A concerted strategy for modernising social protection

In order to reinforce existing cooperation at European level and adopt a common political vision of social protection in the European Union (EU), the Commission is putting forward a concerted strategy to modernise social protection which aims to assist the Member States in this area.

ACT

Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions. A concerted strategy for modernising social protection [COM(1999) 347 final - Not published in the Official Journal].

SUMMARY

Social protection systems provide people with income in times of need and allow them to accept and embrace economic and social change. In this way they promote both social cohesion and economic dynamism.

Expenditure on social protection accounts for 28.5% of Community GDP, the bulk of which (63%) is spent on pensions and health care. Its role in the redistribution of income is immense: in the absence of social transfer payments almost 40% of households would live in relative poverty, a figure which is reduced through tax and benefit systems to 17%.

The social protection systems face a series of significant common challenges - for example, the need to adapt to the changing world of work, new family structures and the dramatic demographic changes of the forthcoming decades. In response to these challenges, a joint reflection has been underway at EU level, based on three documents:

• the Council Recommendation 92/442/EEC of 27 July 1992 on the convergence of social protection objectives and policies;
• the Communication from the Commission of 31 October 1995 on the future of social protection: a framework for a European debate;
• the Communication from the Commission of 12 March 1997 on modernising and improving social protection in the European Union.

Besides, the Dutch, Luxembourg, UK and Austrian Presidencies have all organised important conferences focusing on different aspects of the issue. Finally, the European institutions and civil society have come out in favour of reform, in order to maintain and strengthen social protection.

It has been generally recognised that strong social protection systems are an integral part of the European social model. Social protection provides not only safety nets for those in poverty; it can also facilitate adaptability in the labour market and can thus contribute to improving economic performance. Hence, social protection is a productive factor.

We have also seen a number of important changes in the EU, notably:

• the completion of the single market and the establishment of a single currency;
• the ratification of the Treaty of Amsterdam, in particular the new employment title and the new legal base for the fight against social exclusion;
• enlargement with the countries of eastern and central Europe, Malta and Cyprus.

In March 1999 the European Parliament invited the Commission to launch a process for the concerted approximation of objectives and policies in the social policy field, on the basis of the European employment strategy. In this communication the Commission proposes a concerted strategy for modernising social protection. This strategy is based on an exchange of experiences, the political debates, and the follow-up of the current policy with a view to identifying best practices. The Commission calls on the Member States to achieve the following objectives:

Make work pay and provide secure income

The characteristics of today's labour market are very different from those which obtained when the Member States established their social protection systems (high overall unemployment; a high share of young, female and long-term unemployed; career breaks; changing household patterns; the emergence of new working arrangements etc.). Hence, the social protection systems must now offer workers and jobseekers active help, in particular by promoting employability and adaptability, and must create strong incentives to work and to make work pay:

• tax systems must make work more advantageous for jobseekers;
• social protection systems must reflect and respond to the emergence of new working arrangements (temporary and part-time contracts, self-employment);
• social protection systems must provide the necessary income bridge and the active help necessary to prevent a temporary gap between jobs from sliding into long-term unemployment;
• social protection should contribute to reconciling work and family life;
• the financing of social protection must take account of the need to provide systems with resources adequate to attain their objectives, the need to avoid a negative impact on employment and the need for budgetary discipline.

Make pensions safe and pension systems sustainable

The fundamental objective is to provide people with a securely funded and adequate pension. This may involve finding an appropriate balance between funded and pay-as-you-go systems. Hence, the Commission emphasises:

• the need to anticipate the impact of demographic ageing on social protection systems;
• the design and reform of pension systems should discourage early withdrawal from the labour market, encourage flexibility in retirement arrangements and promote active participation by older people in the light of the Community;
• the need to combat poverty among older women, resulting from their low participation in employment combined with changes in household structures;
• the need to promote active ageing.

Promote social integration

Social protection has a key role to play, in conjunction with other policy instruments, in combating social exclusion and promoting social inclusion. Social protection systems should:

• ensure effective safety nets, consisting of minimum income benefits and accompanying provisions;
• focus on prevention, fostering active rather than passive measures and providing incentives and pathways to (re)integration into the labour market and society;
• contribute to a comprehensive and integrated approach to fighting social exclusion, including all relevant policies and players.

Ensure high quality and sustainability of health care

Every one should be in a position to benefit from systems to promote health care. However, demand on health systems is increasing and will continue to do so because of demographic ageing. Constant innovation in medical technology can bring great benefits but also increases costs. Hence, it is important to:

• contribute to improving the effectiveness and efficiency of the health systems within available resources;
• ensure that all can have access to high quality health services and reduce health inequalities;
• strengthen support for long-term care of frail elderly people;
• focus on illness prevention and health protection as the best way to tackle health problems, reduce costs and promote healthier life.

Promote closer cooperation

The Commission wants the Council to decide on a framework for closer cooperation based on the exchange of experience, mutual concertation and evaluation of ongoing developments with a view to identifying best practices.

Each Member State is also invited to designate a high level senior official to act as focal point for exchange and information gathering activities. The Commission will regularly organise meetings of these officials to analyse and evaluate the progress made.

Monitoring and implementation of the strategy

To assist Member States in this process and to monitor ongoing policy developments, the Commission will in future publish its report on social protection on an annual instead of a biennial basis. This report will be drawn up in close consultation with the Member States and will reflect the broad objectives the Council is invited to adopt in the context of the concerted strategy. It will be based on contributions from Member States and will highlight key policy developments. The Commission will invite the Council to examine the annual report on social protection in conjunction with the joint report on employment.

The Commission invites the other Community institutions, notably the European Parliament, the Economic and Social Committee and the Committee of the Regions, as well as the social partners, the non-governmental organisations and the social security institutions to contribute to this process.

More recently, the EU began to promote closer cooperation between the Member States on modernisation of the social protection systems. This cooperation is achieved by:

• strengthening the open method of coordination, which was developed in the fields of social inclusion and pensions in particular;
• the creation of the Social Protection Committee in 2004, responsible for promoting cooperation in social protection policies between the Member States and the Commission;
• ensuring good coordination of national social security systems, modernisation appropriate to Europeans moving within the Community and subject to different social protection systems.

This modernisation has also been launched in the fields of health care and long term care and in response to the question " making work pay " which aims to promote employability and ensure a high level of social protection for all. MISSOC (the mutual information system on social protection) has also become a key source of information on the state of social protection in Europe. Thanks to the updating of the comparative tables and specific information bulletins, the modernisation of social protection continues to be developed.

RELATED ACTS

Commission Report (2004). Social situation in the European Union [Not published in the Official Journal] [PDF ]

Commission Report (2003). Social situation in the European Union [Not published in the Official Journal] [PDF ]

Commission Report (2002). Social situation in the European Union [Not published in the Official Journal] [PDF ]

Commission Report (2001). Social situation in the European Union [Not published in the Official Journal] [PDF ]

Commission Report (2000). Social situation in the European Union [Not published in the Official Journal] [PDF ]

Last updated: 17.05.2005