In this section, chapters 2, 3 and 4 analyse in greater detail the specific challenges identified in the national reports in relation to access, quality and long-term sustainability, and describe associated policy measures. Chapter 5 looks at access, quality and sustainability in the specific field of long-term care. Chapter 6 concludes and identifies key issues for further work and best practice exchange under the OMC.
Importantly, the national reports show how strongly interlinked the above common objectives are. They emphasise the strong synergies between improving access, enhancing quality and ensuring sustainability in a number of policies. Thus, the reader will find the same issues addressed in more than one section, albeit from a different perspective to reflect these synergies.
Global challenges in the area of access and policies to address them
National reports show that all EU Member States are strongly committed to ensuring access for all, to adequate health care and long-term care. Solidarity and equitable financing (progressive financing through income-related taxation and contributions, risk pooling, risk selection prohibition and risk adjustment mechanisms) are principles inherent in health care systems. Moreover, by way of their design, Member States aim to ensure that access does not depend on ability to pay, income or wealth and that the need for care does not lead to poverty and financial dependency. Universal or near universal rights giving access to care can be found in all Member States, either through National Health Systems (NHS), providing access rights to all residents in a country, or through Social Health Insurance Systems, where access rights are typically granted to those making contributions (and their families) and the State (through taxation) ensures access for non-contributing individuals.
However, universal rights do not necessarily translate into universal access and there remain significant sources of inequalities in access that demand further attention. These include lack of insurance coverage, lack of coverage/provision of certain types of care, high individual financial costs of care and geographical disparities of supply. They also include lengthy waiting times for certain treatments, lack of knowledge or information and complex administrative procedures.
Moreover, whilst, according to most empirical findings, health care systems have largely contributed to significant improvements in health across the EU, there is considerable scope for improvement. All EU countries are faced with substantial inequalities in health within their populations, which have widened in the latter part of the 20th century (Mackenbach, 2005 for UK Presidency). National reports document significant differences in the health outcomes within each country between different sections of the population based on socio-economic status, place of residence and ethnic group (e.g. Roma, travellers or migrants). On average, less advantaged groups have shorter lives, suffer more disease and illness and feel their health to be worse than more advantaged groups. A gradient exists for most health indicators in which those with higher levels of education or wealth, or those in professional employment, have better health on average than their counterparts.
These health inequalities arise because of systematic differences between people according to social group: in the quality of their physical and social environments (e.g. at home, school, workplace), material conditions (poverty and material deprivation, exclusion and marginalisation) and in their exposure to factors which influence health, such as quality of nutrition, level of physical activity, tobacco and alcohol use, sexual behaviour and psychosocial factors (negative life events and a combination of high effort and demands with low reward and low control). Addressing health inequalities requires action to increase social protection and tackle social exclusion, to ensure that socio-economically disadvantaged people are not subject to additional disadvantages in relation to access to health services, and to protect and promote health – particularly in specific disadvantaged groups. Given its clear significance and implications for EU citizens, this is an area of potential EU level exchange. The OMC investigated how social protection systems – including access to care – contribute to reducing health inequalities by means of a peer review in January 2007.
Lack of insurance coverage of the population
There have been consistent increases in health care and long-term care expenditure and Member States have made significant efforts to increase the proportion of their populations that are covered by health insurance. However, there are still some groups without insurance coverage of any sort. In Estonia, for example, 6% of the population only have access to emergency care, and in Slovenia up to 20 000 people are without health insurance owing to their lack of permanent residence or citizenship. In Greece, 3% of the population are not covered, whilst in Austria this proportion is around 2%. In Lithuania and in Belgium the figure is 1%, while it is 0.5% in Germany, 0.2% in Spain and 0.1% in France and in Luxembourg. NHS systems by definition provide coverage for all their resident population. This does not mean, however, that access to care under NHS systems is equal for all population groups.
In general, lack of insurance coverage relates to: a lack of permanent residency or citizenship, lack of official papers, a failure to register with the relevant authorities (often associated with a lack of understanding of how the system works, notably due to a lack of information regarding registration procedures - as is the case in Bulgaria and Romania). Further reasons for lack of insurance coverage include administrative hurdles when changing jobs or marital status. The long-term unemployed, those not receiving social security benefits, minorities (e.g. Roma), the homeless, illegal immigrants and asylum seekers are all particularly at risk.
Furthermore, insurance coverage is not generic for all groups: in many Member States the richest households typically acquire extra voluntary insurance that provides complementary or supplementary coverage. Certain Member States have specific arrangements: in Portugal, for example, distinct groups (e.g. civil servants) have double or triple coverage through both the NHS and their own social insurance system. In Ireland only 28.5% of the population receive a wide range of services for free (based on income and age).
Member States recognise the problem and many have implemented or plan to implement policies to enhance health care coverage. France has created the Couverture Maladie Universelle Complémentaire to cover the full costs of care of more vulnerable groups. This programme also provides financial aid to those on low incomes to help acquire complementary insurance. The Netherlands have introduced mandatory health insurance for the whole population whereas Belgium is increasing risk coverage of the self-employed to align it with the rest of the population. Cyprus is to introduce universal residence-based coverage within the National Health Scheme. Estonia has recently extended coverage to those on unemployment benefits and is pursuing funding options to include those groups not currently covered. Germany has proposals for a new law that aims to ensure that all citizens are covered by health insurance and in Austria social assistance schemes under the responsibility of the Länder are used to pay for the costs of the non-insured. Despite such measures, in a large majority of EU countries much remains to be done in order to extend health insurance coverage to illegal immigrants and asylum seekers.
Lack of coverage of certain types of care and high direct costs of care
The objective in the health care systems of Member States is for access to health care not to depend on the ability to pay, income or wealth and for the need for care not to lead to individual poverty and financial dependency. It is striking therefore to observe that private health care financing has increased substantially throughout the EU, both in absolute and in relative terms. The growth in private expenditure (in part made possible by a general increase in income and wealth) is related to increased cost-sharing for public benefit packages, growing out-of-pocket payments for services excluded from insurance packages and, to a lesser (but not negligible) extent, to premiums for voluntary private insurance with a complementary or supplementary role. Indeed, the large increase in health care expenditure in recent decades has led to fiscal pressure to control the costs of publicly covered or provided care. The bulk of cost-containment policies developed in the 1980s and 1990s included the prioritising of services and the exclusion or non-coverage of particular types of care. These measures were coupled with increased patient cost-sharing (co-payments or co-insurance). This had the dual aim of not only increasing funds to the sector but also improving patient cost awareness and incentivising a behavioural change with regard to the use of health care services. This was expected to reduce unnecessary consumption.
Dental, ophthalmic and aural care services are basic services typically not covered by NHS or social insurance systems in Member States, while co-payments generally apply to a) pharmaceuticals, b) specialist and home visits and hospital care (albeit to a lesser extent), and c) in some cases to primary or even emergency care. Informal (unofficial, under-the-table envelope) payments, though decreasing, add an extra cost to patients in various Member States (e.g. LT, LV, EE, PL, HU, EL, SK, BG, RO).
According to OECD and WHO data (see Table 1), between 1990 and 2004 the share of private health care expenditure within total health care expenditure increased in almost all countries except DK (constant at 17%), UK, IE and PT. These countries showed a decrease from 16 to 14.1%, from 28 to 21.5% and from 35 to 30.3% respectively. In 2004, private health care expenditure ranged from 9.8% (LU) and 9.3% (CZ) of total health care expenditure to about 48.3% (EL) and 52.2% (CY). The figure is more than 20% in all Member States except LU, CZ, DK, SE, UK and SK and at 30% or more in AT, BE, CY, EL, LV, NL, PL and PT.
Table 1: Private health care expenditure as a percentage of total health care expenditure
Private health care expenditure as a percentage of total health care expenditure |
Statutory pensions | Type of statutory scheme (DB, NDC or DC) | Occupational and voluntary pensions | Type of supplementary scheme (DB or DC) |
BE | 68 | DB | 40-45 | DC | Nd (64/61.6) | Nd (42.6/30.5) |
CZ | 100 | DB | / | / | 58 (60.2/56.3) | 41.6 (44.4/39.6) |
DK | 100 | DB | 78 | DC | 62.1 (62/62.3) | 27.7 (35.7/20.3) |
DE | Nd | DB | 70 | DC | Nd | Nd |
EE | 100 | DB and DC | / | / | 60.3 (61.5/59) | 43.7 (45.6/42.9) |
EL | Nd | DB | / | / | 60.4 (61.4/58.6) | 25.1 (27.5/20.8) |
ES | 89 | DB | / | / | 63.7 (63.5/64) | 38 (40.3/30.4) |
FR | Nd | DB | / | / | Nd (60. 6/60.5) | Nd (33.2/34) |
IE | 100 | DB | 52 | DB | 65 | Nd |
IT | 100 | DB and DC | 11.4 | DC | 59.7 (59.8/59.6) | 32.1 (34.9/27.9) |
CY | 86 | DB | / | / | 62.7 (Nd/Nd) | Nd |
LV | 100 | NDC and DC | / | / | 60.3 (61.4/58.3) | 30 (30/29) |
LT | 83 | DB and DC | / | / | 60 (61.4/58.4) | 35.8 (37.5/34.2) |
LU | 92 | DB | / | / | Nd (60.3/62.4) | Nd (44.2/39.1) |
HU | 100 | DB and DC | / | / | 58.5 (59.7/57.3) | 39.1 (40.3/37.9) |
MT | Nd | DB | / | / | 60.8 (61.5/60.5) | 26.3 (29.1/23.5) |
NL | 100 | DB | 91 | DB and/or DC | 65 (65/65) * | Nd |
AT | 100 | DB | / | / | 60.4 (62.7/58.9) | Nd |
PL | 77 | NDC and DC | / | / | 57.8 (60.5/56.4) | 34.9 (37.3/33.9) |
PT | 82 | DB | / | / | 64.2 (63.7 / 64.8) | 27.3 (31.4/21.8) |
SI | 100 | DB | / | / | 63.2 (63.7/62.7) | 28 (30/24) |
SK | Nd | DB and DC | / | / | 58.5 (61.4/56.8) | Nd |
FI | 100 | DB | / | / | 59.1 (59/59.2) | 29.6 (30.9/28.6) |
SE | 100 | NDC and DC | 90 | DB | 64.7 (64.8/64.7) | 28 (30/24) |
UK | 100 | DB | 56 | DB | 62.3 (62.7/61.9) | 35 (42/26) |
Note: The first four columns provide background information on current coverage levels, thus giving elements on the representativeness associated with the base case. Coverage rates refer to the coverage of the labour force; in some cases (notably for occupational and voluntary pensions), this can refer to the coverage of the employees in the private sector. Occupational and voluntary pensions included : BE (occupational pensions), DK (occupational, SP and ATP schemes), DE (occupational or Riester Pensions), IE (occupational pensions), IT (DC occupational pension funds, financed through the diverting of employees’ TFR deferred wage component), NL (occupational pensions, results presented refer to the case of indexation of 80% on wages), SE (occupational pensions) and UK (occupational pensions). Information is provided on the type of scheme taken into account (DB, defined benefit, DC, defined contribution, NDC Notional defined contribution). The last two columns refer to the average age at retirement and seniority at retirement for new flows of retirees and thus provide elements on the representativeness associated with the base case, related to the assumptions of retirement at 65 with 40 years of seniority. Figures are for 2004 except 2005 for age of retirement in ES (*) This refers to the age at retirement of new flows of retirees for the first pillar; the actual exit age in the second pillar is not available.
Table A2 – Assumptions and representativeness of contribution rates (contribution rates in percentage points)
Statutory pensions (or in some cases social security) | Occupational and voluntary pensions | Total contribution rate used as assumption |
Estimate of current levels (2002) | Assumption used |
BE | 46.3a | Nd | 4.25 | 50.55a |
CZ | 28 | / | 28 |
DK | 0.9 b | 8.8 | 12.7 | 13.6 |
DE | 19.5 | Nd | 4 | 23.5 |
EE | 22 | / | 22 |
EL | 20 | / | 20 |
ES | 28.3 | / | 28.3 |
FR | 20 | / | 20 |
IE | 9.5 | 10-15 | 20.7 | 30 |
IT | 32.7 | 5.7 | 6.91 | 39.6 |
CY | 16.6 c | / | 16.6 |
LV | 20 | / | 20 |
LT | 26 | / | 26 |
LU | 24 d | / | 24 |
HU | 26.5 | / | 26.5 |
MT | 30 e | / | 30 |
NL | 7 | 9.8 | 11.5 -12.5 | 21-22 |
AT | 22.8 | / | 22.8 |
PL | 36.9 f | / | 36.9 |
PT | 32.6 g | / | 34.75 |
SI | 24.35 | / | 24.3 |
SK | Nd | / | Nd |
FI | 21.6 | / | 21.6 |
SE | 17.2 | 13.7 | 13.7 | 30.9 |
UK | 14.75 – 10.9 | 16.6 | 23.7 | 34.6 – 38.4 |
Note: The first two columns provide information on contribution rates used for statutory schemes and also eventually occupational or private schemes included in the base case, thus giving elements on the representativeness associated with the base case. Contribution rates correspond to overall contribution rates as a share of gross wages (from employees and employers) used as assumptions for the calculation of theoretical replacement rates. Contribution rates may differ from current levels, reflecting, for instance, projected increases in contribution rates, in particular as regards assumptions used for second pillar schemes. Contribution rates are not always directly comparable as they can refer to different fields.
(a) For Belgium, this refers to the overall Social Security contribution rate, due to its global management.
(b) For Denmark, this refers to contributions, to the ATP (statutory Supplementary Labour Market Pension, though it should be recalled that the financing of the first pillar mainly comes from the general budget. (c) For Cyprus, a quarter (4%) comes from the general State budget.
(d) For Luxembourg, one third (8%) also comes from the general State budget.
(e) For Malta, this amounts to 10% from the employee, 10% from the employer and 10% from the State.
(f) For Poland, this amounts to old-age contributions (19.52 per cent of wage) and disability and survivors contribution (13 per cent of wage).
(g) For Portugal, this is a general estimate (ratio between overall contributions and aggregate wages declared to social security). The total contribution rate used as an assumption in simulations is 34.75 (legal statutory contribution rate).
Table A3 - Evolution of theoretical replacement rates from 2005 to 2050
Change in theoretical replacement rate 2005-2050 (in percentage points) | Change in pension expenditures 2005-2050 (in percentage points of GDP) | Variation of replacement rate, 10 years after retirement (in percentage points) |
Net (Total ) | Gross replacement rate |
OVERARCHING INDICATORS |
At-risk-of-poverty rate + Illustrative threshold value | Share of persons aged 0+ with an equivalised disposable income below 60% of the national median equivalised disposable income Equivalised disposable income is defined as the household's total disposable income divided by its "equivalent size" to take account of its size and composition.. Value of the at-risk-of-poverty threshold (60% median national equivalised income) in PPS for an illustrative household type (e.g., single person household) Source: EU-SILC |
Relative median poverty risk gap | Difference between the median equivalised disposable income of persons aged 0+ below the at-risk-of poverty threshold and the threshold itself, expressed as a percentage of the at-risk-of poverty threshold. Source: EU-SILC |
S80/S20 | Ratio of total income received by the 20% of the country's population with the highest income (top quintile) to that received by the 20% of the country's population with the lowest income (lowest quintile). Income must be understood as equivalised disposable income. Source: EU-SILC |
Healthy life expectancy | Number of years that a person at birth, at 45, at 65 is still expected to live in a healthy condition (also called disability- free life expectancy). To be interpreted jointly with life expectancy Source: Eurostat |
Early school leavers | Share of persons aged 18 to 24 who have only lower secondary education (their highest level of education or training attained is 0, 1 or 2 according to the 1997 International Standard Classification of Education – ISCED 97) and have not received education or training in the four weeks preceding the survey. Source: LFS |
People living in jobless households | Proportion of adults (aged 18-59 and not students) and children living in jobless households, expressed as a share of all people in the same age group . This indicator should be analysed in the light of context indicator: jobless households by main household types Source: LFS |
Projected Total Public Social expenditures | Age-related projections of total public social expenditures (e.g. pensions, health care, long-term care, education and unemployment transfers), current level (% of GDP) and projected change in share of GDP (in percentage points) (2010-20-30-40-50) Specific assumptions agreed in the AWG/EPC. See "The 2005 EPC projections of age-related expenditures (2004-2050) for EU-25: underlying assumptions and projection methodologies" http://ec.europa.eu/economy_finance/epc/documents/2006/ageingreport_en.pdf Source: EPC/AWG |
Median relative income of elderly people | Median individual pension income of retirees aged 65-74 in relation to median earnings of employed persons aged 50-59 excluding social benefits other than pensions, based on gross income Source: EU-SILC |
Aggregate replacement ratio | Median individual pensions of 65-74 relative to median individual earnings of 50-59, excluding other social benefits Source: EU-SILC |
Employment rate of older workers | Persons in employment in age groups 55 - 59 and 60 – 64 as a proportion of total population in the same age group Source: LFS |
In-work poverty risk | Individuals who are classified as employed (distinguishing between “wage and salary employment plus self-employment” and “wage and salary employment” only) and who are at risk of poverty This indicator needs to be analysed according to personal, job and household characteristics. It should also be analysed in comparison with the poverty risk faced by the unemployed and the inactive. Source: EU-SILC |
Activity rate | Share of employed and unemployed people in total population of working age 15-64 Source: LFS |
Regional disparities – coefficient of variation of employment rates | Standard deviation of regional employment rates divided by the weighted national average (age group 15-64 years). (NUTS II) Source: LFS |
SELECTED HEALTH INDICATORS |
Total expenditure on health | Sum of general government health expenditure and private health expenditure in a given year, calculated in national currency units in current prices. It comprises the outlays earmarked for health maintenance, restoration or enhancement of the health status of the population, paid for in cash or in kind. It is expressed in $PPP. International dollars are derived by dividing local currency units by an estimate of their Purchasing Power Parity (PPP) compared to US dollar, i.e. the measure which minimizes the consequences of differences in price levels between countries. Source: NHA (WHO) |
General government expenditure on health as a % of Total health expenditure | Comprises the direct outlays earmarked for the enhancement of the health status of the population and/or the distribution of medical care goods and services among population by the following financing agents: central/federal, state/provincial/regional, and local/municipal authorities; extrabudgetary agencies, social security schemes; parastatals and public firms. Expenditures on health include final consumption, subsidies to producers, and transfers to households (chiefly reimbursements for medical and pharmaceutical bills). It includes both recurrent and investment expenditures (including capital transfers) made during the year. Besides domestic funds it also includes external resources (mainly as grants passing through the government or loans channelled through the national budget). Source: NHA (WHO) |
Private health expenditure as a % of total health expenditure | Sum of expenditures on health by the following entities: - Prepaid plans and risk-pooling arrangements: the outlays of private insurance schemes and private social insurance schemes (with no government control over payment rates and participating providers but with broad guidelines from government) - Firms’ expenditure on health: the outlays by private enterprises for medical care and health enhancing benefits other than payment to social security or other pre-paid schemes. - Non-profit institutions serving mainly households: outlays of those entities whose status do not permit them to be a source of financial gain for the units that establish, control or finance them. This includes funding from internal and external sources. - Household out -of-pocket spending: the direct outlays of households, including gratuities and in-kind payments made to health practitioners and to suppliers of pharmaceuticals, therapeutic appliances and other goods and services. This includes household direct payments to public and private providers of health care services, non-profit institutions, and non-reimbursable cost sharing, such as deductibles, co-payments and fee for services. Source: NHA (WHO) |
CONTEXT INDICATORS |
GDP growth | Growth rate of GDP volume - percentage change on previous year Source: Eurostat STRIND |
Employment rate, by sex | The employment rate is calculated by dividing the number of persons aged 15 to 64 in employment by the total population of the same age group. Source: LFS |
Unemployment rate, by sex, and key age groups | Unemployment rates represent unemployed persons as a percentage of the labour force. The labour force is the total number of people employed and unemployed. Unemployed persons comprise persons aged 15+ who were: a. without work during the reference week, b. currently available for work, i.e. were available for paid employment or self-employment before the end of the two weeks following the reference week, c. actively seeking work, i.e. had taken specific steps in the four weeks period ending with the reference week to seek paid employment or self-employment or who found a job to start later, i.e. within a period of, at most, three months. Source: LFS |
Long term unemployment rate, by sex and key age groups | Long-term unemployed (12 months and more) persons are those aged at least 15 years who are without work within the next two weeks, are available to start work within the next two weeks and who are seeking work (have actively sought employment at some time during the previous four weeks or are not seeking a job because they have already found a job to start later). The total active population (labour force) is the total number of the employed and unemployed population. The duration of unemployment is defined as the duration of a search for a job or as the length of the period since the last job was held (if this period is shorter than the duration of the search for a job). Source: LFS |
Life expectancy at birth and at 65 | LE at birth: The mean number of years that a newborn child can expect to live if subjected throughout his life to the current mortality conditions (age specific probabilities of dying). LE at 65: The mean number of years still to be lived by a person who have reached 65, if subjected throughout the rest of his life to the current mortality conditions (age specific probabilities of dying). Source Eurostat – Demography |
Old age dependency ratio, current and projected | Ratio between the total number of elderly persons of an age when they are generally economically inactive (aged 65 and over) and the number of persons of working age (from 15 to 64). Source Eurostat – Demography |
Distribution of population by household types, incl. collective households | Number and % of people living in private resp. collective households. Source Eurostat - Census 2001 data collection |
Public debt, current and projected, % of GDP | Government debt is the consolidated gross debt of the whole general government sector outstanding at the end of the year (in nominal value). These data are reported to the European Commission in the framework of the Excessive Deficit Procedure (EDP). Projections are produced by the Commission Services in the context of the assessment of the long-term sustainability of the public finances based on the 2005/06 updates of Stability and Convergence Programmes (SCPs). http://ec.europa.eu/economy_finance/publications/european_economy/2006/ee306_en.pdf |
Social protection expenditure, current, by function, gross and net (ESPROSS) | Total social protection expenditures broken down in social benefits, administration cost and other expenditure. In addition, social benefits are classified by functions of social protection. Net expenditures are not presented here since they are not available in ESSPROS yet. Source: Eurostat – ESSPROS |
Jobless households by main household types | Breakdown of jobless households by main household types Source: EU-SILC |
Making work pay indicators (unemployment trap, inactivity trap (esp. second earner case), low-wage trap. | Unemployment trap: Marginal effective tax rate (METR) on labour income taking account of the combined effect of increased taxes and benefits withdrawal as one takes up a job. Calculated as the ratio of change in gross income minus (net in work income minus net out of work income) divided by change in gross income for a single person moving from unemployment to a job with a wage level of 67% of APW. Inactivity trap: METR on labour income taking account of the combined effect of increased taxes and benefits withdrawal as one takes up a job while previously inactive. Calculated as the ratio of change in gross income minus (net in work income minus net out of work income) divided by change in gross income for a single person moving from inactivity to a job with a wage level of 67% of APW. Low wage trap: METR on labour income taking account of the combined effect of increased taxes on labour and in-work benefits withdrawal as one increases the work effort (increased working hours or moving to a better job). Calculated as the ratio of change in personal income tax and employee contributions plus change (reductions) in benefits, divided by increases in gross earnings, using the "discrete" income changes from 34-66% of APW. Breakdown by family types: one-earner couple with two children and single parent with two children. Source: Joint Commission -OECD project using tax-benefit Models |
Net income of social assistance recipients as a % of the at-risk of poverty threshold for 3 jobless household types | This indicator refers to the income of people living in households that only rely on "last resort" social assistance benefits (including related housing benefits) and for which no other income stream is available (from other social protection benefits – e.g. unemployment or disability schemes – or from work). The aim of such an indicator is to evaluate if the safety nets provided to those households most excluded from the labour market are sufficient to lift people out of poverty. This indicator is calculated on the basis of the tax-benefit models developed jointly by the OECD and the European Commission. It is only calculated for Countries where non-categorical social benefits are in place and for 3 jobless household types: single, lone parent, 2 children and couple with 2 children. This indicator is especially relevant when analysing MWP indicators. Source: Joint EC-OECD project using OECD tax-benefit models, and Eurostat (see Chapter I and Annex I) |
Change in projected theoretical replacement ratio for base case 2004-2050 accompanied with information on type of pension scheme (DB, DC or NDC), and change in projected public pension expenditure 2004-2050. (results should systematically be presented collectively in one table). | Change in the theoretical level of income from pensions at the moment of take-up related to the income from work in the last year before retirement for a hypothetical worker (base case), percentage points, 2004-2050, with information on the type of pension scheme (DB, DC or NDC) and changes in the public pension expenditure as a share of GDP, 2004-2050. This information can only collectively form the indicator called Projected theoretical replacement ratio. Results relate to current and projected, gross (public and private) and total net replacement rates, and should be accompanied by information on representativeness and assumptions (contribution rates and coverage rate, public and private), and calculations of changes in replacement rates for 1 or 2 other cases, if suitable (e.g. OECD) Specific assumptions agreed in the ISG. For further details, see 2006 report on Replacement Rates. http://ec.europa.eu/employment_social/social_protection/docs/isg_repl_rates_en.pdf Source: ISG and AWG |
Annex IB - Data Sources – specific notes
INDICATORS OF INCOME AND LIVING CONDITIONS: EU-SILC
For the first time this year, EU-SILC data is available for 25 EU Countries. The newly implemented reference source of statistics on income and social exclusion is the European Survey on Income and Living Conditions (EU-SILC) framework regulation (No.1177/2003). Technical aspects of this instrument are developed through Commission implementing regulations, which are published in the Official Journal. The data for Bulgaria and Romania are still based on the national household budget surveys following the transitional arrangements agreed by the European Statistical System.
The EU-SILC definition of total household gross and disposable income and the different income components keep as close as possible to the international recommendations of the UN ‘Canberra Manual’. A key objective of EU-SILC is to deliver timely, robust and comparable data on total disposable household income, total disposable household income before transfers, total gross income and gross income at component level (in the ECHP, the income components were recorded net). This objective will be reached in two steps, in that Member States have been allowed to postpone the delivery of gross income at component level and of total household gross income data until after the first year of their operations.
Although certain countries (eg. Denmark) are already able to supply income including imputed rent - i.e. the money that one saves on full (market) rent by living in one’s own accommodation or in accommodation rented at a price that is lower than the market rent -, for reasons of comparability, the income definition underlying the calculation of indicators currently excludes imputed rent . This could have a distorting effect in comparisons between countries, or between population sub-groups, when accommodation tenure status varies. This impact may be particularly apparent for the elderly who may have been able to accumulate wealth in the form of housing assets. In the statistical annex, data for Denmark are therefore shown both with and without imputed rent, as an illustration of the impact of this income component on the results. Once imputed rent is taken into account, the at-risk-of-poverty rate is reduced for people aged 65 and over, the inactive other than pensioners and those living in owner-occupied accommodation.
It should also be noted that the definition of income currently used excludes non monetary income components, which include the value of goods produced for own consumption and non-cash employee income. This component will be available for all countries from the SILC(2007) exercise onwards, and therefore included in the indicators that will be published in January 2009.
The reference year for the data is the year to which information on income refers (i.e., the "income year"), which in most cases differs from the survey year in which the data have been collected. Namely, 2004 data refer to the income situation of the population in 2004, even if the information has been collected in 2005. EU aggregates are computed as population-weighted averages of available national values.
Note on trends
During the transition to EU-SILC income based indicators were calculated on the basis of available national sources (household budget survey, micro-censuses, etc.) that were not fully compatible with the SILC methodology based on detailed income. Following the implementation of EU-SILC in a given country, the values of all income based indicators (at-risk-of poverty rates, S80/S20, aggregate replacement ratio, etc) cannot be compared to the estimates presented in previous years. This is why no trends in income based indicators are presented in this year's report.
The limited sample size of certain data sources used for the collection of income data and the specific difficulties of collecting accurate information on disposable income directly from households or through administrative registers raise certain concerns as regards data quality. This is particularly the case for information on income at the two ends of the income distribution.
Furthermore, household surveys do not cover persons living in collective households, homeless persons or other difficult-to-reach groups.
It must also be acknowledged that self-employment income is difficult to collect, whatever the data source. It must also be kept in mind that the difficulty in recording income from the informal economy can introduce a bias in the income distribution as measured by surveys.
Finally, whilst it is considered to be the best basis for such analyses, current income is acknowledged to be an imperfect measure of consumption capabilities and welfare, as, among other things, it does not reflect access to credit, access to accumulated savings or ability to liquidate accumulated assets, informal community support arrangements, aspects of non monetary deprivation, differential pricing, etc. These factors may be of particular relevance for persons at the lower end of the income distribution. The bottom 10 per cent of the income distribution should not, therefore, necessarily be interpreted as having the bottom 10 per cent of living standards. This is why reference is made to the "at-risk-of-poverty" rate rather than simply the poverty rate.
AGE-RELATED EXPENDITURE PROJECTIONS
Long-term budgetary projections were prepared in 2006 by the Economic Policy Committee and the European Commission (DG ECFIN) - see European Policy Committee and European Commission (2006), "The impact of ageing on public expenditure: projections for the EU25 Member States on pensions, health care, long-term care, education and unemployment transfers (2004-2050)", European Economy, Special Report No.1/2006.
The projections are made on the basis of a common population projection and agreed common underlying economic assumptions that have been endorsed by the EPC. The projections are made on the basis of “no policy change”, i.e. only reflecting enacted legislation but not possible future policy changes (although account is taken of provisions in enacted legislation that enter into force over time). The pension projections are made on the basis of legislation enacted by mid-2005. They are also made on the basis of the current behaviour of economic agents, without assuming any future changes in behaviour over time: for example, this is reflected in the assumptions on participation rates, which are based on the most recently observed trends by age and gender. While the underlying assumptions have been made by applying a common methodology uniformly to all Member States, for several countries adjustments have been made to avoid an overly mechanical approach that leads to economically unsound outcomes and to take due account of significant country-specific circumstances. The pension projections were made using the models of national authorities, and thus reflect the current institutional features of national pension systems. In contrast, the projections for health care, long-term care, education and unemployment transfers were made using common models developed by the European Commission in close cooperation with the EPC and its Working Group on Ageing Populations. The projection results show the combined impact of expected changes in size and demographic structure of the population, projected macroeconomic developments and assumed neutral evolution in health status of the population in each Member State of the European Union.
The "pension expenditure" aggregate according to the ESSPROS definition, goes beyond that of public expenditure and also includes expenditure by private social protection schemes. "Pension expenditure" is the sum of seven different categories of benefits, as defined in the 1996 ESSPROS Manual: disability pension, early retirement benefit due to reduced capacity to work, old-age pension, anticipated old-age pension, partial pension, survivors' pension and early retirement benefit for labour market reasons. Some of these benefits (for example, disability pensions) may be paid to people who have not reached the standard retirement age.
The figures for current and prospective pension replacement rates are based on the methodology developed by the Indicators Sub-Group of the Social Protection Committee. The results are based on the baseline assumption of a hypothetical person (male if gender matters), retiring at the age of 65 after a 40 years full-time work career with a flat earnings profile at average earnings with contributions to the most general public pension scheme as well as to occupational and private pension schemes for some Member States.
The replacement rate represents the individual pension income during the first year of retirement relative to the individual income received during the year preceding retirement. Calculations were conducted by the Member States.
HEALTHCARE EXPENDITURE – WHO-health for all database (www.who.int\nha)
This information is based on national health accounts (NHA) collected within an internationally recognised framework. NHA are a synthesis of the financing and spending flows recorded in the operation of a health system. In the future the System of health accounts (SHA) will contain uniform data for Eurostat, the OECD and the WHO. In the meantime, the WHO database is the only one to cover all Member States.
About 100 countries either have produced full national health accounts or report expenditure on health to the OECD. Standard accounting estimation and extrapolation techniques have been used to provide time series (1998-2004). Ministries of Health have responded to the draft updates sent for their inputs and comments. The principal international references used are the International Monetary Fund (IMF), Government Finance Statistics and International Financial Statistics; OECD health data; and the United Nations National Accounts Statistics. National sources include: national health accounts reports, public expenditure reports, statistical yearbooks and other periodicals, budgetary documents, national accounts reports, central bank reports, non-governmental organisation reports, academic studies, reports and data provided by central statistical offices and ministries and statistical data on official websites.
Annex 1C: Statistical tables – Overarching indicators
Additional table: Employment gap of migrants
 In PPS and excluding Luxembourg
 See statistical annex for full data.
 The newly implemented reference source of statistics on income and social exclusion is the European Survey on Income and Living Conditions (EU-SILC) framework regulation (No.1177/2003). For the first time this year, EU-SILC data is available for 25 EU Countries. During the transition to EU-SILC, income based indicators were calculated on the basis of available national sources (household budget survey, micro-censuses, etc.) that were not fully compatible with the SILC methodology based on detailed income. Following the implementation of EU-SILC in a given country, the values of all income based indicators cannot be compared to the estimates presented in previous years, the year to year differences that can be noted are therefore not significant. This is why no trends in income based indicators are presented in this year's report.
 To evaluate the relative position of older people, only monetary income (notably deriving from pensions) is taken into account. The wealth of pensioners, in particular house ownership (and associated imputed rents) and private savings, which have a strong effect on the income distribution of pensioners, are not taken into account, nor are other non-monetary benefits (free healthcare, transport, etc.). For this reason, the poverty risk of older people may be somewhat overestimated.
 For the purpose of this analysis, pensions are considered primary income since their role is not only to redistribute resources across income groups but also, and primarily, over the life-cycle of individuals and/or across generations.
 The indicator of poverty risk before social transfers must be interpreted with caution for a number of reasons. First, no account is taken of measures that, like social cash transfers, can have the effect of raising the disposable incomes of households and individuals, namely transfers in kind, tax credits and tax allowances. Second, the pre-transfer poverty risk is compared to the post-transfer risk keeping all other things equal – namely, assuming unchanged household and labour market structures, thus disregarding any possible behavioural changes that the situation of absence of social transfers would involve.
 This indicator reflects assumptions that households rely on social assistance benefits for the entire year, and that no other income stream (from other social protection benefits such as unemployment insurance or disability or from work) is available. For the calculation of housing benefits, it is assumed that housing costs consist entirely of rent, and the level of rent for all family types regardless of income level and income source is estimated as 20% of the gross earnings of an average production worker. This assumption may affect the level of transfers regarding different household types.
 Long-term unemployment is defined as the total long-term (over 12 months) unemployed population (ILO definition) as a proportion of the total active population aged 15 years or more.
 When comparing the national percentages of joblessness, it is important to keep in mind the differences in the national distributions of people living in jobless households by household types (as shown in the statistical annex).
 Brook, A. and Leibfritz, W., (2005) Slovakia's introduction of a flat tax as part of wider economic reforms , Economics Department Working Papers No 448, OECD, Paris, p. 17.
 In Greece, there is no universal guaranteed minimum income benefit, but a number of categorical social assistance benefits. In Italy, the experimental income support scheme adopted by some 300 municipalities out of 8000 for the whole country was terminated in 2004. In 2004, the Government had expected to introduce a new scheme – the Last Resort Income - fully administered at regional level and co-funded by the State and the regions. This scheme, however, has not been applied (for more details, see http://europa.eu.int/comm/employment_social/social_inclusion/docs/2005/it_it.htm).
 See the 2006 Education and training progress report for a detailed analysis of the phenomenon of early school leavers, at http://ec.europa.eu/education/policies/2010/doc/progressreport06.pdf
 In particular, the percentage of working-age foreign born population is less than 1% in BG, CZ, PL and SK and 10 percentage points or more in the Baltic States, BE, DE, IE, ES, FR, CY, LU, NL, AT, SE and the UK.
 The estimation is based on labour market exit probabilities between age 50 and 70. Note that the methodology can result in spurious variations from one year to the next which can make it more difficult to monitor progress over time.
 See 2006 ISG Report on replacement rates.
 As measured with the evolution in percentage points. The situation does not change significantly in 8 other Member States (a change of +/- 3 percentage points) and an increase in projected for 5 Member States (only one where this exceeds 5 percentage points).
 The situation does not change significantly in 8 other Member States (a change of +/- 3 percentage points) and an increase in projected for only 3 Member States.
 See ECFIN and EPC-AWG projections.
 Please refer to the following page for more detailed information on the computation of healthy life years: http://ec.europa.eu/health/ph_information/indicators/lifeyears_en.htm. The "healthy life years" indicator is the health indicator in the set of the EU Structural Indicators and it is the first-level indicator for the "Public Health" theme in the EU Sustainable Development Indicators. The indicator is based on a sound methodology developed since the 1970s (Sullivan method, mixing both information on morbidity/disability - limitations in activity due to health problem in the case of HLY - and on mortality, being in practice a calculation of life expectancy weighted by morbidity/disability prevalence). The source for the morbidity/disability information is mainly health interviews surveys.
 Note that ESTAT data goes back a decade to 1995 and refers to the EU-15 except Luxembourg. Ireland started reporting in 1999.
 McGuire et al. 1994; Donaldson and Gerard, 1994; European Commission, 2005
 Mackenbach, J. P., Looman, C. W. N., Kunst, A. E., Habbema, J. D. F. and van der Maas, P. J. (1988). Post-1950 mortality trends and medical care: gains in life expectancy due to declines in mortality from conditions amenable to medical intervention in The Netherlands. Soc Sci Med 27: 889-9.
 See for example WHO World Health Report 2000; Evans et al. 2000, 2001; Hollingsworth and Wildman, 2002 and Gravelle et al., 2003; Gupta et al., 2002; Aakvik, 2004; World Bank, 2006.
 See for example the Health Status and Living Conditions Report, Social Situation Observatory, 2005; European Commission 2005; Nolte and McKee, 2004; Levi et al., 2001; Nolte et al, 2000; Mackenbach et al., 1998; Velkova et al., 1997.
 See "Health Inequalities: Europe in Profile", Mackenbach 2005 - UK Presidency; "Health Status and Living Conditions Report", Social Situation Observatory, 2005; WHO European Health Report 2005 for a good overview of the EU countries.
 See SHARE, 2005; Wilkinson and Marmot, 2005; Newey et al., 2003; Mackenbach and Bakker, 2002; Evans et al., 2001.
 See Bardone L. and A. Guio, 2005,"In-work poverty", Statistics in Focus 2/2005 , Eurostat.
 Quotes in this paragraph and in the following one are taken from Council of the European Union, 2002, "Fight against poverty and social exclusion: common objectives for the second round of National Action Plans", SOC 508.
 Of course, not only the presence of children is important but also the household size.
 Jobless households are defined here as households with a "work intensity" equal to zero, with work intensity defined as the number of months all working age household members have worked during the income reference year as a proportion of the total number of months they could have worked, with categories ranging from 0 (jobless household) to 1 (full work intensity).
 See the 2006 ISG report on theoretical replacement rates.
 The recent labour market projections associated with the expenditures projections of the Ageing Working Group report indicate that the 60% Lisbon employment rate target for females is likely to be reached by 2010 and that the employment rate of older workers will sharply increase from around 40% in 2004 to 59% in 2025.
 Full set of Common Objectives for the OMC on Social Protection and Social Inclusion: http://ec.europa.eu/employment_social/social_inclusion/objectives_en.htm
 See 3 examples in the box below.
 For details see http://www.peer-review-social-inclusion.net/peer-reviews/2006/amnesty-of-debts-a-three-step-solution.
 For further details on the EU interpretation of this concept, see COM(2006) 44 final.
 For details on trends in integration policies and measures, see the Second Annual Report on Migration and Integration SEC (2006) 892. The third Annual Report is forthcoming in 2007.
 See Commission Proposal for a Regulation on Community statistics on migration and international protection (COM(2005)375 of 14.9.2005).
( CILE: Comité interministériel de lutte contre les exclusions; DPT: Document de politique transversale Inclusion Sociale
 For more examples of good practice in the area of integration, see 'Handbook on Integration for policy-makers and practitioners'http://ec.europa.eu/justice_home/doc_centre/immigration/integration/doc/handbook_en.pdf:The second edition is due to be published in 2007.
 Department of Health, United Kingdomhttp://www.dh.gov.uk/PolicyAndGuidance/International/EuropeanUnion/EUPresidency2005/EUPresidencyArticle/fs/en?CONTENT_ID=4119613&chk=Xa2sOh
 The section regarding social inclusion highlights some of the action taken for the most vulnerable groups.
 Although there are concerns that during a transition period a proportion of the population will not be covered.
 Such as co-payments – a flat fee or charge per service or co-insurance – a percentage of the total charge
 See Eurobarometer 63 at http://ec.europa.eu/public_opinion/archives/eb/eb63/eb63_en.htm
 Arah et al., 2003, WHO 2000
 See Oxford Centre for Evidence-Based Medicine at http://www.cebm.net/glossary.asp
 HLG/2006/8 FINAL at http://ec.europa.eu/health/ph_overview/co_operation/mobility/high_level_hsmc_en.htm
 Expenditure is the highest the closest one is to death. As the probability of dying is larger in the 65+ than for younger groups, expenditure is larger for the 65+ age bracket.
 ADLs: Activities of Daily Living are self-care activities that a person must perform every day such as bathing, dressing, eating, getting in and out of bed or a chair, moving around, using the toilet, and controlling bladder and bowel functions.
 IADLs: Instrumental activities of daily living are activities related to independent living and include preparing meals, managing money, shopping for groceries or personal items, performing light or heavy housework, and using a telephone.
 OECD 2005 Long-Term Care for Older People
 This corresponds to a decline of average pensions in relation to average wages, as the former are projected to increase at a slower pace than the latter.
 Income data are assessed for households and then individualised using a general equivalence scale (although this equivalence of scale may be slightly different for elderly people). Thus, income data are not individual incomes of men and women or of older or younger people, but a share of the household income in which these individuals live.
 The following aspects were considered: age and seniority at retirement, coverage, percentage of the annual flow of new retirees receiving occupational pensions (or private in general), current overall contribution to the first pillar as a percentage of individual earnings for private employees, current overall contribution to occupational schemes as a percentage of individual earnings for private employees who are currently members of such a scheme, means-tested supplements and other social benefits, aggregate replacement rate, average pension relative to average wage.
 The following aspects were considered: contributions by the employer and the employee to the different schemes included in the calculations (as well as the other social contributions, with the possible addition of any public contributions), and, where a Member States chooses to use a DB framework for 2nd pillar schemes, contribution rates assumed (both employee and employer contributions).
 The assumption on contribution rates is linked for defined benefit schemes to the rate of return assumption. The common assumption of 2.5% for real long-run rates of returns (3% gross minus 0.5% administrative costs) may not necessarily reflect the circumstances of some countries, notably those with well-established pension industries. Member States have been asked to provide national variants when they wish to illustrate this. Some Member States used slightly different assumptions of rates of returns, which should be borne in mind when making comparisons of outcomes of funded schemes. The Finnish and Swedish calculations, for example, use a real net rate of return of 3%, while the Cypriot and Maltese calculations (in the variant 'some reform') use a higher real net rate of return.
 Observing the evolution by measuring relative changes in theoretical replacement ratios allows differences in initial levels to be taken into account (as compared to the evolution in percentage points). In some Member States, the intensity of changes can differ (see ISG 2006 report).
 The level of contribution rates assumed in projections of theoretical replacement rates for NL depends on the actual level of indexation of benefits and of future real rates of return.
 In Ireland and in the UK, the vast majority of the assumed contributions in the base case are employer contributions.
 8National data sources are adjusted ex-post and as far as possible with the EU-SILC methodology. Whilst the maximum effort is made to maximise consistency of definitions and concepts, the resulting indicators cannot be considered to be fully comparable to the EU-SILC based indicators.
 Before the introduction of EU-SILC in the New Member States, the value of goods produced for own consumption was included in the calculation of the EU indicators estimated on the basis of national sources. This transitory agreement was made to take account of the potentially significant impact of this component on the income distribution in these countries.
 See specific footnotes in each country profile